Mobile Payment Opportunities in APAC

3,974 views
3,617 views

Published on

Frost & Sullivan Analyst Briefing on Mobile Payment Opportunities in APAC

Published in: Business, Economy & Finance
0 Comments
8 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
3,974
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
236
Comments
0
Likes
8
Embeds 0
No embeds

No notes for slide
  • Japan and South Korea lead the region in mobile payments adoption. In comparison, despite the high mobile penetrations, markets such as Hong Kong, Singapore and Taiwan have shown little adoption so far. The relatively less developed mobile market such as China, India and Indonesia and the Philippines are showing rapid take-up mainly driven by bill payments and m-banking services such as remittance.
  • Japan and South Korea lead the region in mobile payments adoption. In comparison, despite the high mobile penetrations, markets such as Hong Kong, Singapore and Taiwan have shown little adoption so far. The relatively less developed mobile market such as China, India and Indonesia and the Philippines are showing rapid take-up mainly driven by bill payments and m-banking services such as remittance.
  • Japan and South Korea lead the region in mobile payments adoption. In comparison, despite the high mobile penetrations, markets such as Hong Kong, Singapore and Taiwan have shown little adoption so far. The relatively less developed mobile market such as China, India and Indonesia and the Philippines are showing rapid take-up mainly driven by bill payments and m-banking services such as remittance.
  • Japan and South Korea lead the region in mobile payments adoption. In comparison, despite the high mobile penetrations, markets such as Hong Kong, Singapore and Taiwan have shown little adoption so far. The relatively less developed mobile market such as China, India and Indonesia and the Philippines are showing rapid take-up mainly driven by bill payments and m-banking services such as remittance.
  • The Asia Pacific M-payments market, which registered revenues of almost $2 billion in 2010, is expected to exceed $3.63 billion by 2015 (CAGR of 14.8%),, driven by technology innovations, various operator initiatives and the rising consumer demand in both the developed and emerging markets. Revenue figures does not represent total transaction value, but only service provider revenue generated from m-payments
  • Japan and South Korea lead the region in mobile payments adoption. In comparison, despite the high mobile penetrations, markets such as Hong Kong, Singapore and Taiwan have shown little adoption so far. The relatively less developed mobile market such as China, India and Indonesia and the Philippines are showing rapid take-up mainly driven by bill payments and m-banking services such as remittance.
  • SMS/USSD accounted for almost 78% of m-payment revenues in 2010. Driven by ease of use and ubiquity, SMS will continue to remain as the dominant mobile payment channel Contactless Payments, which accounted for 14% of m-payment transactions in 2010, is expected to increase this contribution to 23% by 2015. This particular channel is largely going to be driven by the more technology advanced markets where take up of electronic payment (e.g. smart cards) is already high WAP/Browser-based payments will remain to be a small contributor in the longer term. A major constraint impeding adoption of the WAP channel, especially in the developing and emerging markets, is that many users still perceive mobile internet as more expensive and remain concerned about high data charges.
  • Japan and South Korea lead the region in mobile payments adoption. In comparison, despite the high mobile penetrations, markets such as Hong Kong, Singapore and Taiwan have shown little adoption so far. The relatively less developed mobile market such as China, India and Indonesia and the Philippines are showing rapid take-up mainly driven by bill payments and m-banking services such as remittance.
  • Mobile Payment Opportunities in APAC

