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Mobile Payments in Europe: Making it Pay

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Mobile payments is a hot topic across the European mobile communications market. Industry participants are hoping that m-payments services become as popular in Europe as they have been in Japan and …

Mobile payments is a hot topic across the European mobile communications market. Industry participants are hoping that m-payments services become as popular in Europe as they have been in Japan and South Korea and create an additional revenue source in an otherwise maturing industry. There are reasons to be hopeful for significant m-payment progress and adoption in Europe – enabling technology is becoming more widely available, wider and deeper acceptance amongst different stakeholders is evident, and industry-wide alliances are driving standardisation efforts.

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  • ERA A&T |V 1 |R SV/AM |E AM |A
  • Transcript

    • 1. Mobile Payments in Europe: Making it Pay Adrian Drozd, Principal Analyst Information & Communication Technologies September 2010
    • 2. Focus Points
      • Current user adoption status
      • Available and substitute technology options
      • Market structure & dynamics
      • Summary & key messages
    • 3. Current user adoption status
    • 4. Defining m-payments
      • GSMA – Mobile Money Initiative
        • Pay-Buy-Mobile
        • Mobile Money Transfer
        • Mobile Ticketing
        • Mobile Money for the Unbanked
      • Frost & Sullivan Mobile Payment
        • NFC based m-payment
        • Non-NFC based m-payments
        • Remittance
        • Mobile banking
    • 5. M-payment is positioned as a potentially lucrative revenue stream Time Market Volume Low Introduction Growth Maturity Decline High Fixed telephony Mobile communications Enhanced TV services Fixed broad-band Source: Frost & Sullivan Broadcast mobile TV services NB: bubble size approximates revenue accruing to communications service providers Mobile payments (excluding SMS-based) Quad-Play services Mobile broadband Triple Play services
    • 6. M-payment status around the world – some examples Source: Frost & Sullivan
      • France
        • NFC trials
        • Mobile ticketing
      • Italy
        • Mobile ticketing
      • Germany
        • Mobile ticketing
        • NFC trials
      • United Kingdom
        • NFC trials
        • Oyster
      • Bangladesh
        • Mobile remittance
      • China
        • Contactless mobile payment (Non NFC based)
      • The Philippines
        • Mobile banking
      • Japan
        • Contactless payments since 2004
      • Korea
        • Proximity payment services since 2002
      • Kenya
        • Mobile for the Unbanked
      • South Africa
        • Mobile remittance
      • Sub-Saharan Africa
        • Mobile remittance
      • Canada
        • NFC trials
      • USA
        • NFC trials
    • 7. Advanced markets in Asia Pacific show the way
    • 8. Expectations of mass market M-payment adoption yet to materialise in Europe
      • Expectations of mass market adoption yet to materialise in 2010
      • Timelines expected to move another 18-24 months
    • 9. Available and substitute technology options
    • 10. Available technology enabling M-payment services M-payment user SMS based transactions IM based transactions M-Internet based transactions Bluetooth based transactions Contactless Non-NFC based transactions Contactless NFC based transactions Source: Frost & Sullivan
    • 11. There is currently a coexistence of m-payment technologies Low High Introduction Growth Maturity Decline Timeline SMS IM M-Internet Bluetooth NFC Contactless Non-NFC Timeline: 2010 Source: Frost & Sullivan Market readiness
    • 12. Future technology landscape defined by demand for improved security Low High Introduction Growth Maturity Decline Timeline SMS IM M-Internet Bluetooth NFC Contactless Non-NFC Source: Frost & Sullivan Timeline: 2020 Market readiness
    • 13. Market structure & dynamics
    • 14. The eco-system for m-payment remains fragmented
      • Industries involved
        • Financial institutions
        • Retail
        • IT & Communications
        • Technology
      • Types of stakeholders involved
        • Telecommunication service providers
        • Regulators (Financial and Telecoms)
        • Financial institutions
        • Application & Solution providers
        • Merchants
        • Device/POS/Terminal vendors
        • Consumers
      • Types of enabling technology platforms
        • Barcode
        • IM
        • SMS
        • Bluetooth
        • Internet
        • Contactless (such as NFC)
      Source: Frost & Sullivan Complex interactions amongst stakeholders
    • 15. Progress in m-payment can be accelerated through standardisation and achieving interoperability
