Being fast, being mobile, being innovative
Kris Kubiena
VocaLink
Traditional (batch-based) ACH
International Card Schemes
Overlays
ApplePay PayPal AliPay Amazon
Payments
Visa MasterCard
BACS
E-commerce /
P2P
POS
Account to
account
Traditional infrastructure was built over 30 years ago Cards and overlays are needed to complement its services
3
Instant
and speed
1.Authentication Funds availability
2. Posting Funds available to
beneficiary in real
time
3. Settlement Instant settlement
between financial
institutions
What is an instant payment?
What isn’t an instant payment ?
Paying money out of one bank account into another delivering an end to
end real time experience for customers
• Not card payments
• Not e:wallets
• Not pre-paid
• Not RTGS
• Not a real time promise to pay, or payment guarantee
21.393% 15.905% 15.177% 7.750% 4.343% 25.788%
3.240% 0.845% 0.793% 0.725% 0.725% 3.312% 0.687%
Collaborative and ubiquitous payments Ownership structure of VocaLink
14%
senders
14%
receivers 2% of
potential
transactions
50%
senders
50%
receivers
25% of
potential
transactions 100%
receivers
and
senders
100% of
potential
transactions
Value of ubiquity
16million Peak daily Faster Payments
transactions; 2 April 2013
1.1billion Faster Payments transactions
in 12 month to November 2014
4.03billion Faster Payments transactions
processed up to 31 October 2014
0
10
20
30
40
50
60
70
80
Millio
ns
Faster Payments
BACS
Remote Banking single payments, transactions / month
Faster Payments is a tremendous success in the UK
Receiving
bank
mobile app
Sending bank
mobile app
Vocalink’s
mobile
payments
infrastructure
Existing
payments
channels
Paym: real-time account-to-account payment by mobile number
Faster Payment (real-time)
E-commerce /
P2P
POS
Account to
account
Overlays
Card Schemes ZAPP PayM
Introduction of real-time and ubiquitous access opens up
opportunities to serve market
Direct Access to A2A payments
Real-time payments
• Real-time lending
• Direct Corporate Access
• Mobile Banking
• Mobile Proxy: Person-to-person payment
• Handset fraud detection
• Identity attributes
• M-commerce
• E-commerce
• Bill payments
Real-time payment / ISO20022
• Affordability assessment
• Fraud detection
• SME lending
Proxy databases
Mobile Payments
Data
Real-time / ISO20022 creates cascading benefits
Fast goes live in Singapore
12
The future is not set: Banks have a right to win in mobile payments
– if they can move quickly to meet consumer demand
13
Banks are highly trusted institution for payments1
28%
4%
58%
26%
9% 36%
10%
29%
UK Netherlands
Other
Debit card
Credit card
iDeal
PayPal
54% 51% 50%
47% 47%
42% 40%
37%
32% 31%
16%
9% 9%
% of respondents expressing high trust Last Payment Method Used Online
1. McKinsey Global Payments Survey 2014; 2. Accenture and Payments Council 2013
Today’s alternative payment solutions
Online payments via PC or mobile internet
Micropayments Low-value transactions
(often bundled) for digital products
Mobile POS Payment acceptance via
mobile devices using NFC
P2P Person-to-person
payments
Traditional 3- or 4-party model
Piggy Back Additional layer using the 4-party model
New Entrant Payments made outside 4-party model
(in partnership w/
manufacturers/ operators)
Card
A
CH
& c
ard
C
ash
& A
CH
Latent consumer demand and the US switch to Chip & Pin has prompted Apple to
enter the market – ApplePay are “targeting” revenues and the customer
relationship.
15
ApplePay is a ‘five-party’ model
ISSUER GETS DISRUPTED:
APPLEPAY INSERTED IN TRADITIONAL FOUR-PARTY
MODEL
Customer interaction ‘owned’ by Apple
Consumer
Issuer /
Scheme
Apple
1
2
3
4
5
I paid
using my
iPhone
Real time
Secure
Digital
Convenient
Provided by banks
Not a Wallet
Not an App
Not card-based
Full payment scheme
No multilateral
interchange
M-commerce
E-commerce
Bill Payment
SMB
In store
Value-added
services
Loyalty
Data
Identity
Zapp: real-time payment for goods from mobile device
Request to Pay (RTP) based
payment (ZAPP) Traditional push payment
• Requires entry of payment details
• Not suitable for commerce
• Based on Request to Pay
• Designed for commerce
Zapp reverses the logic of the payment flow
Payer Payee
RTP
Payer Payee
Permission
Mobile proxy Person to Person
Request to Pay
Tokenisation
Bill Pay
F2F Small
Business
Online
Bricks &
Mortar
Channels
Zapp with Pay-m offers a full mobile payment solution underpinned by IPS
Mobile
Mobile
Retail
Pay-out Top Up
Use Cases
Telephone
Paper Loyalty &
Offers
18
Key take-aways
Real-time opens up opportunities
• New products to serve evolving market
• Brings value back to the core
• Process simplification and lower cost
Ubiquity and reach are crucial, collaboration is a winning strategy
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