The Trusted Service Manager -
    Pivot Point in Mobile Payments
     Near Term Opportunities for Banks




              ...
NACHA Morning Announcements
•   Please turn off all cell phones or mobile devices
•   All conference attendees will have f...
Agenda



• Definition and types of Mobile Payments

• How the Mobile Payments space is developing

• What’s changing - th...
A Working Definition for Mobile Payments




• Digital exchange of value at a point of sale

• At least one party using a ...
M-Pesa is a Widely Used Premium SMS Solution

                                          •      Popular mobile solution in ...
Paypal Uses WAP (Wireless Application Protocol)
Technology in its New Mobile Solution




                                ...
mFoundry Offers a 2-D Barcode Payment Solution

•   Merchant signs up and provisions POS scanners.

•   Consumers sign up ...
NFC is the Most Widely Recognized Mobile Payment
Initiation Method

                   •   NFC or “Near Field Communicatio...
Payment Methods


    • The method of payment is not necessarily                      General Use
      linked to the mean...
Hmmmm – Interesting Perspective




                                        BTW – You can still donate $10 to
            ...
A 2007 GSMA Whitepaper Defines 9 Entities With a Stake
 in NFC Mobile Payments – The Many-to-Many Problem



             ...
The Many-to-Many Problem in Developed Markets

        If the Bank market is segmented                        And the Mobi...
Collaboration Between Two Participants Yields Results,
 but a Broader Solution is Required for Success

             The j...
The Role of a Trusted Service Manager
      - The TSM role can exist between two parties or many
                         ...
The European Payments Council and the GSMA are
     Collaborating on TSM Business Component Definition

                  ...
The TSM Role Becomes a Coordinating Point for the
Ecosystem, Addressing the Complexity



                                ...
Developing Economies Have Fewer Dominant Players -
 Banks and Telecoms, So the TSM can Occur by Default



               ...
There is a Debate Forming Globally About the Form
 That a TSM Should Take in a Given Market




     Trusted Service Manag...
An Idea of How the Mobile Payments Market Could Evolve


2010                 2011                 2012                  2...
As Mobile Payments Emerge, Banks Need to Anticipate
 the Challenge to Their Payments Business




                        ...
The Intersection Between Identity from the Bank and the
 Mobile Operator’s Point of View is Critical




                 ...
Key Value Points of Mobile Technology

The key to understanding mobile technology is to comprehend the power that
this uni...
Banks Have the Opportunity to Surround Future Mobile
 Payment Offerings with Value Now
         - Preemptively protecting ...
Leverage the Intelligence of the Device to Enhance the
 Experience
          - The device does not have to transact to int...
Wells and Visa are Leveraging Alerts




25                        28 April 2010   © 2010 Charles Wickenden cwickenden@gma...
Orange Barclaycard Mashup




26                     28 April 2010   © 2010 Charles Wickenden cwickenden@gmail.com
Leverage the Intelligence of the Device to Enhance
 the Experience
         - The device does not have to transact to inte...
Create Value from the Mobile Device’s Locational
 Awareness




                          Deliver Transaction
            ...
Mobile Technology is Already Changing the Way We
 Shop

                                     Customer starts web based
  C...
Banks Can Use Locational Information to Improve
 Loyalty and Cross-sell




                                         Speci...
Mobile Technology used to Track Bank Robbers




                                        Wouldn’t it just be easier to tra...
Create Value from the Mobile Device’s Locational
 Awareness




                                       Locational Aware


...
What Value can be Delivered by Combining Consumer
 Interaction, Location and Analytics?




                         Deliv...
Shortcuts.com is a New Program to put CPG Coupons
 on a Card – Easily Translates to Other Devices




34                  ...
Blippy – Customer Insight Turned Sideways




                                        This is an application from one of t...
Bundle.com Examines Comparative Spending Data – and
 There’s iPhone App




36                     28 April 2010      © 20...
Mint.com Helps Consumers Manage Spending Too –
 and There’s an App . . .




37                     28 April 2010     © 20...
What Value can be Delivered by Combining Consumer
 Interaction, Location and Analytics?




                              ...
Smart Phones are Expandable – How Can That Change
 the Equation?




                         Deliver Transaction
        ...
Devices That Combine Mobile Technology and
 Merchant Acceptance Have Debuted Recently



     iPhone credit card swipe war...
Tyfone – Ingenious NFC Workaround




 Tyfone creates value by providing a turnkey infrastructure
 (software on the phone,...
Biometric Authentication


 At a minimum, any mobile phone can do
 some level of biometric voice authentication.
         ...
Smart Phones are Expandable – How can That Change
 the Equation?