    1. 1. Mobile Payment Opportunities in APAC Jayesh Easwaramony VP - ICT Practice, Frost & Sullivan
    2. 2. Key Issues APAC Snapshot Agenda Contents Overview 1 2 3
    3. 3. Rise of the smartphone and mobile internet Mobile internet revolution is underway 1.38 Billion New Handsets Sold in 2010 1.06 Billion were camera phones 490 million had premium input method (Qwerty/Touch Screen/Hybrid) 298 million were smart phones 2 Billion Internet Users 31% 20% 49% 1.6 bn Mobile internet users 2.2 Billion with a Banking account =
    4. 4. .. Is impacting all aspects of m-finance M-Banking apps <ul><li>Mbanking involves typical banking interactions over mobile medium like account Balance, previous transaction, payment of mobile bills, </li></ul>mPayments <ul><li>Mpayments can be further broken up into the following categories </li></ul><ul><ul><li>Account/ Wallet linked payments </li></ul></ul><ul><ul><ul><li>M-commerce: </li></ul></ul></ul><ul><ul><ul><li>Bill payments </li></ul></ul></ul><ul><ul><li>Proximity payment : very small amount involving contactless solution ( like NFC ) for transactions like Parking, retail. </li></ul></ul><ul><ul><li>May involve stored value or may be linked to a bank. </li></ul></ul>M-money + transfers <ul><ul><li>Unbanked transactions : Transactions involving users who do not have a bank account. </li></ul></ul><ul><ul><li>Micropayment enablement </li></ul></ul><ul><ul><li>Money transfers </li></ul></ul>Implementation complexity Linkage to bank account M-payments is one part of the m-finance landscape
    5. 5. Key drivers of m-payments Greater collaboration is driving the m-payment market Mobile usage behaviour M-payments gets ‘platformized’ Banks move beyond wait and watch – experience vs enablement Credit cards – capture of smaller ticket size Increased commitment to NFC – phones, Wafer based and SD card based NFC Various surveys show > 40% of users want to try phone as a payment mechanism
    6. 6. Evolution of mobile payment Phases of evolution Business Models/Ecosystem Technology Pre 2007 2008 - 2012 2012 -2015 Triggers <ul><li>Business models driven largely by operators with specific standards </li></ul><ul><li>Japan and South Korea </li></ul><ul><li>Less than 10% 3G penetration </li></ul><ul><li>Early exploration of the technology </li></ul><ul><li>Business models evolving – strong establishment of alliances and consortiums </li></ul><ul><li>Large number of NFC based trials </li></ul><ul><li>Relative maturity of mobile wallet based approaches </li></ul><ul><li>> 30% </li></ul><ul><li>Standardized business models with clear revenue share with ecosystem players </li></ul><ul><li>Expansion and integration with traditional payment processing methods </li></ul>Embryonic Active Experimentation Maturing >50%
    7. 7. M-payment Business Model Operator driven models FI driven models 3 rd party driven models Collaboration Model <ul><ul><li>Mobile operator independently deploys mobile payment applications </li></ul></ul><ul><ul><li>Apps may support a prepaid stored value model or the charges may be integrated into the customer’s monthly bill </li></ul></ul><ul><ul><li>A bank deploys mobile payment applications or devices to customers, ensures merchants have the required point-of-sale (POS) </li></ul></ul><ul><ul><li>Payments are processed over the existing financial networks </li></ul></ul><ul><ul><li>An independent peer-to-peer service provider provides secure mobile payments between customers or between customers and merchants </li></ul></ul><ul><ul><li>Involves collaboration among banks, mobile operators and other stakeholders in the mobile payments value chain </li></ul></ul><ul><ul><ul><li>Consortium Led </li></ul></ul></ul><ul><ul><ul><li>Alliance Led </li></ul></ul></ul>
    8. 8. Operator-Centric Model: Early ventures <ul><li>SMART Padala (Philippines) </li></ul><ul><li>World’s first International cash remittance service through text; offered since 2004; </li></ul><ul><li>Remittances are charged a 1% commission; considerably less expensive </li></ul><ul><li>Available in more than 19 countries through its SMART Remittance Partners </li></ul><ul><li>Also offers a domestic money transfer, To en-cash, the receiver needs to go to the nearest Smart Padala Center </li></ul>SMART Remittance Partners <ul><li>Japan </li></ul><ul><li>Proprietary technology Felica – owned jointly by Sony, NTT and Japan Railways </li></ul><ul><li>Combination of payments with loyalty discounts - with the Osaifu-Keitai service </li></ul><ul><li>Extended to application platforms in 2008 </li></ul><ul><li>Over 50% of subscribers have access to Felica handsets - > 10 mn active users </li></ul><ul><li>Korea </li></ul><ul><li>Moneta services launched by SKT in 2005 as mobile wallet ~ 6 mn users </li></ul><ul><li>Launch of T-cash – as proximity payment in 2009 </li></ul><ul><li>Unique case of telecom operators either acquiring credit card cos (SKT) </li></ul><ul><li>HanaSK ( Hana Bank with SKT Telecom) and BC Card with Korea Telecom </li></ul>
    9. 9. Non-operator Model <ul><li>Mobile Money (Malaysia) </li></ul><ul><li>Allows registered users to pay for goods and services with a 6-digit security PIN via SMS. </li></ul><ul><li>Users can place online orders without the need to disclose their credit card information </li></ul><ul><li>Users must have either a savings, current or credit card account with participating banks </li></ul><ul><li>It functions like a credit card if a shopper applies for a &quot;Pay by Mobile Phone&quot; credit card account (eg Hong Leong Mobile Credit Card). The user will be billed by the bank accordingly at month's end </li></ul><ul><li>In addition, it can also function as a debit card if it is tied to the user’s savings or current account. The amount will be deducted from the user’s account upon successful transaction </li></ul>
