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Status of Mobile Payments
19 September 2007
Eelco de JongSenior Consultant
RFID Europe 2007
2
Introducing Thaesis
• What we doWe are a strategic consulting firm helping senior
managers to– to grow and innovate their business; and– to navigate successfully in dynamic market
environments
• Who we are– Prof.dr. Theo Huibers (Managing Partner)– Dr. Bernd Wondergem (Partner)– Drs. Eelco de Jong MBA (Senior Consultant)– 5 consultants and back offie
Source:
3
“The convergence of payments and mobile communications is
not just logical – it is inevitable”
John Philip Coghlan, Visa USA CEO March 2007
“The convergence of payments and mobile communications is
not just logical – it is inevitable”
John Philip Coghlan, Visa USA CEO March 2007
Do you agree?
4
Mobile payments is the future?
5
Some questions
• When will NFC reach mass adoption?A. Within two years (2009)B. Three to five years (2010-2012)C. Never
• Which application will drive adoption of NFC technologie?A. Mobile payments?B. Mobile ticketing (e.g. public transport)?C. Other (e.g. smart posters, loyalty, vouchering)?D. No application
6
What is….
• Contactless• M-wallet• Physical payment• POS• Remote payment
7
Agenda
1. Introduction
2. Mobile payments 1.0: 2000-2005
3. Mobile payments 2.0: 2006-2010
4. Conclusion and summary
8 N°8
Defining mobile payments
Use of a wireless communication device (such as a mobile phone) to make a purchase or other payment related transaction
Value: Low value (<5 €), Medium (5-25 €), High (>15 €)Physical: With Point-of-Sale terminal (POS), or remote
(no POS available)Type of settlement:
• Through operator (e.g Premium SMS)• Pre-paid wallet• Debit card enabling or credit card enabling
Mobile Payments:
Mobile Payments can be divided along multiple dimensions:
9
Mobile Payments 2000-2005: Hard lessons learned….
15
Summary Mobile Payments 1.0 in Europe 2000-2005
• Many early European mobile payment initiatives have failed – Main reasons for failure are lack of usability and lack of
availability
• Mobile payments 1.0 in Europe is dominated by Premium SMS – 20%-40% revenue share for telecom operators– In 2006 1 Billion Euro purchased through Premium SMS– Used by 60% of young consumers
• Increasing consumer acceptance in niche areas such as m-parking – In Croatia more than 50% of all parking fees are paid by mobile
phone
• Europe is currently far behind Asia
16
2006-2010 will be the era of Mobile Payments 2.0
18
Some Mobile Payments 2.0 initiatives in 2007
UK: Combined Barclays and
Oyster contactless
card
UK: Combined Barclays and
Oyster contactless
card
Belgium: operators launch
SMS payment
Belgium: operators launch
SMS payment
France: NFC pilots in Caen,
Strasbourg, Grenoble, Paris
France: NFC pilots in Caen,
Strasbourg, Grenoble, Paris
Croatia: 50% of parking fees paid by moble phone
Croatia: 50% of parking fees paid by moble phone
Austria: operator-owned Paybox grows
to 300,000 mobile payment users
Austria: operator-owned Paybox grows
to 300,000 mobile payment users
Germany: NFC implementation in public transport in
Frankfurt area
Germany: NFC implementation in public transport in
Frankfurt area
Netherlands: NFC pilots with payments
using credit and debit card
Netherlands: NFC pilots with payments
using credit and debit card
Norway: Telenor and banks launch BankID Norway: Telenor and banks launch BankID
Italy: card issuer CartaSi launches ski pass payment
service
Italy: card issuer CartaSi launches ski pass payment
service
UK: Vodafone and Citigroup
announce remittance
venture
UK: Vodafone and Citigroup
announce remittance
venture
19
Mobile Payments 2.0 will be driven by four trends
1. Consumers who are adopting a mobile lifestyle– Mobile phones are including photo camera’s, MP3
players, etc
2. Superior usability for new services, enabled by NFC – NFC is easy, simple and convenient
3. The global mass adoption of contactless cards – Creating an infrastructure for NFC-enabled mobile
phones
4. The evolution of “traditional” mobile payment 1.0 applications
21
NFC Payments: Fast and Simple – Touch to Pay
22
Consumers value NFC because it is EASY, FAST and CONVENIENT
Consumer feedback:
23
NFC will be a major driver for mobile payments
1. NFC will be a payment method for physical payments – Using the growing infrastructure for contactless cards– Leading to micro payments, for example with Mastercard Paypass, or direct
debit
2. NFC will accelerate the growth of mobile ticketing – Including public transport, airline tickets and hotel check-in– Leading to more remote payments, both micro and macro
3. NFC will make it easier to download digital content on the phone– Leading to more micro-payments, for example with Premium SMS
With NFC, payments with a mobile phone can be faster
and easier than traditional payments such as cards and
cash….