                                    Mobile Card
     ...
A Further Suggestion for Your Reading List




                                         One of the best articles that look...
Thank You




                             Chip Wickenden
                             cwickenden@gmail.com
              ...
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Chip Wickenden Trusted Service Manager Pivot Point In Mobile Payments Final

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Chip Wickenden Trusted Service Manager Pivot Point In Mobile Payments Final

  1. 1. The Trusted Service Manager - Pivot Point in Mobile Payments Near Term Opportunities for Banks Chip Wickenden cwickenden@gmail.com 1 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  2. 2. NACHA Morning Announcements • Please turn off all cell phones or mobile devices • All conference attendees will have free access to PAYMENTS 2010 conference session recordings. Attendees that registered onsite will receive details to access the session recordings within 10 days. • Should you wish to purchase a CD-ROM, a special conference rate is offered to all conference attendees. • Most of the education sessions at the conference can be counted towards your continuing AAP accreditation. The AAP Documentation of Attendance can be found in the onsite guide. • Please take a moment to complete session evaluations! Each evening attendees will receive an email link to access session evaluations that are offered each day. Attendees are automatically entered into a daily drawing for a chance to win a $50 gift card. • We hope to see you all next year at PAYMENTS 2011 in Austin, Texas April 3-6, 2011 • Thanks to all of our track sponsors throughout the conference! 2 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  3. 3. Agenda • Definition and types of Mobile Payments • How the Mobile Payments space is developing • What’s changing - the Trusted Service Manager • What banks need to do now 3 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  4. 4. A Working Definition for Mobile Payments • Digital exchange of value at a point of sale • At least one party using a mobile device, such as a mobile phone, smartphone or PDA • Excludes web based purchases using a mobile device 4 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  5. 5. M-Pesa is a Widely Used Premium SMS Solution • Popular mobile solution in Kenya developed by the leading mobile network operator, Safaricom, a Vodafone subsidiary. • Outgrowth of an informal remittance solution based on transferable and refundable mobile minutes. • Solution includes P2P, Point of Sale, Remittance, Bill Payment, Mobile top-up, ATM withdrawal • Customer downloads a simple applet to pay • Inputs receiver’s mobile phone number and amount • Receiver can present the SMS confirmation to an M-Pesa agent for cash – over 10,000 agents ~40% of Adult Population in Kenya 5 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  6. 6. Paypal Uses WAP (Wireless Application Protocol) Technology in its New Mobile Solution * The iPhone uses a similar technical stack that is proprietary to Apple Wireless Application Environment • Extends a very popular notional payment scheme Wireless Session Protocol into the mobile space Wireless Transaction Protocol • Primarily focused on P2P, not necessarily Wireless Transport Layer Security WAP merchant acceptance Wireless Datagram Protocol • Also an SMS solution available ***Any Wireless Data Network*** 6 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  7. 7. mFoundry Offers a 2-D Barcode Payment Solution • Merchant signs up and provisions POS scanners. • Consumers sign up and download applet to their mobile device • At the point of sale, the consumer starts the applet, a bar code appears and is scanned to effect payment. • Linked with value added services to enhance the customer experience • Key Value Point – No POS hardware upgrade necessary 7 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  8. 8. NFC is the Most Widely Recognized Mobile Payment Initiation Method • NFC or “Near Field Communication” transaction technology is based on standards developed for smart cards and for contactless cards (primarily ISO 14443). The technology can be built into a simple card, token, sticker, or integrated into a another device, such as a mobile phone. • NFC uses Radio Frequency ID chips to communicate the unique identifiers and other information necessary to do a transaction. • Integration into a mobile phone can be done through the handset manufacturer, or through a specialized SD card used in an expansion slot, or integrated into the SIM card itself. Some of the Standards Bodies involved in NFC: ETSI / SCP : Interface between the SIM card and the NFC chipset. GlobalPlatform : Multi-application architecture of the secure element. EMVCo : Impacts on the EMV payment applications NFC Forum : Ensure interoperability GSMA : Common global approach to using NFC technology ISO/IEC/ ECMA : Transport, NFC Interface andProtocol 8 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  9. 9. Payment Methods • The method of payment is not necessarily General Use linked to the means of effecting payment Payment Methods • The complexity of implementation for a • Franchise extends into mobile • Risks and cost of funds are well given payment method is directly related understood and managed to the level of acceptance • Broad merchant acceptance • Franchise may go beyond Closed Loop mobile Notional Account • Risk is managed based on program specifics • Program carries cost of funds • Merchants must subscribe • Simple and Easy Bill Through Carrier • Carrier holds risk & cost of funds • Merchants must subscribe 9 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  10. 10. Hmmmm – Interesting Perspective BTW – You can still donate $10 to the Red Cross Haiti relief fund by sending a text to “90999” 10 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  11. 