    10. 10. Collaboration Model <ul><li>mChek (India) </li></ul><ul><li>Links users mobile phones to their Visa/MasterCard credit or debit card </li></ul><ul><li>Users can pay for their mobile bills, flight tickets, insurance premiums, movie tickets, utility bill payments, and so on </li></ul><ul><li>More than 250,000 users with 60,000 transacting customers </li></ul><ul><li>Processed over $2.1 million (100 Million Rupees) of mobile payments since its launch in September 2007 </li></ul><ul><li>Service now live in India with Bharti Airtel, Tata Indicom and Tata Docomo, and in Sri Lanka with Dialog Telekom </li></ul><ul><li>Achieved the Payment Card Industry's Data Security Standards 1.2 - a standard to curb debit and credit card fraud </li></ul><ul><li>Certified by Western Union as a Mobile Money Transfer Vendor </li></ul>
    11. 11. Collaboration Models <ul><li>Barclays with Orange </li></ul><ul><li>Shoppers will be able to make small payments using mobile phones if they have Barclays, Orange and Samsung Tocco Lite phone </li></ul><ul><li>Initially, Mobile payments upto 15 pounds at 50,000 retail outlets </li></ul><ul><li>Quick Tap payments – let users debit  100 pounds from Barclays and payments will be processed by Mastercard </li></ul><ul><li>Quick Tap payments can be done by SIM Card and amounts above 15 pounds will have PIN numbers for additional security </li></ul>UK USA <ul><li>ISIS JV </li></ul><ul><li>Created by the 3 operators AT&T , Verizon Wireless ; Sprint being wooed </li></ul><ul><li>NFC based solution </li></ul><ul><li>ISIS wants to create a mobile wallet by 2012 and wants Google and Apple to partner with them </li></ul>
    12. 12. Key Issues APAC Snapshot Agenda Contents Overview 1 2 3
    13. 13. Asia Pacific Revenue Forecasts Source: Frost & Sullivan Mobile Payment Market: Revenue Forecasts (Asia Pacific), 2006-2015 Note: These revenues denote revenues accrued to operators only
    14. 14. Asia Pacific Revenue Snapshot *Size of bubbles compare revenue size Source: Frost & Sullivan Mobile Payment Market: Revenue Market Snapshot (Asia Pacific), 2010 Note: These revenues denote revenues accrued to operators only
    15. 15. Mobile Payment Channels <ul><li>NFC to exhibit most growth </li></ul><ul><li>SMS will continue to remain as the dominant mobile payment channel </li></ul><ul><li>WAP/Browser-based payments will remain to be a small contributor </li></ul>Source: Frost & Sullivan
    16. 16. Key Issues APAC Snapshot Agenda Contents Overview 1 2 3
    17. 17. Complex value chain Operators Purchase Media Technology Provider Payment Gateway Fulfillment Direct Debit / Credit Stored Value Card (Prepaid) Direct Mobile Deduction Specific M-Commerce Sites Applications Website access on Mobile Gateway providers <ul><li>MChek </li></ul><ul><li>Obopay </li></ul><ul><li>PayTM </li></ul>Mobile Payment Platform Providers <ul><li>VISA </li></ul><ul><li>MASTERCARD </li></ul><ul><li>AMERICAN EXPRESS </li></ul>IVR Service Providers Mobile Payment Fulfillers <ul><li>Mchek </li></ul><ul><li>Obopay </li></ul>Financial institutions Others <ul><li>Complexity of value chain needs a co-opetitive models </li></ul><ul><ul><li>Customer ownership – operator clinging on </li></ul></ul><ul><ul><li>Payment infrastructure – remote vs proximity </li></ul></ul><ul><ul><li>End to end SLA, liability, risk, security and privacy management – TSM? </li></ul></ul><ul><ul><li>Co- branding vs revenue sharing – banks see marginal gains </li></ul></ul><ul><ul><li>Merchants still unsure </li></ul></ul><ul><ul><li>P2P models interesting for mobile wallet but not for proximity </li></ul></ul>
    18. 18. Replication is tough – the case of m-pesa Kenya Tanzania Adoption Market share of MNO Agent network Platform Others Run-away success ~ 7 mn users Limited success < 1 mn users Safaricom – 79% Vodacom– 79% Re-use of existing airtime dealers Different- single shop agents SIM Toolkit USSD Higher GDP Presence of national ID Higher pop density Lower GDP Absence of national ID Lower pop density
    19. 19. Integrated security and risk management Customer Education Mobile Security Compliance Forensics and Event Management End to end management Application-centric Security
    20. 20. Conclusion <ul><li>M-payment delivers value to all players in the ecosystem </li></ul><ul><li>However consumers will be slow to adopt ; cash and stored value card have strong value propositions </li></ul><ul><li>Technology is not the answer , understanding the customer is </li></ul><ul><li>Strong co-operation between cross-industry players is essential </li></ul><ul><li>Contactless payment a reality; NFC to drive the next wave of growth </li></ul><ul><li>Location assisted + loyalty – to assist m-payments </li></ul><ul><li>Proactive government for standardization and enablement </li></ul><ul><li>Innovation in business models for unbanked and emerging markets </li></ul>
    21. 21. http://twitter.com/frost_sullivan Follow Frost & Sullivan on Social Media! http://www.facebook.com/pages/Frost-Sullivan/249995031751?ref=ts http://www.linkedin.com/companies/4506 http://www.slideshare.net/FrostandSullivan
    22. 22. For Additional Information Donna Jeremiah Corporate Communications Asia Pacific +603 6204 5832 [email_address] Carrie Low Corporate Communications Asia Pacific +603 6204 5910 [email_address] Jayesh Easwaramony Vice President ICT +65 6890 0942 [email_address] Jessie Loh Corporate Communications Asia Pacific +65 6890 0942 [email_address]

    ×