Is Canada Ready for

Mobile Wallet?

Environics Research Group

Tuesday November 20th , 2012

Industry Players are ready, are we?

Familiarity with Mobile Wallet is Low …

12%

3%

7%

25%

14%

19%

17%

19%

17%

47%

63%

57%

Smart PhoneUsers

Feature PhoneUsers

Total (n=1004)

Familiarity with the concept of Mobile Wallet

Very Familiar Somewhat Familiar Somewhat Unfamiliar Not at all Familiar

A1: How familiar are you with the term ‘mobile wallet”? n=1004

Appetite for Adoption Varies

19% 15% 21%

33%

22%

40%

26% 35%

21%

10%

16%

5%

Total(n=1,004)

36%----

12%

Smart Phone(n=516)

51%----

11%

Feature Phone(n=591)

26%----

13%

1. If mobile wallet technology was available today, how likely would you be to use it to make purchases at retail stores?

Very likely

Somewhat likely

Not very likely

Not at all likely

TOP 2 BOX ------------------------ Unsure – Need More Information

Canadian Values And Technology

Enthusiasm for

Technology

• A favourable bias toward technology. A

tendency to be fascinated with the

possibilities offered by modern

technology; to believe that technology is

the best tool for facing today’s world,

one that helps us adapt and respond to

the demands of daily life.

• People who are strong on this trend

have great confidence that science and

technology can better their lives.

Female Gen Y

Female Boomers

Male Boomers

New Canadians

Male Gen Y

High Enthusiasm for Technology

Low Enthusiasm for Technology

Can-Asian Gen Y will act as an Influence

Spear for New Technology in Canada

44% 50%

54% 52%

62%

White Chinese South Asian ImmigrantChinese

Immigrant SouthAsian

I am excited by the possibilities presented by new technologies (Gen Y: 15 to 29)

Canadian Born Foreign Born

Mobile is Personal

If I forgot my phone at home, I'd be so lost …it is my watch so I would probably be

late for everything. I would constantly be wondering what I'm missing out on because I can't go on Facebook or check my email … I wouldn't be able to watch my

tv shows [at lunch]. I think I would skip the gym after work because I wouldn't have my phone to listen to music”

If I forgot my phone at home, I'd feel completely NAKED! … to be honest, if I realized before I was too far, I would likely go back home to get it.

If I forgot my cell phone and had to carry on my day I would be somewhat nervous

and apprehensive because of not knowing if someone was calling or texting me. I would find it hard to concentrate on my work.

I would like you pretend you forgot your mobile phone when you left the house this morning. Tell me a bit about what the day would be like for you?

Methodology Overview

• A quantitative survey of n=1004 Canadian Mobile phone

customers (September 24 – 28, 2012)

• Bulletin Board Focus Groups with smartphone owners

(November 3-4)

• Ongoing Social Media Listening

– Wireless CSAT Syndicated Offering (Twitter)

– Blog scraping

– Facebook/Twitter monitoring

Pulse measurement via monitoring

540

1162

941 788 785

515 656

754 746

Aug-30 Sep-04 Sep-09 Sep-14 Sep-19 Sep-24 Sep-29

Google announces it is canceling prepaid card

Discussion around absence of NFC in iPhone 5

Arrival of Nexus 7 reignites debate about Apple vs. Google and NFC adoption

Galaxy SIII Beacon SmartBoards?

Clear signals that Mobile Wallet is on the

minds of consumers

1943

1112

1476

May-13 Jun-17 Jul-22 Aug-26 Sep-30 Nov-04

Rogers & CIBC announce mobile wallet plans

Rogers & CIBC roll out mobile wallet offering

iPhone 5 data plans announced

Reactions to Rogers/CIBC in BBFG

“Whether you are the first or the fifth to launch a new program, giving your customers the access [to new features] is certainly beneficial. At the same time, it obviously isn't appealing when whichever company you are loyal to is consistently following trends and late to react in comparison …” - Male, 21 years old

“I am more inclined to use an app knowing that my personal information is being secured by an actual bank. I trust it solely because of the brand itself. In comparison to the Google wallet app, I would have to say I'm more likely to use the CIBC/Rogers app, the names make it seem more trustworthy.” - Female, 20 years old

“I do not know if I trust them as much as Google, or believe that they are as competent as Google in getting this off the ground without glitches.” - Male, 55 years old

6. So many of you saw the news last night that Rogers and CIBC have launched their own Mobile Payment system. How does this change your perception of these brands? Do you see them as leaders because they were the first ones out of the gate? Or are they taking a risk with their customers sensitive information? What are your thoughts about the Rogers/CIBC application compared to what you saw about the Google Wallet approach?