11. A 2007 GSMA Whitepaper Defines 9 Entities With a Stake in NFC Mobile Payments – The Many-to-Many Problem Acquiring Issuing Bank Bank Payment Merchant Consumer Network POS Mobile Supplier Operator Handset Mfr SIM/UICC Mfr This means that in order for a mobile transaction to occur between a merchant and a consumer 7 other entities need to either coordinate their actions, and have a financial reason to act, or have their needs addressed in some other fashion. This complexity is magnified by multiple real entities for each logical entity represented here. 11 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  12. 12. The Many-to-Many Problem in Developed Markets If the Bank market is segmented And the Mobile market is segmented like this: like this: Mobile Network Market Share Bank Market Share The dynamics make it almost impossible to form a critical mass of market share 12 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  13. 13. Collaboration Between Two Participants Yields Results, but a Broader Solution is Required for Success The joint services offered through such binary relationships are typically governed by a Service Manager function. Mobile Network Market Share Bank Market Share The Trusted Service Manager has been developed to identify the common governing entity to support market wide adoption. 13 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  14. 14. The Role of a Trusted Service Manager - The TSM role can exist between two parties or many Consumer Services/Billing Telecom services Bank Carrier Over-the-air Bank Management Carrier Bank Trusted Service Carrier Service Manager Service Negotiation & Negotiation & Provisioning Provisioning Entity Validation, Security & Permissioning Merchant Airline • Intermediation between banks, carriers and other service providers App Provider • Cryptographic key management • Application management Transaction processing is typically handled through traditional methods not through the TSM • Value-added services 14 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  15. 15. The European Payments Council and the GSMA are Collaborating on TSM Business Component Definition Mobile Network Market Share Bank Market Share The industry is coalescing around EPC - GSMA Trusted Service “Trusted Services Manager” as the Management Requirements and Specifications European Payments title for this entity and defining roles Council & GSMA, Jan 2010 and options Whitepaper that defines specific functions and requirements for each role in the ecosystem 15 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  16. 16. The TSM Role Becomes a Coordinating Point for the Ecosystem, Addressing the Complexity Payment Network Acquiring Issuing Banks Banks Trusted Merchants Service Consumers Manager POS Mobile Suppliers Operators Handset Mfrs SIM/UICC Mfrs 16 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  17. 17. Developing Economies Have Fewer Dominant Players - Banks and Telecoms, So the TSM can Occur by Default Mobile Network Market Share Bank Market Share 17 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  18. 18. There is a Debate Forming Globally About the Form That a TSM Should Take in a Given Market Trusted Service Manager - The Key to Portals and Rails: Coordinating Roles Accelerating Mobile Payments in Mobile Payments- Who Will We First Data Corporation, May 2009 Trust? Sept 2009, Federal Reserve Whitepaper that discusses market acceleration Bank of Atlanta and the revenue opportunities in the TSM role Whitepaper that discusses appropriate entities to fulfill the TSM role The central question is whether a TSM should be a for-profit entity or a not-for-profit entity. There is no single “right answer” – it will be different based on economic, social, regulatory and competitive factors. There may also be multiple solutions in a given market. 18 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  19. 19. An Idea of How the Mobile Payments Market Could Evolve 2010 2011 2012 2013 2014 TSM Deployment, Rationalization Developed Economy Pilots, PoCs Developing Economy Production Deployments – Telco & Bank Developed Economy Telco Production Deployments Developed Economy Bank Production Deployments Market Disruptors, Value Add 3rd party Provider Deployments 19 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  20. 20. As Mobile Payments Emerge, Banks Need to Anticipate the Challenge to Their Payments Business Mobile Payments While the market is adjusting to the emergence of Trusted Service Managers and banks are determining their relative position in that regard, there are a number of tactical steps that can be taken to add value and strengthen banks’ market position. 20 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  21. 21. The Intersection Between Identity from the Bank and the Mobile Operator’s Point of View is Critical Broader View of the Customer ber Ac N um co u one nt Nu Ph Any stakeholder interested in participating m le in mobile payments should put together a be obi business program to associate and r M validate these two data elements. As well as a foundation for mobile payments, capturing this intersection provides a Bank Identity foundation for delivering related services Mobile Identity and maintaining market position. 21 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  22. 22. Key Value Points of Mobile Technology The key to understanding mobile technology is to comprehend the power that this unique combination feature and function delivers Mobile Technology is: • Networked – Mobile devices are an absolute model of cloud computing delivering as much functionality as needed at the point of service • Intelligent – Mobile devices carry their own storage and processing capability as well as being connected to the cloud • Locationally Aware – Mobile phones provide locational information which can be a powerful tool for customer insight and marketing, as well as risk management • Versatile – At a minimum, mobile devices have keypad and voice input and screen and sound output. Cameras and expansion capability offer even more flexibility 22 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  23. 23. Banks Have the Opportunity to Surround Future Mobile Payment Offerings with Value Now - Preemptively protecting the franchise in payments Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value - Let’s look at some of the opportunities and ideas 23 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  24. 