Mobile Payments 2010 2014 - Portio Research Ltd
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Mobile Payments 2010 2014 - Portio Research Ltd

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First edition of our annual report looking at the mobile payment industry and the penetration of NFC-enabled handsets

First edition of our annual report looking at the mobile payment industry and the penetration of NFC-enabled handsets

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    Mobile Payments 2010 2014 - Portio Research Ltd Mobile Payments 2010 2014 - Portio Research Ltd Document Transcript

    • Mobile Payments 2010-2014 © 2010, Portio Research. All Rights Reserved 1
    • Mobile Payments 2010-2014 Portio Research Limited. Published March 2010 by Portio Research Limited © Copyright 2010. www.portioresearch.com info@portioresearch.com Disclaimer and Legal Notices Disclaimer Every care has been taken in the preparation of this study to ensure that the information contained herein is accurate, factual and correct to the best of our knowledge, at time of publishing. All opinions, suppositions, estimates and recommendations included in this document are solely the opinions of the authors unless otherwise stated. Portio Research Limited accepts no liability for any loss or damage or unforeseen consequential loss or damage arising from the use of the information contained within this document. The opinions, suppositions, estimates and recommendations within this document cannot be guaranteed, and readers use this information at their own risk. The information published in this document is subject to change without notice at any time, and Portio Research Limited accepts no liability or obligation to inform the reader of such changes. Portio Research Limited do not promote or endorse any specific companies or products, the views and opinions we express in this document are wholly our own assessments, and independent from any external interest or influence. Many terms and phrases and trade names used in this document are proprietary and Portio Research Limited recognises and acknowledges that all trademarks are copyright, belonging to their respective owners. Where possible, this document accords such terms and phrases and trade names to their respective owners. All Rights Reserved. No part of this document can be copied, shared, redistributed, transmitted, displayed in the public domain, stored or displayed on any internal or external company or private network or electronic retrieval system, nor reprinted, republished or reconstituted in any way without the express written permission of the publisher. Forwarding of this electronic document without the correct legal licence is theft. It’s unethical, immoral and against the law. If you have any questions about the legal licence conditions under which this document has been distributed, please contact Portio Research on info@portioresearch.com If you did not buy this document and a colleague or associate has sent it to you, do not assume you are legally entitled to read it, it is your responsibility to ensure you have the correct legal licence to read this document. 2 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Contents Introduction ..............................................................................................................................8  Worldwide Mobile Market ..................................................................................................................... 8  Worldwide Mobile Payments Market .................................................................................................... 8  Mobile Payment Users ...................................................................................................................... 8  Mobile Payment Volumes................................................................................................................ 10  Market Size ..................................................................................................................................... 10  Mobile Money..........................................................................................................................13  Objective ............................................................................................................................................ 13  Overview ............................................................................................................................................ 13  Mobile Payments ....................................................................................................................16  Overview ............................................................................................................................................ 16  Case Studies – Mobile Payments ...................................................................................................... 25  Japan .............................................................................................................................................. 25  The UK ............................................................................................................................................ 29  The US ............................................................................................................................................ 31  Drivers ............................................................................................................................................... 33  Challenges ......................................................................................................................................... 35  Value Chain ....................................................................................................................................... 38  Business Models ................................................................................................................................ 40  Bank-centric Model.......................................................................................................................... 40  Collaboration Model ........................................................................................................................ 43  Operator-centric Model.................................................................................................................... 46  Peer-to-Peer Model ......................................................................................................................... 49  Key Players ........................................................................................................................................ 53  Safaricom Kenya – M-PESA ........................................................................................................... 53  NTT DOCOMO Japan – DCMX ...................................................................................................... 55  Globe Telecom Philippines – GCASH ............................................................................................. 56  mChek ............................................................................................................................................. 57  Paybox ............................................................................................................................................ 58  paythru ............................................................................................................................................ 59  Mobile In-application Payments ...........................................................................................61  Overview ............................................................................................................................................ 61  Revenue Potential.............................................................................................................................. 61  Operators ........................................................................................................................................ 61  Application Developers.................................................................................................................... 61  Handset Manufacturers ................................................................................................................... 62  In-app payment mechanism ............................................................................................................... 62  Business Model.................................................................................................................................. 62  Case Study: Apple App Store ............................................................................................................ 63  Mobile Ticketing and Coupons .............................................................................................67  Overview ............................................................................................................................................ 67  Mobile Ticketing ................................................................................................................................. 67  Mobile Coupons ................................................................................................................................. 68  Drivers and Inhibitors ......................................................................................................................... 68  Key Players – Mobile Ticketing and Coupons .................................................................................... 69  Mobiqa ............................................................................................................................................ 69  NeoMedia Technologies.................................................................................................................. 71  Cellfire ............................................................................................................................................. 73  Market Size ........................................................................................................................................ 74  Value Chain – Mobile Ticketing.......................................................................................................... 75  Business Models – Mobile Ticketing .................................................................................................. 77  Model I ............................................................................................................................................ 77  Model II ........................................................................................................................................... 78  Value Chain – Mobile Coupons ......................................................................................................... 79  © 2010, Portio Research. All Rights Reserved 3
    • Mobile Payments 2010-2014 Business Model – Mobile Coupons .................................................................................................... 80  Case study ......................................................................................................................................... 81  Mobile Ticketing – Go North East .................................................................................................... 81  Mobile Coupons – Planet Funk ....................................................................................................... 83  Opportunities and Benefits for Stakeholders ...................................................................................... 84  Conclusion ..............................................................................................................................86  Appendices .............................................................................................................................90  Glossary .......................................................................................................................................... 91  Portio Research Classifications ..................................................................................................... 103  Companies Mentioned in this Report ............................................................................................ 104  About the Authors.......................................................................................................................... 107  Also available from Portio Research Limited ................................................................................... 109  4 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 List of Figures Figure 1:  Figure 2:  Figure 3:  Figure 4:  Figure 5:  Figure 6:  Figure 7:  Figure 8:  Figure 9:  Figure 10:  Figure 11:  Figure 12:  Figure 13:  Figure 14:  Figure 15:  Figure 16:  Figure 17:  Figure 18:  Figure 19:  Figure 20:  Figure 21:  Figure 22:  Figure 23:  Figure 24:  Figure 25:  Figure 26:  Figure 27:  Figure 28:  Figure 29:  Figure 30:  Figure 31:  Figure 32:  Figure 33:  Figure 34:  Figure 35:  Figure 36:  Figure 37:  Figure 38:  Figure 39:  Figure 40:  Figure 41:  Figure 42:  Figure 43:  Figure 44:  Figure 45:  Figure 46:  Figure 47:  Figure 48:  Figure 49:  Figure 50:  Mobile Subscribers – Worldwide (In Million, 2009 – 2014F) ................................................ 8  Mobile Payment Users and Penetration – Worldwide (2009 – 2014F) ................................ 9  Mobile Payment Users – Regional (In Million, 2009 & 2014F) ............................................ 9  Mobile Payment Volumes – Worldwide (In USD Billion, 2009 – 2014F) ............................ 10  Mobile Payment Volumes – Regional (In USD Billion, 2009 & 2014F) .............................. 11  Mobile Payment Volumes – Growth by Region (In Percent, 2009 – 2014F) ..................... 11  Mobile Payment Opportunities for Key Stakeholders ........................................................ 16  How NFC Payments work ................................................................................................ 19  Subscribers with NFC Capable Handsets — Worldwide (In Million, 2009 – 2014F).......... 20  Penetration of NFC Devices — Worldwide (In Percent, 2009 – 2014F) ............................ 20  Mobile Payment Users — Worldwide (In Million, 2009 – 2014F)....................................... 21  Mobile Payment Volume — Worldwide (In USD Billion, 2009 – 2014F) ............................ 22  NFC Payment Volume — Worldwide (In USD Billion, 2009 – 2014F) ............................... 23  NFC Payment Volume as a Percentage of Mobile Payment Volume — Worldwide (In Percent, 2009 – 2014F) .................................................................................................... 