    • 16. Emerging providers – including mobile operators – seek to meet growing demand from financial institutions Infrastructure and service enablers Payment service providers End user Emerging Traditional Mobile operators Mobile devices Retailers Financial institutions Non bank affiliated payment communities Campuses Public transport Payments IT & Communications infrastructure providers Software applications providers Service providers Hardware providers Source: Frost & Sullivan
    • 17. Key players to watch: mobile money enablers – Monitise
    • 18. Key players to watch: mobile operators
      • Telefonica’s UK mobile operation, O2, has pushed into the financial services space, teaming up with the bank, NatWest, to launch a prepaid debit card.
      • This is the first fee-free prepaid VISA card and has been available to O2 contract and prepaid customers since Q3 2009. The card is designed to help people manage their spending by doing away with overdrafts and providing real time balance updates on the mobile phone.
      • The card can be used anywhere that accepts VISA within the United Kingdom and overseas. It can be used online and the card can be used to withdraw cash from an ATM. These cards can also be personalised to define the appropriate uses available to children aged 13 and above. For example, there are user specified rules that prevent a card to be used on different web locations such as online gambling sites.
      • Mobile operators are taking different routes, including collaboration with financial institutions, to create awareness of alternative payment methods. This push certainly adds to Visa Europe’s optimism of contactless technology adoption in UK. It expects the number of Visa contactless cards in use in the UK to reach 12million by the end of the year.
    • 19. Summary & key messages
    • 20. Summary & key messages Market status There has been progress in m-payment trials and deployments in Europe but mass adoption remains to be seen. Market outlook The outlook for m-payment remains positive because of technology availability, an increased sense of urgency amongst key stakeholders to enable m-payment functions, and a growing number of end users being comfortable with m-payment functions. Market expectations M-payment methods will vary across Europe; the dominance of SMS-based m-payment functions will continue but contactless technology may become important over the medium term.
    • 21. Key success factors Ease of use for the consumer In the absence of any life critical need, m-payment is a new service that requires consumers to change their habits. Convenience of use becomes very critical. Security assurance Frost & Sullivan strongly believes that the predominant m-payment technology will be the one that provides an appropriate security level proportionate to the m-transacton. Standardisation & Interoperability The eco-system requires further development to reduce complexity in interactions amongst stakeholders. Standardisation and efforts of interoperability are crucial to decrease fragmentation in the eco system.
    • 22. Security concerns will remain a key inhibitor Mobile Money Market: Key Market Drivers & Restraints (2010-2015) Security concerns Lack of regulation on mobile transactions Quality of service Lack of collaboration between players High cost of solution Better user awareness Ease of payment Secure network Interoperability across networks and platforms Efficiency and speed of mobile networks Drivers Restraints
    • 23. A €6 billion opportunity by 2013 in Western Europe The market is expected to grow at an average of 25 per cent annually over the next five years
    • 24. Next Steps
      • Request a strategic approach document for a Growth Partnership Service or Growth Consulting Service to support you and your team to accelerate the growth of your company. ( [email_address] ) +44 (0)20 7343 8383
      • Join us at our annual Growth, Innovation and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth
      • ( www.gil-global.com )
      • Register for the next Chairman’s Series on Growth : Driving Innovations (October 5th) ( http:// www.frost.com /growth )
      • Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities ( www.frost.com /news )
    • 25. Your Feedback is Important to Us
      • Growth Forecasts?
      • Competitive Structure?
      • Emerging Trends?
      • Strategic Recommendations?
      • Other?
      Please inform us by taking our survey. What would you like to see from Frost & Sullivan?
    • 26. Find us @Frost_Sullivan on Twitter Frost & Sullivan on Twitter and Facebook Become a fan of Frost & Sullivan on Facebook
    • 27. For Additional Information Joanna Lewandowska Corporate Communications ICT Europe (0048) 22 390 41 46 [email_address] Gustavo Cury Sales manager ICT Europe (0048) 22 244 0864 [email_address] Adrian Drozd Principal Analyst & Research Manager Telecoms Europe (0044) 1865 398 699 [email_address]