With NFC, payments with a mobile phone can be faster
and easier than traditional payments such as cards and
cash….
25
NFC: A tremendous opportunity for cash displacement
Profit decomposition ofpayments for European Banks:
Source: McKinsey Payment Practice
-21,2 € Billion
+ 30,2 € Billion
Cash payments Non-cash payments (credit/debit/transfer)
Huge benefits of cash displacement :
• A 50% reduction of
cash transactions will
result in 10 € Billion
annual savings for
European banks
• And potentially billions
in new revenue streams
Huge benefits of cash displacement :
• A 50% reduction of
cash transactions will
result in 10 € Billion
annual savings for
European banks
• And potentially billions
in new revenue streams
(includes Germany, UK, France, Italy, Spain, Netherlands, Belgium, Sweden, Poland)
27
3. Contactless is moving towards global mass adoption
• Major cities mass transit operators have migrated to contactless– Japan, South Korea, HongKong, Singapore, London, France– Netherlands will migrate soon to nation-wide system– Over 200 Million contactless transit cards
• US and Asian banks are moving toward contactless payments– 50 Million contactless banking cards in circulation– 40,000 stores now accept Paypass, and growing– All new US Visa cards are contactless enabled
• Growing acceptance of contactless among identification technologies
– Supply chain management, access control, ticketing etc
NFC Mobile handsets will utilize this growing global infrastructure
29
What are the issues for mobile payments adoption?
• The complexity of the ecosystem– Banks– Telecom operators– Handset manufacturers– Regulators– Merchants– Card institutions– Consumers
• All these stakeholders will need to see the benefits
• Standardisation (at national and international level)
30
Summary and Conclusions
Since 2006 mobile payments are entering a new phase, driven by four trends:
1. Consumers are adopting a mobile lifestyle2. NFC enables new consumer services on the mobile
devices3. The global mass adoption of contactless cards4. Traditional mobile payment application are evolving
As a result, mobile payments are already becoming a reality in Europe
31 N°31
“ The best way to predict the future is to invent it.”
Alan Kay
“ The best way to predict the future is to invent it.”
Alan Kay
Eelco de JongSenior ConsultantE: [email protected]: +31-6- 1590 5506
32
Appendix: NFC Pilots
1. C1000 Retail Stores, Netherlands2. Caen, France3. JCB Credit Card, Netherlands4. Transport Ticketing, Grenoble, France5. NFC Paypass, Dallas, USA6. NFC HSBC Cards, USA7. NFC Payments at Philips Stadium, USA8. NFC Trial Hagenberg, Germany9. NFC Payment trail, Strasbourg, France10.NFC Transport Ticketing, Hanau, Germany11.NFC Consumer Services in Cinema complex, Bangkok,
Thailand
33
Case Study: C1000 Retail Stores, Netherlands
• Description:
A number of NFC applications in the retail stores of C100, including payments, loyalty and information services.
• Start: 2007
• Users: 100
• Key Words: loyalty, payments, information services
• Handsets: Samsung
• Operator Rabo Mobiel, KPN
• Chip: NXP
• Others: LogicaCMG, C1000 (Schuitema)
• Source:
34
Case Study: Payter
• Description:
Mobile payment pilot in Rotterdam, based on mobile-wallet application (pre-paid). Strong focus on developing additional services for consumer (loyalty, smart posters, vouchers). 30 stores participating in centre of Rotterdam. Planned rollout in 2008
• Start: 2007
• Users: 1000
• Key Words: loyalty, payments, information services
• Handsets: Nokia 6131 NFC
• Operator operator independent
• Chip: NXP
• Others: Equens
• Source: www.payter.com
35
Case Study: NFC Pilot Caen, France
• Description:A number of NFC applications in the city of Caen, including payments at retailer Monoprix, parking, and tourist information.