24  Contactless Mobile Payments Services in Japan .............................................................. 26  DCMX Users (In Million, June 2009 – December 2009) .................................................... 27  Consumer Spending Behaviour for Contactless Payments – Japan (2008) ...................... 27  Contactless Payment Trials on NoWcard Buses for Over-the-Air Ticket Sales to NFCenabled Handsets by the UK’s Department for Transport ................................................ 30  Mobile Payment Volume — The US (In USD Billion, 2009 – 2014F) ................................ 31  Micro-payment Opportunities in the US (In USD Billion, 2009) ......................................... 32  Basic Value Chain of Mobile Payments ............................................................................. 38  Bank-centric Model ............................................................................................................ 40  Bank-centric Model – Benefits and Drawbacks ................................................................. 42  Collaboration Model .......................................................................................................... 43  Collaboration Model – Benefits and Drawbacks ................................................................ 45  Operator-centric Model ...................................................................................................... 46  Operator-centric Model – Benefits and Drawbacks ........................................................... 48  Peer-to-Peer Model ........................................................................................................... 49  Peer-to-Peer Model – Benefits and Drawbacks................................................................. 51  M-PESA Users – Kenya (In Million, March 2008 – September 2009) ............................... 53  Monthly P2P Transactions Value – Kenya (In USD Million, March 2008, March 2009 & September 2009) .............................................................................................................. 54  DCMX Users (In Million, June 2009 – December 2009) .................................................... 55  GCASH Users (In Million, 2007 – 2009) ............................................................................ 56  Apple App Store In-app Payments Model ......................................................................... 63  Application Downloads from Apple’s App Store – Performance in the eighteen months since launch ...................................................................................................................... 64  Drivers and Inhibitors – Mobile Ticketing and Coupons .................................................... 69  Major Business Deals and Partnerships – Mobiqa ............................................................ 70  Major Business Deals and Partnerships – NeoMedia Technologies ................................. 72  Major Business Deals and Partnerships – Cellfire............................................................. 73  Mobile Ticketing and Coupons Users — Worldwide (In Million, 2009 – 2014F) ................ 74  Mobile Ticketing and Coupons Volume — Worldwide (In USD Billion, 2009 – 2014F) ..... 74  Basic Value Chain of Mobile Ticketing .............................................................................. 75  Mobile Ticketing – Business Model I ................................................................................. 77  Mobile Ticketing – Business Model II ................................................................................ 78  Basic Value Chain of Mobile Coupons .............................................................................. 79  Mobile Coupons – Pay per Redemption Business Model .................................................. 80  Increase in Revenue of Go North East (In GBP Million, 2006 – 2009) .............................. 81  Go North East’s Contribution to Go-Ahead’s Bus Revenue (In Percent, 2005 – 2009) ..... 82  Benefits of Planet Funk’s mobile coupons campaign ........................................................ 83  Mobile Payment Volumes – Regional (In USD Billion, 2009) ............................................ 86  © 2010, Portio Research. All Rights Reserved 5
    • Mobile Payments 2010-2014 List of Tables Table 1:  Table 2:  Table 3:  Table 4:  Table 5:  Table 6:  Table 7:  Table 8:  Table 9:  6 Regional Break-out of Mobile Payment Users (In Million, 2009 – 2014F) ......................... 22  Regional Break-out of Mobile Payment Volume (In USD Billion, 2009 – 2014F)............... 23  Regional Drivers – An Overview........................................................................................ 34  Challenges for Different Mobile Payment Platforms .......................................................... 35  Assessment of Challenges for Different Mobile Payment Platforms.................................. 36  Regional Challenges – An Overview ................................................................................. 37  Comparison of Mobile Payments Business Models........................................................... 52  Top Applications with In-app Payments available from Apple’s App Store (November 2009) 65  Opportunities and Benefits of Mobile Ticketing and Coupons for Stakeholders ................ 84  © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Chapter 1 Introduction © 2010, Portio Research. All Rights Reserved 7
    • Mobile Payments 2010-2014 Introduction Worldwide Mobile Market The worldwide mobile market is witnessing tremendous growth. It was one of the least impacted industries during the recent economic downturn, and – with the now improving scenario – is expected to outpace other major industries in terms of growth. In 2009, the worldwide mobile subscriber base stood at nearly 4.6 billion and is forecast to reach 6.3 billion by end-2014. The figure below highlights the growth of mobile subscribers between 2009 and 2014. Figure 1: Mobile Subscribers – Worldwide (In Million, 2009 – 2014F) 7,000 6,000 Subscribers (In Million) 5,000 4,570.6 5,045.8 5,440.6 5,777.9 6,065.1 6,310.8 4,000 3,000 2,000 1,000 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted Worldwide Mobile Payments Market In light of falling voice ARPU, mobile operators around the world are focusing their efforts on stabilising ARPU by promoting mobile data services. Mobile payment services are also a part of operators’ promotional campaigns, and operators – either on their own or in partnership with banks and mobile payment service providers – are developing platforms and applications to offer mobile payment services. With such initiatives in place, the mobile payments segment has established itself in several advanced mobile markets worldwide and is now expanding its reach in emerging markets as well. Mobile Payment Users In 2009, there were 81.3 million mobile payment users worldwide; this number is forecast to reach nearly 490 million by the end of 2014. Figure 2 highlights the number of mobile payment users worldwide and their penetration within the worldwide mobile subscriber base between 2009 and 2014. 8 © 2010, Portio Research. All Rights Reserved In 2009, the worldwide mobile subscriber base stood at nearly 4.6 billion and is forecast to reach 6.3 billion by end-2014.
    • Mobile Payments 2010-2014 600 10 7.8 Users (In Million) 500 400 5.6 300 6 4.1 489.5 3.0 200 1.8 2.3 81.3 2010F 2 237.3 165.5 116.0 2009 4 340.6 100 0 8 Mobile Payment Penetration (In Percent) Figure 2: Mobile Payment Users and Penetration – Worldwide (2009 – 2014F) 0 2011F 2012F 2013F 2014F Year Users (In Million) Mobile Payment Penetration (In Percent) Source: Portio Research Ltd. F – Forecasted According to the figure above, the worldwide penetration of mobile payment users is forecast to increase from 1.8 percent in 2009 to nearly 8 percent by end-2014. In 2009, Asia Pacific accounted for the highest number of mobile payment users worldwide, followed by Europe and North America. By end-2014, Asia Pacific is still expected to lead the market, accounting for over half of the mobile payment users worldwide. Between 2009 and 2014, both Europe and North America will witness a decline in their share of the worldwide mobile payment user base, while Latin America’s share is anticipated to increase during this period. Mobile payment services have the potential to significantly transform the money transactions industry, and thereby the economies in these developing markets. Figure 3: Mobile Payment Users – Regional (In Million, 2009 & 2014F) 300 267.1 Users (In Million) 250 200 150 113.7 100 50 29.4 33.9 52.4 9.9 3.2 26.9 4.9 29.4 0 Europe Asia Pacific North America Latin America Africa and Middle East Region 2009 2014F Source: Portio Research Ltd. F – Forecasted © 2010, Portio Research. All Rights Reserved 9 In 2009, Asia Pacific accounted for the highest number of mobile payment users worldwide, followed by Europe and North America.
    • Mobile Payments 2010-2014 Mobile Payment Volumes Mobile payment volumes denote the face value of purchases and transactions through mobile handsets; whereas mobile payment revenue is a small percentage of this volume. This percentage varies across geographies because of the different business models employed. For example, if a subscriber makes a payment of USD 100 through a mobile handset and the transaction cost is 6 percent, then USD 100 represents the mobile payment volume and USD 6 is the revenue opportunity for the stakeholders. This amount will be distributed among all stakeholders—MNOs, banks/financial institutions and payment service providers —according to the revenue sharing agreement. Market Size Mobile payment volumes were USD 68.7 billion in 2009 and are forecast to reach USD 633.4 billon by end-2014. The figure below depicts the growth of mobile payment volumes between 2009 and 2014. Figure 4: Mobile Payment Volumes – Worldwide (In USD Billion, 2009 – 2014F) Mobile Payment Volumes (In USD Billion) 700 633.4 600 500 415.5 400 270.0 300 171.0 200 100 68.7 108.3 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted In 2009, Asia Pacific generated the highest mobile payment volumes, followed by Europe. In the same year, the difference between mobile payment volumes in Asia Pacific and Europe was nearly USD 4 billion; however, by end-2014 this difference is forecast to increase to USD 198.5 billion. Markets such as China, Japan, South Korea and India are expected to lead the growth of mobile payments in Asia Pacific. 10 © 2010, Portio Research. All Rights Reserved Mobile payment volumes were USD 68.7 billion in 2009 and are forecast to reach USD 633.4 billon by end-2014.
    • Mobile Payments 2010-2014 Figure 5: Mobile Payment Volumes – Regional (In USD Billion, 2009 & 2014F) Mobile Payment Volumes (In USD Billion) 500 400 345.6 300 200 147.1 82.1 100 28.7 24.8 9.8 2.7 34.8 2.7 23.8 0 Europe Asia Pacific North America Latin America Africa and Middle East Region 2009 2014F Source: Portio Research Ltd. F – Forecasted Worldwide mobile payment volumes are forecast to grow at a CAGR (Compound Annual Growth Rate) of 55.9 percent between 2009 and 2014. During this period, Latin America will lead other regions in terms of growth in mobile payment volumes with a CAGR of 66.7 percent, followed by Asia Pacific with a CAGR of 64.5 percent. Europe is expected to experience the least growth in mobile payment volumes with a CAGR of 42.7 percent. Figure 6: Mobile Payment Volumes – Growth by Region (In Percent, 2009 – 2014F) CAGR (In Percent) CAGR Worldwide = 55.9 % 64.5 70 60 66.7 CAGR 55.9 % 55.0 52.8 50 42.7 40 30 20 10 0 Asia Pacific Europe North America Latin America Africa and Middle East Region Source: Portio Research Ltd. F – Forecasted © 2010, Portio Research. All Rights Reserved 11
    • Mobile Payments 2010-2014 Chapter 2 Mobile Money 12 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Mobile Money Objective In this report, different types of mobile payments and mobile payment platforms have been studied. The existing business models and current opportunities for stakeholders have been discussed, while select case studies have also been evaluated. The study also provides market forecasts in terms of revenues and users, to gauge the opportunities provided by each type of mobile payment option. Overview Mobile handsets have found utility in transactions such as money transfer and payments. Handsets are now increasingly being used to transfer money and purchase products (physical or digital goods) and services. One of the earliest major commercial platforms for mobile payments services was launched in 1999 when NTT DOCOMO launched the i-Mode mobile Internet platform for money transactions in Japan. Smart launched Smart Money the next year in the Philippines. Currently, there are a variety of mobile money transactions being provided. Some are mentioned below: • Mobile payments Physical goods including books, CDs, garments, etc. Digital content including ringtones, games, music, videos, applications etc. In-app payments Mobile ticketing Mobile coupons • Mobile banking • Mobile money transfer including remittance transfers The advent of NFC (Near Field Communication) technology and its use for making contactless proximity payments is revolutionising mass transit systems and retail payments. NFC payment platforms have been widely adopted in Japan, South Korea, the US and major mobile markets in Western Europe. Mobile payments refer to the use of mobile handsets to pay for items in a store, to settle a bill, to buy tickets or to redeem coupons. This is finding traction with consumers who prefer cashless payments and with merchant firms seeking to reduce billing processing times. Mobile ticketing is used for the sale of tickets at movie theatres, concerts, sporting events, airports, train stations, mass transit systems, parking lots, etc. Mobile ticketing offerings have evolved to incorporate coupons and loyalty programmes. Location-based services have also been used for targeted mobile advertisements through promotions and coupons. Furthermore, mobile handsets are being used to access banking services that include account information, bank transactions, and stock and commodity trading. In addition to mobile banking services, mobile handsets are also used to remit money through specific remittance corridors through MNO-bank collaborations. Despite the obvious benefits of mobile money services, early market adoption was stunted by technological challenges, a lack of standardisation, fragmented commercial efforts, and most importantly a lack of sustainable business models. However, there are certain factors – both on the supply and demand side – which encourage the deployment and adoption of mobile money services. These have worked in the favour of proliferation of these services. © 2010, Portio Research. All Rights Reserved 13 NFC payment platforms have been widely adopted in Japan, South Korea, the US and major mobile markets in Western Europe.