37%

18%

14% 12%

8% 6%

34%

19%

8% 9% 11%

5%

Companies Leading Implementation of Mobile Wallet Technology

Perceived

Ideal

Who Should Lead mCommerce?

A5:Based on what you have heard about mobile wallet technology, what company or companies do you believe are driving the implementation of this new technology in Canada? (excluding DK/NA n=1304) A6: Based on your understanding of mobile wallet technology what company or companies would you like to see drive mobile wallet implementation in Canada? (excluding DK/NA n=1101)

“I believe the banks will ensure security, the carriers and the others will make sure it works and is simple to use.”

So, Are We Ready?

21%

46%

34%

33%

42%

25%

24%

13%

22%

Still a ways to go! (4 years or more)

We'll be ready soon! (2-3 years)

We're Ready! (Now or next year)

Experts and Enthusiasts (n=50)

Feature phone users (n=591)

Smartphone users (n = 516)

When do you see this technology becoming commonplace?

Blogger Typology

Expert – not ready

Expert – Ready!

Laymen – not ready

Laymen – Ready!

Are Canadians Ready?

1. Yes, we’re ready!

2. No, we still have a ways to go!

3. We’ll be ready soon!

Are Canadians Ready for

Mobile Wallet?

We’re Ready!

Mobile Wallet is Already Here!

Yes, 5% No, 87%

Not sure, 8%

Q. Do you own a mobile wallet? n=1,004

…But Still Far Behind Other Markets

11%

40% 46%

Have used Smartphone for online purchases

Source - http://www.worldpay.com/globalshopper/mrc-report-shopper.pdf

Mobile Wallet ‘Light’ – QR Codes

Well.ca Virtual Store

“…another example of how

the line between store-based

and online retailing is

becoming increasingly less

defined. ”

Mobile Wallet ‘Light’ - Parking

“Mobile payments for parking meters means that

you can re-up your parking time from the

restaurant. You’ll be notified when your time is

running short. You’ll have an easier time

following the rules and in the long run everyone

will win.”

Mobile Wallet ‘Light’ –Transit Payments

“For transit agencies who don’t want

to issue their own fare cards,

moving to open payment reduces

the need to procure, encode,

distribute, and support literally

millions of magnetic tickets or

contactless smart cards.”

Are Canadians Ready for

Mobile Wallet?

We Still Have A Ways

to Go!

Security Concerns - Blogs

Expert - Canada is not ready

Significant security concerns with

software and hardware on phones.

Concern that people will throw their

phones away with critical security

information still in the SIM card.

“[NFC] certainly increases the risk

that something could go wrong.”

Enthusiast - Canada is not ready

Fear that people will be able to steal

money without any physical contact, by

having their phone chips scanned.

"As mobile payment systems are

increasingly gaining more momentum,

you may not want to stand too close to

Charlie Miller or other hackers of his

caliber."

"I think of the mobile wallet and NFC

technology which still has not taken off

because it just isn’t any better than a

credit card in the user experience."

Security Concerns Haven’t Been Addressed

49%

36%

5%

3%

2%

2%

1%

1%

1%

Security of credit/debit card information

Security of transactions

Ease of Use

Integration with my financial institution

Availability of merchant locations to use this technology

A single application to hold all accounts, "one wallet" concept

Compatibility with different brands of smartphone

Transferability of my "mobile wallet" to other devices

Capability of logging into different "mobile wallet" accounts

Most important feature for mobile payment app (n= 1,004)

Q3A Pretend for a moment that this new technology was available to you via your mobile phone. How important would each of the following features/functions be when considering whether or not you would use it?