• Start: 2005• Users: 200• Key Words: ticketing, payments,
information• Handsets: Samsung• Operator Orange• Chip: NXP• Others: Monoprix• Source:
36
Case Study: NFC JCB Credit Card, Amsterdam, Netherlands
• Description:NFC based credit card payments with JCB credit card at WTC in Amsterdam
• Start: 2006• Users: 100• Key Words: payments, credit cards• Handsets: Nokia• Operator KPN• Chip: NXP• Others: JCB (credit card), Vivotech
(contactless EMV readers), Gemplus (mobie payment application), PaySquare (merchant acquisition), CCV Holland (processing)
• Source:http://www.mobiletechnews.com/info/
2006/06/12/123126.html
37
Case Study: NFC transport ticketing, Grenoble, France
• Description:NFC based ticketing and information services for public transport in Grenoble. Secure element is stored in the SIM
• Start: March 2007• Users: 200• Key Words: public transport, ticketing• Handsets: Sagem• Operator Bouygues Telecom • Chip:• Others: Gemalta (SIM card with Single-
Wire Protocol), Inside Contactless, Sagem Communication,
• Source:http://www.institutionnel.bouyguestelecom.fr/actu/
c1_2.aspx?fUrl=/actualite/communiquesdepresse/cpdetail_2800.html
38
Case Study: NFC Paypass in Dallas, USA
• Description:NFC based payment with MasterCard Paypass card at Dallas
• Start: 2006, • Users: 500 • Key Words: mobile payments• Handsets: Nokia 3220• Operator Ztar Mobile• Chip:• Others: G&D (OTA personalisation and
Paypass application), 7-Eleven, Bluko Information Group, People’s Bank
• Source:Mastercard
39
Case Study: NFC payments at HSBC Cards, USA
• Description:NFC based payment with HSBC Mastercard
• Start: 2007, • Users: 200 (HSBC employees)• Key Words: mobile payments• Handsets: Nokia 3220• Operator• Chip:• Others: HSBC, Mastercard, Vivotech• Source:Mastercard
40
Case Study: NFC Payments at Philips Stadium, Atlanta, USA
• Description:NFC based payment with Visa at Philips Stadium in Atlanta
• Start: 2006• Users: unknown. • Key Words: mobile payments• Handsets: Nokia 3220• Operator Cingular• Chip: NXP• Others: Chase (bank), Visa • Source:http://www.rfidjournal.com/article/view/2638/• Video:http://www.youtube.com/watch?v=NpoK2ebF7Js
41
Case Study: NFC Trial Hagenberg• Description:• Various NFC applications at university,
including access control, payments, loyalty and peer-to-peer.
• Start: 2006• Users: 100 • Key Words: payments, acces
control, loyalty• Handsets: Samsung X7000m• Operator• Chip: NXP• Others: University of Applied
Sciences
42
Case Study: NFC Payment Pilot in Strasbourg
• Description:NFC based payment pilot in Strasbourg, led by Credit Mutuel CIC. With EMV Payment Application in the SIM. Payments upto 200 euro at various locations, including restaurants.
• Start: 2006, moving into next phase with SFR in 2007
• Users: Inititially 200, but growing. Initially 50 merchants.
• Key Words: payment• Handsets: Sagem• Operator SFR, NFJ Mobiel (MVNO)• Chip:• Others: Credit Mutuel CIC (bank),
Gemalto (SIM with Paypass application), Inside Contactless (NFC Module), Mastercard Paypass, Sagem Monetel (payments terminal)
• Source:• http://www.smartinsights.net/smart-card/
index.php?2007/02/08/39-sfr-joins-in-credit-mutuel-nfc-trial
43
Case Study: NFC Transport Ticketing in Hanau and Frankfurt
• Description:NFC based ticketing for public transport passengers in Hanau and Frankfurt. Now expanding into broader information, loyalty, payment and ticketing applications, for example with the Erlebnis card
• Start: 2005, now commerically available
• Users: Inititially 200, but growing.
• Key Words: public transport ticketing
• Handsets: Nokia 3220• Operator Vodafone• Chip: NXP• Others: RMV (Rhein-Main-
Verkehrsverbund), T-Systems
44
Case Study: NFC Consumer services in Cinema, Thailand
• Description:
NFC based consumer applications such as information, ticketing and marketing at cinema complex in Bangkok, Thailand
• Start: 2007
• Users: Inititially 200, but growing.
• Key Words: marketing, ticketing
• Handsets: Nokia 3220
• Operator
• Chip:
• Others: PayZy