    • Mobile Payments 2010-2014 • • Demand side: ― The growing ubiquity of mobile phones and their increasing multifunctionality make them a compelling replacement for physical wallets; worldwide mobile penetration passed 67 percent at end-2009 ― Unbanked populations can access financial services through this mode, which helps boost economic growth Supply side: ― MNOs have large subscriber bases and control of mobile handset features, user interface, and subsidies ― Banks have loyal user bases and financial resources to become enablers of mobile payments Key value propositions of payments using mobile handsets: • Convenience for in-store segments, particularly the micropayments segment • Speed of contactless transactions enabled by mobile phones with embedded NFC chips • Inherent connectivity, ubiquity and near real-time verification capability of mobile devices (via SMS, WAP, USSD or NFC) 14 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Chapter 3 Mobile Payments © 2010, Portio Research. All Rights Reserved 15
    • Mobile Payments 2010-2014 Mobile Payments Overview The mobile payments market has significantly evolved in the last five years. Despite its limited success in a majority of markets, both developed and developing, few have doubted the potential mobile payments have to act as an alternative for cash and cheque payments, especially for micro-payments (less than USD 15). Obstacles to adoption have been a lack of scalable and viable business models, lack of standardisation, and fragmented commercial efforts. However, the success of mobile payment business models in countries like Japan, South Korea and the US has revived the interest of potential stakeholders to bring out the next phase of mobile payment services worldwide. Key stakeholders in the mobile payments value chain include: • Merchants • Banks and financial institutions • Mobile network operators (MNOs) • Consumers Mobile payments provide a number of opportunities to stakeholders, as depicted in the figure below. Figure 7: Mobile Payment Opportunities for Key Stakeholders Stakeholders Opportunities Banks and Financial Institutions • • More sales opportunities Personalised marketing and improved marketing effectiveness • • • New users from unbanked areas Tapping micro-payments market Channel to provide differentiated offerings • Merchants Transaction commissions by leveraging network assets and subscriber base Platform for increased mobile content sales Mobile Network Operators • Consumers • • Immediate access to product information and promotions Easier micro-payments, cashless payments Source: Portio Research Ltd. 16 © 2010, Portio Research. All Rights Reserved The success of mobile payment business models in countries like Japan, South Korea and the US has revived the interest of potential stakeholders to bring out the next phase of mobile payment services worldwide.
    • Mobile Payments 2010-2014 Key categories of goods and services offered through mobile payments are: • Mobile applications and In-app payments • Mobile ticketing • Mobile coupons • Transportation and parking payments • Mobile content (music, videos, online game subscriptions, wallpapers, etc.) • Physical goods (books, magazines, CD/DVDs, clothes, etc.) Currently, mobile payments are mostly used for the purchase of mobile content, mobile ticketing, coupons and micro-transactions. The growing number of bank-MNO partnerships is expected to make mobile wallets more capable of carrying out larger and secure transactions. This will encourage the use of mobile payments for the purchase of physical goods and macro-transactions will also increase significantly. Mobile Payments — Stakeholders’ Views and Initiatives Retail stores are looking to use mobile payments as a means of reducing queues at the checkout Every second saved at the counter equates to an additional EUR 1 (USD 1.3) in net income. Consumers like contactless mobile payment facilities and there has been positive feedback. — McDonalds Reviving the vending machine market Visa has collaborated with fellow Vancouver 2010 Olympic and Paralympic Winter Games sponsor Coca-Cola to provide 550 Coca-Cola vending machines enabled with ‘Visa payWave’ contactless payment terminals. (Announcement made in January 2010) Investments in developing technology for mobile payments Mobile payments is a focus area and Visa has been collaborating with MNOs and handset manufacturers to standardise this. Visa has invested nearly EUR 800 million (USD 1.0 billion) during the past five years (20052009) on R&D and EUR 170 million (USD 219.9 million) of this investment went into R&D of chip and PIN. Another EUR 200 million (USD 258.7 million) is planned to be invested for developing low-cost contactless payments through cards and mobile handsets. — Visa Mobile payment services primarily fall into two categories— remote and proximity services. The four major mediums of providing these services are the following: • SMS/Application • WAP • USSD (Unstructured Supplementary Services Data ) • Near Field Communications (NFC) or Contactless payments © 2010, Portio Research. All Rights Reserved 17 The growing number of bankMNO partnerships is expected to make mobile wallets more capable of carrying out larger and secure transactions.
    • Mobile Payments 2010-2014 Mobile payment services using SMS, applications, WAP and USSD can be accessed remotely. However, NFC payment services can only be used if the accessing device is in proximity of the NFC reader, which connects the device with the back-end servers and data centres. The choice of medium for providing mobile payment services depends upon market characteristics and the capital the service providers are willing to spend. SMS and applications-based mobile payments have been deployed in many emerging markets, such as China, India, the Philippines and Indonesia. This medium benefits from the ubiquity of SMS use and can therefore be used to target the ‘bottom of pyramid’ user segment. The ‘Smart Money’ service in the Philippines is an example of a successful SMS-based payments service. WAP services can be used to target the owners of mid-range and high-end handsets. However, these services are often hampered in emerging markets by an unavailability of high-speed networks and a lack of capable handsets. The problem of session timeouts also degrades user experiences. USSD (Unstructured Supplementary Services Data) is a standard for transmitting information over GSM networks. This mobile payment medium is apt for developing markets and is cheaper than mobile payments using SMS. Barclays’ ‘Hello Money’ is an example of USSD-based mobile payments; a user dials a specific short code on the handset to access the mobile payments menu. NFC is more useful in developed markets with capable infrastructure. It is being used to make mobile payments for transportation, ticketing and coupon services. Japan and South Korea have pioneered the deployment of NFC solutions for mobile payments. How NFC Payments work The way in which NFC mobile payments work is depicted on the next page. 18 © 2010, Portio Research. All Rights Reserved The choice of medium for providing mobile payment services depends upon market characteristics and the capital the service providers are willing to spend.
    • Mobile Payments 2010-2014 Figure 8: How NFC Payments work Mobile Ticketing – Issuing Server Mobile Coupons – Issuing Server Financial Card Provider – Issuing Server IP Network Back-end Application Software Financial Point-of-Sale Network Merchant NFC Reader Device Collaborating Payments Solutions and Authentication Firms MNO Source: Portio Research Ltd. To avail NFC payment facilities, a user needs to have an NFC-enabled handset. In order to make a transaction, a user must wave the handset near an NFC reader device so that the user account is identified by the reader and the transaction is made. Micro-transactions— which are defined differently in different markets—do not require authentication. The payment is either deducted from a pre-paid account or is charged to the mobile/bank/credit card account directly. The details of the mobile payment and available balance can then be accessed using the handset. Advantages of making NFC payments through mobile handsets: • Contactless payments are nearly 40 percent faster compared with payments using credit or debit cards, and nearly 55 percent faster than cash payments. 1 • The availability of historical data for consumer spending behaviour of NFC users makes them easy to target for mobile advertisements, promotions and mobile coupons • NFC payments are more efficient in enabling micro-payments The proliferation of NFC devices in the near future is shown in the following forecasts. 1 Source: http://www.bos.frb.org/economic/cprc/presentations/2008/quibria012308.pdf © 2010, Portio Research. All Rights Reserved 19
    • Mobile Payments 2010-2014 Figure 9: Subscribers with NFC Capable Handsets — Worldwide (In Million, 2009 – 2014F) Subscribers with NFC Capable Handsets (In MIllion) 1,000 893.4 800 653.1 600 437.7 400 200 232.8 33.1 106.5 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted The extent to which the worldwide penetration of NFC devices will increase between 2009 and 2014 is shown in the figure below. Penetration of NFC Devices (In Percent) Figure 10: Penetration of NFC Devices — Worldwide (In Percent, 2009 – 2014F) 14.2 15 10.8 12 7.6 9 4.3 6 3 2.1 0.7 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted 20 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Market Size The mobile payments market is expected to witness significant growth to 2014. The forecasts for the number of mobile payment users during this period are given in the figure below. Figure 11: Mobile Payment Users — Worldwide (In Million, 2009 – 2014F) Mobile Payment Users (In Million) 600 489.5 400 340.6 237.3 165.5 200 81.3 116.0 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted The worldwide mobile payment user base is forecast to grow at a CAGR of 43.2 percent between 2009 and 2014. The Latin American mobile payment user base is expected to witness the highest growth rate during this period, while Europe is forecast to experience the least growth. The regional distribution of mobile payment users is given in the next table. © 2010, Portio Research. All Rights Reserved 21