Overcoming Security Concerns - BBFG

I would definitely need assurances from the credit card companies and mobile wallet that transactions are legitimately tracked and the owner is the only one able to use it. - Male, 29 years old I would be slightly concerned but I currently have the BMO mobile app which I use on a regular basis. Piece of mind comes from a BMO disclaimer about righting any wrong that occurs while using internet banking. I think i would wait a while before I started using this app just to wait until they have worked out all the kinks. - Female, 31 years old “they [could] limit the credit ceiling for mobile apps to a significantly lower amount [than what you could do with your card]. It would also help if there was extra security protocol other than pin numbers. - Female, 22 years old

Overcoming Security Concerns - BBFG

There is always concern for theft, especially involving items of high value. Obviously I would be more concerned about a $200 boarding pass than a $2 coupon for coffee or something, but its nice to know that even that $2 coupon is relatively secured within the app you're using … it would be unnerving having multiple people you may not know, knowing you and your personal information. - Male 21 years old I'm personally not overly concerned with mobile wallet. Been using online payment services such as PayPal, EMT, and phone apps before without issues so I'm sure the providers would address all the issues of security before launching such a service…People used to be skeptical about online banking and such, but it's now just common practice. - Male, 32 years old

How to overcome security concerns?

22%

1%

30%

36%

45%

47%

67%

Nothing

If a financial incentive is offered/if it's free

If most, or all of the vendors that I currently have a ‘plastic’ card with migrate to mobile

If most, or all merchants offered this technology to be used at their location

If the government created laws or standards onsecurity in using mobile wallet technology

Offered by a vendor orfinancial institution that I trust

Fraud protection or zero liability

Ways to encourage mobile wallet use (n= 1,004)

Q4 Which of the following would encourage you to use this technology, if any?

Experts – Overcoming security concern

If they want to speed adoption of mobile wallets, they´re going to have to demonstrate users´ security concerns have been addressed. Prove that …

– man in the middle attacks can’t happen

– when my phone is lost or stolen that there is a procedure in place to prevent me being stuck paying charges (zero liability)

– when I walk by someone in the midst of a transaction, that my phone won’t be the one that pays for the other person’s goods

– when the merchant retailer´s mobile wallet technology doesn´t accept my phone, that I won´t have to leave empty handed. That´d be especially problematic (and embarrassing) in a restaurant, for example.

- Dave Chappell, IT/Security Blogger http://securebuzz.ca

Are Canadians Ready for

Mobile Wallet?

We’ll Be Ready Soon!

When does mCommerce go mainstream?

“Mobile wallet payments have to offer significant

advantages over cash, credit card, or debit card in order to

be accepted. This could be point programs or emailed

receipts or actually making the checkout process faster.”

- Greg Lam, Small Business Blogger

http://www.smallbusinessdoer.com/

Loyalty Cards and Coupons are the key to

driving adoption

23%

20%

6%

18%

28%

28%

29%

32%

34%

45%

None of the above

All of the above

Prepaid VISA

Boarding Passes

Membership Cards

Gift Cards

Banking/DEBIT Cards

VISA/Mastercard/…

Coupons

Loyalty Reward Cards…

TOTAL (n= 1004)

Q6 Say you had the following cards in your physical wallet. Which, if any would you ‘migrate’ over to your mobile wallet (meaning you would have it on your smartphone in addition to a physical card)?

“I'm less concerned about the left of my loyalty cards, coupons, etc because most don't have threatening information loaded to them.” - Female, 27 years old

“ Anyone can find out your address by looking you up on Canada 411 and if you have a Facebook account your personal life is out there. So no I'm not concerned about theft of my personal information.” - Female, 53 years old

When does mCommerce Go Mainstream?

• When consumers understand added value

• added efficiency

• new opportunities (mobile only offers)

• Lessons learned from QR codes

• Biggest opportunities with routine behaviours

such as transportation/parking, QSR, everyday

activities

Methodological Learning

• Be Flexible

• Be Specific

• Be Open-minded

• Explore – Test – Confirm – Monitor

Thank You! Questions?

John Crockett, CMRP

Vice President, Digital Innovation & Data Management

john.crockett@environics.ca