24. Leverage the Intelligence of the Device to Enhance the Experience - The device does not have to transact to interact Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value 24 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  25. 25. Wells and Visa are Leveraging Alerts 25 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  26. 26. Orange Barclaycard Mashup 26 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  27. 27. Leverage the Intelligence of the Device to Enhance the Experience - The device does not have to transact to interact Transaction Alerts Threshold Alerts Large Purchase Validation Spending Mobile Payments Transaction Blocking 27 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  28. 28. Create Value from the Mobile Device’s Locational Awareness Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value 28 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  29. 29. Mobile Technology is Already Changing the Way We Shop Customer starts web based Context aware ads sent to research on a given product, Customer transitions from groups of people based on either through browsing or by advertising to interacting with matching between their scanning a barcode a product specialist on the profiles and context of the ads mobile device Customer continues research through social media – blogs, rating engines, friends and advisors Customer has agreed to locationally aware advertising which triggers offers based on lingering in a given position Analytics Easier to examine the item in the store and then buy in on line? Shopping can be mixed Retail search solution mode. identifies best product Checkout can happen matches with locational anywhere – which can information completely change the front of the store concept 29 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  30. 30. Banks Can Use Locational Information to Improve Loyalty and Cross-sell Special Due to size and rates just complexity, for this dealership! consumers often MyBank shop separately for mortgages and auto loans . 30 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  31. 31. Mobile Technology used to Track Bank Robbers Wouldn’t it just be easier to track the robber’s cell phone? 31 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  32. 32. Create Value from the Mobile Device’s Locational Awareness Locational Aware Offers for Locations Fraud Alerts Location Specific Deliver Insight & Couponing Mobile Payments Location Based Customer Insight 32 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  33. 33. What Value can be Delivered by Combining Consumer Interaction, Location and Analytics? Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value 33 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  34. 34. Shortcuts.com is a New Program to put CPG Coupons on a Card – Easily Translates to Other Devices 34 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  35. 35. Blippy – Customer Insight Turned Sideways This is an application from one of the founders of Twitter that lets your friends follow what you are buying. . . . However recent investigations have found some security flaws, even by social media standards. 35 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  36. 36. Bundle.com Examines Comparative Spending Data – and There’s iPhone App 36 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  37. 37. Mint.com Helps Consumers Manage Spending Too – and There’s an App . . . 37 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  38. 38. What Value can be Delivered by Combining Consumer Interaction, Location and Analytics? Tools for Financial Management Focused Spending Couponing Interactive Socially Mobile Payments Shopping Lists & Budgets 38 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  39. 39. Smart Phones are Expandable – How Can That Change the Equation? Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value 39 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  40. 40. Devices That Combine Mobile Technology and Merchant Acceptance Have Debuted Recently iPhone credit card swipe war heats up - This has the potential to change the merchant landscape significantly from a customer profile, risk and acquiring perspective 40 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  41. 41. Tyfone – Ingenious NFC Workaround Tyfone creates value by providing a turnkey infrastructure (software on the phone, middleware platform, and a memory card based token for the secure element/contactless payments/NFC). Tyfone’s patented technology combines a smart card chip (secure element), an NFC chip, and a miniature antenna provisioned to a memory card that works in any standard memory card slot. This comprehensive solution enables device independence in an issuer-centric model allowing the issuer to control both the channel and customer. 41 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  42. 42. Biometric Authentication At a minimum, any mobile phone can do some level of biometric voice authentication. • All Phones have a microphone Voice match • Smartphones have cameras • Fingerprint readers can be added Handset Handset Validation Server Biometric Biometric Applet Applet Result Requests Speech Requests Speech Facial recognition Result Matches? Matches? Input Y/N Y/N Input Stored Stored Bio print Bio print Self contained Network based Fingerprint 42 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  43. 43. Smart Phones are Expandable – How can That Change the Equation? Mobile Card Acceptance Authentication Work-Around Biometric For NFC Mobile Payments Shopping Lists & Budgets 43 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  44. 44. A Further Suggestion for Your Reading List One of the best articles that looks at the broad view of where money and the world of payments is headed 44 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  45. 45. Thank You Chip Wickenden cwickenden@gmail.com Office: 1-904-387-0106 Mobile: 1-904-422-1321 http://www.linkedin.com/in/chipwickenden 45 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com

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