    • Mobile Payments 2010-2014 Table 1: Regional Break-out of Mobile Payment Users (In Million, 2009 – 2014F) 2 Mobile Payment Users (In Million) 2009 2010F 2011F 2012F 2013F 2014F CAGR (In Percent, 2009 – 2014F) Europe 29.4 39.1 51.4 67.2 87.5 113.7 31.1 Asia Pacific 33.9 51.5 78.1 118.4 178.4 267.1 51.1 North America 9.9 13.6 18.8 26.3 37.0 52.4 39.6 Latin America 3.2 4.7 7.1 10.8 16.9 26.9 53.0 Africa and Middle East 4.9 7.1 10.1 14.5 20.7 29.4 43.0 Total 81.3 116.0 165.5 237.3 340.6 489.5 43.2 Region Source: Portio Research Ltd. Worldwide mobile payment volumes are expected to increase at a CAGR of nearly 56 percent between 2009 and 2014. The forecasts for mobile payment volumes are given in the figure below. Figure 12: Mobile Payment Volume — Worldwide (In USD Billion, 2009 – 2014F) 3 Mobile Payment Volume (In USD Billion) 700 633.4 560 415.5 420 270.0 280 171.0 140 68.7 108.3 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted The following table provides the regional break-out of mobile payment volumes to 2014. 2 3 Note: The total number may not add up to the sum of regional numbers because of rounding-off errors. Note: Mobile payment volumes denote the face value of purchases and transactions through mobile handsets. 22 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Table 2: Regional Break-out of Mobile Payment Volume (In USD Billion, 2009 – 2014F) Mobile Payment Volume (In USD Billion) 4 2009 2010F 2011F 2012F 2013F 2014F CAGR (In Percent, 2009 – 2014F) Europe 24.8 36.6 53.1 76.4 106.8 147.1 42.7 Asia Pacific 28.7 48.1 80.7 134.7 217.7 345.6 64.5 North America 9.8 15.0 23.0 35.5 53.8 82.1 52.8 Latin America 2.7 4.4 7.3 12.3 20.6 34.8 66.7 Africa and Middle East 2.7 4.3 6.9 11.0 16.6 23.8 55.0 Total 68.7 108.3 171.0 270.0 415.5 633.4 55.9 Region Source: Portio Research Ltd. The contribution of NFC payments to mobile payments is forecast to increase in the future. NFC payment volumes are shown below. Figure 13: NFC Payment Volume — Worldwide (In USD Billion, 2009 – 2014F) 5 NFC Payment Volume (In USD Billion) 160 133.7 140 120 100 85.2 80 55.0 60 31.7 40 20 9.7 17.8 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted The contribution of NFC payments to worldwide mobile payment volumes is given in the next figure. 4 Note: The total number may not add up to the sum of regional numbers because of rounding-off errors. Note: NFC payment volumes denote the face value of purchases and transactions through NFC-enabled mobile handsets. 5 © 2010, Portio Research. All Rights Reserved 23
    • Mobile Payments 2010-2014 NFC Payments' Share in Mobile Payment Volume (In Percent) Figure 14: NFC Payment Volume as a Percentage of Mobile Payment Volume — Worldwide (In Percent, 2009 – 2014F) 25 18.5 20 15 20.4 21.8 22.7 16.4 14.1 10 5 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted 24 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Case Studies – Mobile Payments Japan Population: 126.9 million (End-2009) Mobile Penetration: 87.3 percent (End-2009) Popular Mobile Payment Services: FeliCa, Mobile Suica, Edy Money, Nanaco, QUICPay Mobile payments industry in Japan: Overview • Japan is a developed market with wide-scale deployment of mobile payment solutions • Pre 2004, the primary mode of mobile payments was by accessing merchant sites using mobile Internet. In 1999, NTT DOCOMO was one of the first MNOs worldwide to commercially launch money transaction services; these were based on their iMode mobile Internet platform. Users paid through credit card or bank accounts. • The deployment of mobile contactless payment solutions began as early as July 2004. The proliferation of mobile payments through NFC-enabled handsets is illustrated in the figure over the page. © 2010, Portio Research. All Rights Reserved 25
    • Mobile Payments 2010-2014 Figure 15: Contactless Mobile Payments Services in Japan Adoption by other MNOs In 2005, KDDI and Softbank (previously Vodafone Japan) adopted FeliCa Development of Platforms for Businesses Platform development for businesses, to enable contactless payments Some of the platforms developed are mentioned below. o NTT DOCOMO: iD o East Japan Railways: Mobile Suica o JCB (a credit card company): QUICPay o Bit Wallet (a joint venture of NTT DOCOMO, Sony, and some financial institutions): Edy Money o Seven & I Holdings: Nanaco Service Evolution and Uptake Development of Products and Services In July 2004, NTT DOCOMO began offering mobile handsets incorporating FeliCa contactless chips developed by Sony The chips carried information such as personal identification, bank account numbers, balance, transit pass details, etc. In April 2006, NTT DOCOMO launched DCMX, a consumer credit service Deployment of Mobile Payments Launch of Services Interoperability Railways, JCB, and Bit Wallet have enabled interoperability for their point-of-sale readers and data centres ‘Mitsubishi UFJ Nicos’ (a credit card company) and ‘Seven & I Holdings’ have agreed to enable interoperability for their readers and data centres Source: Federal Reserve Bank of Boston, ITIF and Portio Research Ltd. • • 6 As of October 2009, 60 million mobile subscribers in Japan had NFC-capable handsets. 6 NTT DOCOMO is the market leader in mobile contactless payments in Japan in terms of number of users. Its DCMX service, offering credit to users, has been successful with high adoption rates. The following figure illustrates the growth in DCMX users during H2 2009. Source: http://www.cartes-asia.com/mobile-felica-5-years-of-mobile-contactless-business-in-japan 26 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Figure 16: DCMX Users (In Million, June 2009 – December 2009) 12 Users (In Million) 10.7 10.2 9.6 8 4 0 Jun-09 Sep-09 Dec-09 Period Source: Portio Research Ltd. • • As of September 2009, the installed base of FeliCa compatible iD reader/writers was over 420,000; and more than 600,000 shops accepted mobile payments in Japan. 7, 8 The breakout of Japan’s proximity payment volume in 2008 is shown below: Figure 17: Consumer Spending Behaviour for Contactless Payments – Japan (2008) 34.5% 14.3% 8.3% 35.0% 7.9% Physical Retail Location Online Shopping Auction Transportation Mobile Content Purchase Source: Portio Research Ltd. 7 Source: http://www.nearfieldcommunicationsworld.com/2009/09/03/31591/ntt-docomo-reports-10-million-mobilecredit-card-customers/ 8 Source: http://www.itif.org/files/2009-mobile-payments.pdf © 2010, Portio Research. All Rights Reserved 27
    • Mobile Payments 2010-2014 Key drivers: • Dense urban population and high use of mass transit systems • Consumer behaviour preferring the use of value added services • Initiatives by dominant players in businesses, including mobile services, digital and electronics component manufacturers, financial services providers and mass transit system operators (NTT DOCOMO, Sony, JCB, East Japan Railways, etc.) in setting up the mobile payment ecosystem • Government’s role in encouraging key stakeholders to collaboratively develop and deploy mobile payment services Success factors: • Consumer satisfaction: Consumer satisfaction due to swift and hassle-free transactions • Higher sales volumes: Higher than average purchases and reduced transaction times at checkouts encouraged merchants to deploy the NFC mode of payment, as the gains offset the high commissions charged by the issuers • Mobile advertisement potential: The FeliCa service for mobile phones is useful for targeted mobile advertising. It has attracted many merchants who send coupons directly to users at the time of payment, and also uses a database of consumer behavior to target their advertisements. • Unifying loyalty programmes: Japanese consumers subscribe to a number of loyalty programmes from chain retailers; on average, a Japanese consumer has 12 loyalty cards. Mobile NFC payment services, such as i-mode FeliCa by NTT DOCOMO, unified these loyalty cards on the mobile handset, which removed the need to carry cards to avail loyalty benefits. 9 9 Source: http://www.cartes-asia.com/mobile-felica-5-years-of-mobile-contactless-business-in-japan 28 © 2010, Portio Research. All Rights Reserved Higher than average purchases and reduced transaction times at checkouts encouraged merchants to deploy the NFC mode of payment, as the gains offset the high commissions charged by the issuers.
    • Mobile Payments 2010-2014 The UK Population: 61.2 million (End-2009) Mobile Penetration: 132.8 percent (End-2009) Popular Mobile Payment Services: payforIT (Vodafone, Orange/T-Mobile, O2, 3), PayPal Mobile Mobile payments industry in the UK: Overview: • Mobile payment services are at an early stage of adoption in the UK. There have been a number of trials to identify efficient mobile payments options, and trials for contactless mobile payments through NFC have been a key focus area. • Not all stakeholders who can benefit from the deployment of mobile payment services are proactively pushing these services, which is impeding its proliferation • The UK government plans to boost the initial deployment of mobile payments infrastructure by funding the early adopters, such as the transit system • State of Contactless Payments in the UK: Contactless card transactions in the UK without a PIN are currently limited to a maximum of GBP 16. This limits the number of payments a user can make without entering the PIN as a security check. 10 The competition for micro-payments using mobile handsets comes from payment cards issued by leading international payment bodies, including American Express, MasterCard and Visa, which enable low-value payments, usually under GBP 10, without entering a PIN. 11 Department for Transport highlights the need for stakeholders to step-up In a publication released in July 2009, the UK’s Department for Transport and consultancy firm Detica highlighted the need for MNOs and local authorities to step-up in building contactless ticketing infrastructure. The report suggests that the benefits of setting up contactless payments infrastructure will be realised by operators and local authorities. Therefore, their participation in building the infrastructure is required to formulate a sustainable model and it will not be feasible for the Department for Transport to fully fund the entire contactless payment infrastructure. Developments: • payforIT: payforIT is a cross-MNO mobile payment initiative by UK MNOs including Vodafone, 3 and Orange/T-Mobile. The service allows payment for mobile subscriptions and content to be charged directly to a subscriber’s mobile bill, avoiding the hassle of receiving a series of premium SMS messages (for microtransactions). • Visa pilot: Visa Europe’s large scale six-month pilot of “mobile wallet” with O2 in the UK was completed in April 2009. The pilot aimed at executing contactless payments using mobile handsets for purchases, travel and accessing events. Partner firms included Transport for London, TranSys, Barclaycard, Nokia and AEG. 12, 13 10 Source: http://www.crimereduction.homeoffice.gov.uk/crimereduction047a.pdf Source: http://www.dft.gov.uk/pgr/regional/policy/nationalsmartticketing/ticketreport.pdf 12 Source: http://corporate.visa.com/_media/visa-mobile-fact-sheet.pdf 13 Source: http://www.visaeurope.com/pressandmedia/newsreleases/press398_pressreleases.jsp 11 © 2010, Portio Research. All Rights Reserved 29 The UK government plans to boost the initial deployment of mobile payments infrastructure by funding the early adopters, such as the transit system.
    • Mobile Payments 2010-2014 Opportunities: • Revolutionising mass transit payments through handsets: The UK’s Department for Transport estimates that a national ticketing project using NFC for contactless payments can bring savings of over GBP 2 billion per year as a result of reduced dwell time, reduced time through station gates, decongestion benefits and other factors. The figure below depicts contactless payments through Electronic Ticket Modules on NoWcard Buses for Over-the-Air Ticket Sales to NFC-enabled Handsets. 14 Figure 18: Contactless Payment Trials on NoWcard Buses for Over-the-Air Ticket Sales to NFCenabled Handsets by the UK’s Department for Transport NoWcard trial phone (NFC-enabled handset) being used with a ‘Bus Electronic Ticket Module’ User accessing information on available balance and last transactions Source: The UK’s Department for Transport Report and Portio Research Ltd. 14 Source: http://www.dft.gov.uk/pgr/regional/policy/nationalsmartticketing/ticketreport.pdf 30 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 The US Population: 308.7 million (End-2009) Mobile Penetration: 89.0 percent (End-2009) Popular Mobile Payment Services: PayPal Mobile Mobile payments industry in the US: Overview: • The US market is anticipated to be one of the key markets for the growth of mobile payments. It is already established as a leading market in e-commerce with welldeveloped credit infrastructure, and consumer spending behaviour is expected to propel growth in mobile payments in the next five years. • Mobile payment forecasts for the US market to 2014 are given in the figure below: Figure 19: Mobile Payment Volume — The US (In USD Billion, 2009 – 2014F) 15 75.7 Mobile Payment Volume (In USD Billion) 80 70 60 49.6 50 40 32.8 30 20 10 21.2 9.1 13.8 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted • • NFC-based mobile payments are mostly in trial or initial launch phases in the US market, with different stakeholders – including MNOs, financial institutions and merchants – making efforts to set up the mobile payment ecosystem Merchants are deciding whether the resultant increase in payment volumes and operational efficiencies brought about by NFC-capable point-of-sale readers will result in adequate return on investment upon setting up this infrastructure. Therefore, the initial adoption for NFC is expected to be in the form of large-scale deployments, which will ensure a critical mass for making the investments profitable. Developments: • Apple is working on prototypes for the next generation iPhone with an in-built RFID reader that may pave the way for Apple’s foray into NFC-enabled handsets. If launched, this would clearly have a positive impact on the proliferation of NFCenabled handsets in the US. 16 • At end-2009, over 35,500 point-of-sale terminals were deployed in 13 cities for contactless fare payment on the US mass transit system; the number of service users was nearly 19 million. 17 15 Note: Mobile payment volumes denote the face value of purchases and transactions through mobile handsets. Source: http://www.nearfieldcommunicationsworld.com/2009/11/05/32191/apple-testing-rfid-enabled-iphone/ 17 Source: http://www.itif.org/files/2009-mobile-payments.pdf 16 © 2010, Portio Research. All Rights Reserved 31 NFC-based mobile payments are mostly in trial or initial launch phases in the US market, with different stakeholders making efforts to set up the mobile payment ecosystem.
    • Mobile Payments 2010-2014 Opportunities: • The micro-payments market in the US is a burgeoning market. There is an opportunity for mobile payments to establish themselves as the preferred mode of micro-payments in several areas. The micro-payment volumes given in the figure below account for the total spending in a specified area. Given the size of consumer spending in these areas, mobile payment players can tap huge revenue opportunities through planned investments. Figure 20: Micro-payment Opportunities in the US (In USD Billion, 2009) Spending Volume (In USD Billion) 160 153.0 120 80 40 14.0 14.0 10.0 7.0 7.0 7.0 4.0 3.0 0 Payment Areas Source: Federal Reserve Bank of Boston and ITIF • • • 18 Although the food restaurant sector shows the highest annual consumer spending, this is a fragmented sector with a number of small players, whereas the mass transit system – while smaller in terms of consumer spending – is consolidated. As mass transit systems are run by the government, the deployment can be more planned, uniform and scalable. Big restaurant brands such as Subway offer mobile coupons to consumers which they can use to avail several discount schemes Nearly 33 million trips are made daily on the mass transit system in the US which is expected to provide a critical mass of initial demand for mobile payments 18 Source: http://www.itif.org/files/2009-mobile-payments.pdf 32 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Drivers The mobile payments ecosystem primarily consists of four entities: banks, mobile network operators, merchants/retailers and users. In the bullet points below, we briefly highlight various drivers for each stakeholder to adopt the service. • Banks Mobile banking is a potential revenue generation service as banks offer mobile banking to existing clients with additional charges Mobile banking helps enhance the user experience, as it helps reduce the time taken for banking activites; for example, money transfers, accessing the last 10 transactions, paying bills on the move. Mobile services are often more accessible than banks. Handsets can therefore act as a stepping stone for banks to reach unaddressed users through their mobile connections. Mobile banking helps to reduce operating expenditure. For example, as more and more users become mobile, banks can reduce the number of staff or branches and thereby reduce the related costs • Operators Mobile payments will help operators increase revenues by offering it as a value added service, and also through the receipt of transaction commissions A successfully implemented mobile payment service will lead to several benefits including the possible adoption of flat-rate data plans, and additional SMS traffic (in the case of SMS based payments), etc. Prepaid top-ups, gifts, bill payments, and similar services will increase convenience and enhance the user experience By entering into partnerships with m-commerce service providers and introducing loyalty programmes, subscribers will be encouraged to access several mobile payment services • Merchants Mobile payments help merchants in generating a new channel of sales; increasing mobile Internet subscribers will mean an increase in potential user base for the merchants Merchants would like to capitalize on the consumer’s spontaneous purchase decisions – while on the move Consumers use their handsets for checking prices and reviews on products; it will be easy for the merchants to sell their products through the same interface Merchants can make significant cost savings resulting from lower labour costs, and by using more cost effective marketing campaigns – an SMS campaign will cost much less than a media campaign • Consumers As consumers look for convenience in their day-to-day transactions – such as transport tickets, prepaid top-ups, greeting cards, etc – mobile payments can provide the required convenience and cashless options, reducing the dependency on a PC/ laptop Mobile banking will provide consumers with the convenience of checking their bank account information on their mobile handsets, thus negating the need to visit a branch. This will greatly influence consumers in subscribing for the mobile banking service As mobile handsets increasingly become an integral part of lifestyles, and as handset manufacturers, operators, and banks try to regulate security and payment standards, more and more people are likely to use mobile payments © 2010, Portio Research. All Rights Reserved 33 By entering into partnerships with m-commerce service providers and introducing loyalty programmes, subscribers will be encouraged to access several mobile payment services. Mobile banking will provide consumers with the convenience of checking their bank account information on their mobile handsets.
    • Mobile Payments 2010-2014 Table 3: Regional Drivers – An Overview Regional Drivers – An Overview The US • High use of credit/debit cards will make it easy for consumers to adopt mobile payments • US consumers are well equipped for using applications (high smartphone penetration), hence they will find it easy to use mobile payment applications • Mobile Internet use is high among US subscribers Africa & Middle East • M-PESA (implemented in Kenya, South Africa, Afghanistan & Tanzania), is expected to garner a positive impact on other African nations • Well established remittance market in the UAE will further drive the mobile banking market in the Middle East Western Europe • High smartphone penetration • Early adoption of mobile payments for mobile ticketing • Mobile Internet use is high among subscribers, with most subscribers using flat-rate data plans Japan & Korea • Tech savvy subscriber base, willing to try new services • Successful implementation of FeliCa mobile wallet and availability of NFC enabled handsets (60 million in Japan as of October 2009) will encourage MNOs to try new mobile payment services in Japan India & China • Huge subscriber base • In China, the availability of cheap smartphones and collaborations between MNOs and ecommerce players is expected to boost the uptake for mobile payments • The bill payments market in India, coupled with the emergence of payment solutions providers (mCheck, Obopay, etc.), will be an enabler for new mobile payment services • Grameenphone’s successful implementation of Cell Bazaar in Bangladesh – a service where a subscriber can buy or sell merchandise – could stimulate Indian MNOs to come up with such services. Source: Portio Research Ltd. 34 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Challenges • • • • • • • • As mobile payment services have to be customised for each market, deployment times and the time to create consumer awareness of such services is usually lengthy Lack of specific ready-to-use and sound business models leads to several fragmented versions of mobile payment models (operator-centric or bank-centric models). This leads to minimal cooperation between the two critical players of mobile payments – Banks and MNOs. There is lack of coordination or shared strategy between mobile handset manufacturers, MNOs, mobile payment service providers, retailers and government regulators Interoperability issues exist in mobile payment systems due to the lack of common technology standards. Thus, the system cannot be easily adopted by any player in the mobile payment ecosystem. As there are no regulations for mobile payments in most countries, consumers are still not confident to use these services Infrastructure development is a key requirement for mobile payments; only a few countries have existing infrastructure for NFC payments. Furthermore, the availability of NFC-enabled handsets is still low. Not all merchants have an interface for mobile payments. Even when merchants have the interface, some of them are unable to read the bar-codes on tickets and coupons efficiently. Security threats in the wireless domain still pose a great challenge for adopting any mode of mobile payment Table 4: Challenges for Different Mobile Payment Platforms Platform Challenges NFC (Near Field Communication) Mobile payments using NFC requires existing contactless infrastructure and also NFC-enabled mobile handsets. WAP, HTML, or XML Technologies Mobile Internet access is still expensive in many parts of the world. Furthermore, the interface also requires modifications to make it more userfriendly. USSD (Unstructured Supplementary Service Data) The USSD mode of payment uses the signaling channels of the GSM networks and hence requires better network capacity. Also, as the data encryption in this method is weak, it poses a greater threat to data security. SMS-based SMS based services are plagued by poor reliability and security issues due to weak encryption. Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 35 As there are no regulations for mobile payments in most countries, consumers are still not confident to use this service
    • Mobile Payments 2010-2014 Table 5: Assessment of Challenges for Different Mobile Payment Platforms Challenge Platform Provisioning and Handset Compatibility Cost Security Adoption NFC WAP, HTML, or XML Technologies USSD SMS-based We use the following key to depict the level of challenge involved in implementing mobile payment services. Legend Level of Challenge for Implementation Highly Challenging Easy 36 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Table 6: Regional Challenges – An Overview Region Challenges Japan (Asia Pacific) The Osaifu-Keitai system (FeliCa mobile wallet), a mobile payment model using NFC technology, was successfully implemented by NTT DOCOMO and further licensed by the other two MNOs in Japan (SoftBank and KDDI). This met with huge success in the country and received support from both banks and merchants. However, Osaifu-Keitai uses only one of the three modes that NFC is capable of – ‘card emulation’ mode. The other two modes are ‘Reader’ and ‘Peer-to-Peer’. Due to this limitation, the system is incapable of implementing new types of services in the future. India (Asia Pacific) In India, banks play the most critical role in the mobile payment ecosystem, with mobile payments being regulated by RBI (Reserve Bank of India). As per RBI regulations, mobile payments can only be executed after the users register their credit/debit card information with the MNOs. However, this is presently limiting the success of mobile transactions as the majority of the Indian population (rural majority) do not have access to a credit or a debit card. Also, with India being a country with 23 official languages and several hundred mother tongues, the mobile payment system needs to be multi-lingual, which will result in a longer lead time for service implementation. Italy (Europe) In Italy, business users prefer using their smart phones for e-mail applications at a higher rate than they use SMS and other Internet-based services. Also, the penetration of SMS users in Italy is low compared to other major European markets, thus likely making SMS-based mobile payment services in Italy comparably less successful. The UK (Europe) Due to lack of a well established commercial model for mobile payments, these services are not being marketed to consumers. Hence the adoption rate in the UK with respect to mobile payments has been low. The US (North America) Various stakeholders such as banks, transit agencies, etc. have not yet shown much interest in developing any open and interoperable multi-function smart card or mobile wallet devices. Emerging Markets (Latin America, Africa and the Middle East) The biggest hurdle for the uptake of mobile payment services in the emerging markets is the lack of the required technology and infrastructure, and also subscribers’ reluctance to adopt such services. Historically, advanced mobile data services have always faced such challenges in these regions and mobile payments are no exception. Subscribers’ lack of technical know-how and apprehensions about pricing and safety has impeded the growth of payment services in these regions. Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 37
    • Mobile Payments 2010-2014 Value Chain The value chain of mobile payments is quite complex and involves MNOs, banks, retailers, merchants and consumers at various stages. Since the services are offered through different business models in different markets, the practical value chain differs from region to region; however, fundamentally it remains the same worldwide. In the figure below, the value chain of mobile payments is explained in a basic and simplified manner, defining the role of each stakeholder across the value chain. Figure 21: Basic Value Chain of Mobile Payments Deployment of the Service Demand for the Service Use of the Service Customer Relationship Management Processing of the Service Consumers order products or transfers using the mobile payment platform and the products or services are delivered by the concerned party Regular communication with consumers is conducted to market the product and address their issues or inquiries Stakeholders Involved Stakeholders Involved Stakeholders Involved Consumers Consumers, MNOs, Merchants and Content Owners/Aggregators Consumers, Banks, MNOs, Mobile Marketing and Outsourcing Companies Consumers demand for the mobile payment instruments or applications Mobile payment instruments or applications are deployed by the concerned party Once the services or products are delivered, payment process is initiated and the amount is either debited from a user’s account or added to their monthly bill Stakeholders Involved Stakeholders Involved MNOs, Banks, Mobile Payment Service Providers and Mobile Handset Vendors MNOs, Banks and Mobile Payment Service Providers Source: Portio Research Ltd. 38 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 The several stages in the value chain of mobile payment services are explained below: • Demand for the service: Consumers can approach any of the mobile payment service providers, including MNOs, banks, independent service providers, handset vendors, etc., for a service that best suits their needs • Deployment of the service: A mobile payment service may include a mobile payment application or the instrument or both, which can be deployed by any of the below mentioned players in the value chain: MNO Bank Mobile Handset Vendor Independent service providers • • • Consumers can approach any of the mobile payment service providers, including MNOs, banks, independent service providers, handset vendors, etc., for a service that best suits their needs. These entities may assume different roles in the deployment process of mobile payment services. Several responsibilities undertaken by an entity in this stage include: Providing the required hardware/instrument or the application for the use of a mobile payment service, such as NFC-enabled handsets, mobile money payment software and dedicated POS units After the provision of hardware, the provider has to activate the service in order to enable users to avail this service Once the service is activated, the concerned party takes care of all after sales activities, such as maintaining the product and developing the updates of the product Use of the service: Once users have the required application and hardware to avail payment services, they use the service for making purchases and transactions. When users place orders with their mobile handsets, the content owner/aggregator is responsible for making the delivery. The content can be aggregated and delivered by the MNO or from independent merchants and content owners. Processing of the service: After a user avails this service, the transaction process is initiated and can be executed by the concerned parties—MNOs, banks and independent mobile payment providers. Transactions are processed in two different modes—postpaid and prepaid. In the postpaid mode, the amount is added to the user’s monthly credit card or mobile bill. In the prepaid mode, the amount is deducted from the user’s bank account or prepaid balance. Customer Relationship Management: Mobile payment service providers set up dedicated operations teams to market their applications and handle users’ enquiries. Service providers can either establish these operations in-house or outsource them to other companies. © 2010, Portio Research. All Rights Reserved 39
    • Mobile Payments 2010-2014 Business Models The business models used predominantly for mobile payment services are: • Bank-centric Model • Collaboration Model • Operator-centric Model • Peer-to-peer Model The following section briefly discusses these models. Bank-centric Model As the name suggests, banks play the central role in this model and feature in the majority of the execution stages of the whole process. Starting with the deployment of POS at the merchants’ location and mobile payment applications at the users’ instruments, banks complete the transaction process by transferring the amount to the merchants’ accounts. Figure 22: Bank-centric Model 6 Transfer of money to merchant’s account Issuer Bank Acquirer Bank 5 Requesting for money transfer 1a Deployment of mobile payment application 3 Deduction of transaction fee 4 Initiating payment request Consumer 1b Deployment of contactless point of sale (POS) Merchant 2 Purchase of product Steps Source: Portio Research Ltd. 40 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 The payment process is executed as follows: • Banks provide merchants with contactless points of sales (POS) and users with mobile payment applications • Users avail these applications to make purchases at merchants’ shops by simply displaying their NFC-enabled handset against the POS installed in the shop • After the purchase is made, the users’ banks deduct the transaction fee from the users’ accounts. This transaction fee is either fixed as per the agreement between the users and banks or is a specific percentage of the purchase made by the users. • Post delivery of the product to users, merchants ask their banks to initiate the money transfer process to their accounts and banks charge their share based on the agreement between the two parties. • Once the merchants’ bank receives the transfer request from the merchants, the bank coordinates with the users’ bank for the transfer. • Finally, the amount is transferred to the merchants’ account completing the transaction process Industry experts are not particularly upbeat about this business model. The model does not offer any substantial benefits to MNOs as they do not feature in the value chain of mobile payments in this model. Therefore, MNOs are reluctant to strike deals with other stakeholders that promote this mobile payment business model. The following figure depicts the benefits and drawbacks of this model from the stakeholders’ perspectives. © 2010, Portio Research. All Rights Reserved 41 This model does not offer any substantial benefits to MNOs as they do not feature in the value chain of mobile payments in this model.
    • Mobile Payments 2010-2014 Figure 23: Bank-centric Model – Benefits and Drawbacks Benefits • • • New user acquisition opportunities New revenue streams from micropayments Reduced risk with less cash involved Benefits • • Increased data traffic and revenue Opportunity to tie up with banks to acquire new users MNOs Banks Drawbacks Drawbacks • • Additional costs for deployment and maintenance of mobile payment application and POS No existing user base like MNOs • Benefits Benefits • • Quick and comfortable way to make purchases Get detailed information of all the transactions, irrespective of value of transactions Operators do not get a share in revenue as they only provide the network • • Less cash involvement, reducing mishandling risks Increased impulsive spending from consumers Merchants Consumers Drawbacks Drawbacks • Less choice as the application is completely bank dependent • • Transaction fee charged by banks Extra hardware deployment in form of POS Source: Portio Research Ltd. 42 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Collaboration Model In this model, MNOs and banks join hands to provide mobile payment services to users. The service can be deployed through two different entities: either the stakeholders (MNO and banks) can agree upon an MNO providing the bank-specific mobile payment platform, or they can approach a third-party service provider to deliver the service on their behalf. Figure 24: Collaboration Model 1 Agreement between MNOs and Banks to offer payment service Third Party Service Provider MNO 2a Deployment of mobile payment application 4 Deduction of transaction fee 4 Deduction of transaction fee Consumer 3 Purchase of product 6 Requesting for money transfer 7 Transfer of money to merchant’s account 5 Initiating payment request Merchant Steps Issuer Bank Acquirer Bank 2b Deployment of contactless point of sale (POS) Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 43
    • Mobile Payments 2010-2014 The payment process is executed as follows: • Banks and MNOs come together to offer mobile payment services • The deployment of a mobile payment application is done by either the MNO or a third-party service provider selected by the MNO and bank; the deploying entity gets a fixed amount or specific percentage of total transactions being handled by its platform • Users avail these applications to make purchases at the merchants’ shops by simply displaying their NFC-enabled handset against POS installed in the shops • After the purchase is made, the users’ banks deduct transaction fees from users’ accounts and the MNOs can either add their fee to the monthly mobile bill or deduct it from the users’ prepaid balance in case of a prepaid connection. This transaction fee is either fixed as per the agreement between the users and the MNOs or is a percentage of the total purchase made by users. • Post delivery of the product to the users, merchants asks their banks to initiate the money transfer process to their accounts; banks charge their share based on the agreement between the two parties. • Once the merchants’ banks receive the transfer request from merchants, the banks coordinate with the users’ banks for the transfer. • Finally, the amount is transferred to the merchants’ accounts, completing the transaction process This model has received a positive response from all the stakeholders in the mobile payments value chain, as each player receives a share from the revenue pie. However, in practice, this model will be difficult to implement considering the complexities involved in setting standards for the payment platforms, and with the mutual consent of banks, MNOs and third party service providers also being required. The figure on the next page depicts the benefits and drawbacks of this model from the stakeholders’ perspectives. 44 © 2010, Portio Research. All Rights Reserved This model has received a positive response from all the stakeholders in the mobile payments value chain, as each player receives a share of the revenue pie.
    • Mobile Payments 2010-2014 Figure 25: Collaboration Model – Benefits and Drawbacks Benefits • • New user acquisition opportunities No hassle of deploying the service as it is provided either by the MNO or by a third party Benefits • • New revenue stream from transactions New user acquisition opportunities MNOs Banks Drawbacks Drawbacks • • Transaction revenue is shared with MNOs Complexities while setting standards for the service • Benefits Benefits • • Quick and easy way to make purchases More options available while choosing bank for payment service Complexities while setting standards for the service • • Less cash involvement, reducing mishandling risks Improved users’ satisfaction Merchants Consumers Drawbacks Drawbacks • Increased concerns about transaction fee deduction with involvement of a third party service provider • • Transaction fee charged by banks Extra hardware deployment in form of POS Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 45
    • Mobile Payments 2010-2014 Operator-centric Model In this model, the mobile network operator is responsible for the deployment of the mobile payment service and performing the transaction process. The MNO installs the application on the users’ NFC-enabled mobile handsets and provides merchants with POS. Post deployment, the MNO handles payment processes as well, thus assuming the role played in other business models by banks or independent electronic firms. Figure 26: Operator-centric Model MNO 3 Amount deducted from prepaid account or added to the monthly bill 4 Amount Paid to Merchant 1a Deployment of application on NFCenabled device 1b Deployment of POS or application on NFC-enabled device Merchant Consumer 2 Purchase of product Steps Source: Portio Research Ltd. 46 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 The payment process is executed as follows: • The MNO installs the mobile payment application on users’ NFC-enabled mobile handsets and deploys points of sale at merchants’ locations • Users avail these applications to make purchases at merchants’ shops by simply displaying their NFC-enabled handset against the POS installed in the shop. In addition, users can buy the MNO’s content as well. • MNOs charge users either by deducting the purchase amount and the transaction fee amount from the users’ prepaid balance or by adding the amount to their monthly bill • Post the purchasing process, merchants share the amount information with the MNO through the installed POS, after which the amount is paid to the merchant by the MNO This model is not expected to gain widespread popularity among stakeholders, as it is biased towards MNOs and completely discards the involvement of entities such as banks and electronic money companies. While MNOs gain extra revenue streams and extended product portfolios under this model, the absence of banks and known electronic money transfer firms is expected to add to consumers’ concerns about the risks involved in the process. The next figure depicts the benefits and drawbacks of this model from the stakeholders’ perspectives. © 2010, Portio Research. All Rights Reserved 47 This model is not expected to gain widespread popularity among stakeholders, as it is biased towards MNOs and completely discards the involvement of entities such as banks and electronic money companies.
    • Mobile Payments 2010-2014 Figure 27: Operator-centric Model – Benefits and Drawbacks Benefits • No Benefits • Full authority over the process Extended service portfolio and increased subscriber loyalty MNOs Banks Drawbacks Drawbacks • Exclusion from the mobile payment value chain • • Benefits Benefits • • Less hassle as service is provided directly by MNOs Less complexities with reduced number of entities involved Complete responsibility for infrastructure development and deployment of instruments Increased liability – risks and fraud • • Increased impulsive spending by consumers Reduced costs with elimination of paper bills and receipts Merchants Consumers Drawbacks Drawbacks • Increased concern for security and risks involved due to the absence of banks and electronic money companies • • MNOs have an upper hand in deciding transaction fee Extra hardware required Source: Portio Research Ltd. 48 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Peer-to-Peer Model In this business model, Peer-to-Peer mobile payment service providers sit at the centre of the process handling the majority of the activities, and thus reducing the role of banks and MNOs in the mobile payments value chain. Peer-to-Peer service providers install payment services on users’ NFC-enabled devices and deploy POS at merchants’ locations. Furthermore, the service providers coordinate with the issuer banks to transfer the amount to the merchants’ account. Figure 28: Peer-to-Peer Model Issuer Bank 4 Verification Process 5 Amount transferred after deducting processing or intercharge fee 3 Request to initiate transfer Peer-to-Peer Service Provider 2b Purchase through portal 1a Deployment of mobile payment application 6 Amount transferred after deducting predefined commission 1b Deployment of POS Consumer Merchant 2a Purchase of product through POS installed Steps Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 49
    • Mobile Payments 2010-2014 The payment process is executed as follows: • Peer-to-Peer payment service providers install the mobile payment service on users’ handsets and deploy POS at merchants’ locations, after which both users and merchants are required to open their accounts on the service providers’ portal to process the transactions • Once these accounts are functional, users can make purchases either from the POS installed at merchants’ locations or through the service providers’ online portal and initiate the transfer request. • After receiving purchase details from the users, service providers contact users’ banks for further processing of the transaction • The banks initiate the verification process and once it is complete, transfer money after deducting their processing fee • After receiving money from the bank, service providers transfer this amount to the merchants’ account after deducting their own commissions This business model is different in principle from other models as it minimises, to a large extent, the role of banks and MNOs—the cornerstones of the value chain in other models. Although users and merchants are expected to benefit from this type of service – as they have additional ways to avail services with the service provider’s own online portal – the reduced participation of banks and MNOs will hinder the widescale penetration and acceptance of this model. The next figure depicts the benefits and drawbacks of this model from the stakeholders’ perspectives. 50 © 2010, Portio Research. All Rights Reserved This business model is different in principle from other models as it minimises, to a large extent, the role of banks and MNOs—the cornerstones of the value chain in other models.
    • Mobile Payments 2010-2014 Figure 29: Peer-to-Peer Model – Benefits and Drawbacks MNOs Banks Drawbacks Benefits • • • New revenue channel from processing fees Opportunity to gain new users through partnerships Drawbacks Benefits Reduced revenue generation compared to other models • • • Increase in data traffic Opportunity to gain new users through partnerships No share in the mobile payment revenue pie Peer-to-Peer Service Provider Drawbacks Benefits • • Maximum control over revenue channel Partnership opportunities with banks and MNOs • • Increased initial costs with infrastructure set up Increased risk liability Merchants Consumers Drawbacks Benefits • • Reduced or no transaction fee Several discount schemes • • Extra account to manage Less involvement of more reliable entities such as banks and MNOs Drawbacks Benefits • • Opportunity with potential increase in number of transactions Faster mode of payment • Transaction fee charged by Peerto-peer service providers Lack of experience of service provider • Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 51
    • Mobile Payments 2010-2014 Table 7: Comparison of Mobile Payments Business Models Model Stakeholder Benefits Drawbacks Banks New revenue streams Cost incurred on infrastructure installation MNOs Increase in data traffic No share in mobile payments revenue pie Merchants Less cash involvement, reducing the risk of fraud and thefts Transaction fee charged by the banks Consumers Quick and easy way to purchase Less options in choice of bank Banks No hassle of deploying the service Transaction revenue is shared with MNOs MNOs New revenue stream from transactions Complexities while setting standards for the service Merchants Improved users’ satisfaction Extra hardware deployment in form of POS Consumers More options available while choosing bank for payment service Increased concerns with involvement of third party service provider Banks No benefits Exclusion from the mobile payment value chain MNOs Full authority over the complete process Increased liability for risks and fraud Merchants Increased impulsive spending MNOs hold upper hand in deciding transaction fee Consumers Less hassle as service is provided directly by MNOs High risks due to absence of banks and electronic money companies Banks More potential users through partnerships Reduced revenue generation as compared to other models MNOs Increase in data traffic No share in the mobile payment revenue pie Merchants Opportunity with potential increase in number of transactions Lack of experience of service provider P2P Service Providers Maximum control over revenue channel Increased risk liability Consumers Reduced or no transaction fee Extra account to manage Bank-centric Collaboration Operator-centric Peer-to-Peer Source: Portio Research Ltd. 52 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Key Players Mobile payment services are now being offered in all major markets worldwide. Operators either develop their own payment solutions, as in the case of Japan’s NTT DOCOMO and Safaricom in Kenya, or tie up with independent service providers to extend these services to their subscribers. The following section discusses some of the key providers of mobile payment services. Safaricom Kenya – M-PESA M-PESA was introduced by Kenyan operator Safaricom in March 2007. The service was developed by Sagentia, an international technology consulting organisation, for Vodafone. Vodafone launched this service in several countries through its subsidiaries and partners— Safaricom in Kenya, Vodacom in Tanzania and Roshan in Afghanistan. The service allows users to perform the following functions: • Withdraw and deposit money • Transfer money to another’s account • Pay bills • Buy airtime As of September 2009, there were nearly 8 million subscribers of this service and the total value of P2P transactions (cumulative) stood at USD 3.4 billion. In September 2009 alone, the P2P (peer-to-peer) transactions value was USD 302 million. 19 The service is rapidly increasing its reach, with partnerships with leading banks, ATM service providers, Saccos and MFIs. 20 Recently, Safaricom signed a deal with Equity Bank, which will allow M-PESA users to withdraw money from Equity Bank ATMs. Safaricom has also recently entered into an agreement with Gulf African Bank, Kenya’s first fully Shar’iahcompliant bank for agent-to-agent transactions. This partnership has provided M-PESA agents with access to more delivery channels through the bank. As of September 2009, the M-PESA service was distributed through 13,326 agents and more than 27 bulk payment partners in Kenya. The figure below depicts the growth of M-PESA users in Kenya. Figure 30: M-PESA Users – Kenya (In Million, March 2008 – September 2009) 10 8.0 Users (In Million) 8 6.5 6 4 2.1 2 0 Mar-08 Mar-09 Sep-09 Period Source: Portio Research Ltd. 19 Source: Company Reports Note: SACCOs stands for Savings And Credit Cooperative Organisations and MFIs stands for Microfinance Institutions. 20 © 2010, Portio Research. All Rights Reserved 53 As of September 2009, there were nearly 8 million subscribers of M-PESA and the total value of P2P transactions (cumulative) stood at USD 3.4 billion.
    • Mobile Payments 2010-2014 The figure below shows the value of P2P transactions processed through M-PESA. Monthly Transactions Value (In USD Million) Figure 31: Monthly P2P Transactions Value – Kenya (In USD Million, March 2008, March 2009 & September 2009) 350 302.0 300 250 220.6 200 150 100 50 47.8 0 Mar-08 Mar-09 Sep-09 Month Source: Portio Research Ltd. 54 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 NTT DOCOMO Japan – DCMX DCMX is a credit payment service launched by Japanese operator NTT DOCOMO in April 2006, that went on to attract one million subscribers within seven months of launch. 21 DCMX allows its users to use their mobile handsets as credit cards and make purchases through DOCOMO’s mobile payment platform iD. In order to make purchases, users’ handsets should be installed with Osaifu-Keitai, DOCOMO’s contactless IC cards. The service is highly secure, as the handsets deployed with Osaifu-Keitai can be locked remotely in the event they are lost or stolen. The growing popularity of Osaifu-Keitai enabled handsets and iD terminals in shops and fast food restaurants etc. has boosted the penetration of DCMX among DOCOMO subscribers. The figure below highlights the growth of DCMX users in 2009. Figure 32: DCMX Users (In Million, June 2009 – December 2009) Users (In Million) 12 9.6 10.2 10.7 8 4 0 Jun-09 Sep-09 Dec-09 Period Source: Portio Research Ltd. As of July 2009, over 0.4 million iD readers/writers were installed throughout Japan and more than 30 million subscribers were using Osaifu-Keitai-compatible handsets. OsaifuKeitai services were used by nearly 60 percent of DOCOMO’s subscribers as of July 2009. 22 In order to promote the service, the operator offers loyalty points on every transaction. Users collect these points to get discounts on operator-owned products and other rewards offered by the MNO. 21 22 Source: http://www.nttdocomo.com/pr/2009/001450.html Source: http://www.nttdocomo.com/pr/2009/001450.html © 2010, Portio Research. All Rights Reserved 55 As of July 2009, over 0.4 million iD readers/writers were installed throughout Japan and more than 30 million subscribers were using Osaifu-Keitaicompatible handsets.
    • Mobile Payments 2010-2014 Globe Telecom Philippines – GCASH GCASH is a popular M-commerce service launched by Globe Telecom in October 2004. In order to use the service, users have to register themselves and pay PHP 1 (USD 0.02) per transaction. Using GCASH, users can make payments for the following: • Domestic and international remittances • Utility bills • Interest and amortization of loans • Insurance premiums • Donations to various institutions and organizations • Sales commissions and payroll disbursements • School tuition fees • Micro tax payments and business registration • Electronic loads and pins • Online purchases • Ferry and airline tickets • Train tickets using the G-PASS chip As of end-2009, there were 1.2 million registered users of the service. The figure below highlights the number of GCASH users since end-2007. Figure 33: GCASH Users (In Million, 2007 – 2009) 23 Users (In Million) 2 1.4 1.2 1.2 1 0 2007 2008 2009 Period Source: Portio Research Ltd. The operator has made dedicated efforts to extend the reach of this service through several partnerships and by increasing the number of outlets. In January 2010, Globe received approval from Bangko Sentral ng Pilipinas (the central bank) to use Globe’s sub-distributors as GCASH outlets. With this approval, the total number of GCASH outlets has increased from 3,000 to 18,000. 24 , 25 In August 2009, GCASH partnered with Delbros, a logistics company in the Philippines, to mitigate users’ apprehensions regarding the safety of online shopping and the delivery of goods. This partnership allows users to inspect the purchased product before they pay for it. In early 2009, Globe Telecom joined with Friendster, a social networking site, for online money transfers. With this partnership in effect, millions of Friendster’s users within and outside the Philippines gained access to GCASH, allowing them to transfer and receive money anytime, anywhere. 23 Note: The dip in users in 2009 would appear to be caused by heavy subscriber churn. Past GCASH user levels are also skewed by changes in the way Globe counts GCASH users. 24 Source: http://www.mobile-financial.com/node/3495/Globe-unit-secures-govt-nod-to-expand-remittance-service 25 Source: http://pinoybusiness.org/2010/01/29/globe-gets-bsp-nod-to-expand-gcash-network/ 56 © 2010, Portio Research. All Rights Reserved As of end-2009, there were 1.2 million registered users of GCASH.
    • Mobile Payments 2010-2014 mChek mChek is a provider of mobile payment services in India, and has established business partnerships with major Indian MNOs and banks to extend its services to users across India. mChek’s key partners include: • Bharti Airtel • Tata DOCOMO • ICICI Bank • VISA • HDFC Bank • Citi Bank • Standard Chartered Bank • Gemalto • State Bank of India • MasterCard Its mobile payment solution is handset independent and is compatible with all financial instruments such as credit cards, debit cards and prepaid cards. Users can avail its solution for the following purposes: • Pay utility bills such as electricity and Satellite TV • Purchase mobile recharge with an SMS • Buy movie tickets and flight tickets • Pay insurance premiums • Transfer money to domestic as well as international Visa Cards • Pay for over-the-counter purchases In December 2009, mChek partnered with NGO Swayam Krishi Sangam and introduced a model for cash-free microfinance for unbanked and under-banked users. The model is intended to provide financial services to users who do not have access to banks and deal in cash only. © 2010, Portio Research. All Rights Reserved 57 mChek’s mobile payment solution is handset independent and is compatible with all financial instruments such as credit cards, debit cards and prepaid cards.
    • Mobile Payments 2010-2014 Paybox Paybox is a provider of mobile payment enterprise solutions worldwide. The company was established in 1999 and was acquired by Sybase, an enterprise software and services company, in January 2009. Paybox solutions are used by more than 5 million end users and 20,000 merchants worldwide. 26 Its clientele includes major MNOs and mobile commerce providers worldwide, including: • Vodafone Germany • O2 Germany • Mobilkom Austria • Maxis Malaysia • Celcom Malaysia • Vodafone Egypt • eBay Key products offered by the company are: • TopUp Mobiliser: It is primarily used for recharging the prepaid accounts of mobile subscribers. The product can be used for fixed and variable top-up denominations and supports both voucher based and voucher less solutions. • Brand Mobiliser: It allows mobile subscribes to avail mobile commerce services and content through dedicated SMS short codes. • Money Mobiliser: It allows financial service providers to target high risk markets and unbanked consumers with cost-efficient banking and payment services. • Card Mobiliser: It allows financial service providers to offer special purpose payment instruments such as VISA, Mastercard, etc. In May 2009, Sybase 365 announced plans to partner with Swisscontact, the Swiss Foundation for Technical Cooperation, to offer development services for mobile money solutions in emerging markets. 26 Source: http://www.paybox.net/about_paybox.html 58 © 2010, Portio Research. All Rights Reserved Paybox solutions are used by more than 5 million end users and 20,000 merchants worldwide.
    • Mobile Payments 2010-2014 paythru paythru is a mobile payment solutions provider based in the UK. Until October 2009, the company was operating under the brand name of txttrans, after which it was rebranded as paythru. The company’s mobile payment solution allows users to make purchases anywhere, anytime, and users are not required to set up any account or e-wallet in order to avail its services. Furthermore, users are not charged for utilising this service, instead the retailers bear the service cost. The service is highly secure and is the first mobile payment service to achieve Level 1 PCI DSS compliance. 27 paythru’s key partners include: • pensio • O-C Group • Rackspace The company currently has operations in Europe and the US, and plans to shortly introduce services in Asia Pacific and the Middle East. The company’s key clients include: • JML • Rangers FC • CabCard • MoBank The key features and benefits of paythru’s mobile payment solution include: • No data is stored on the phone, reducing consumers’ security-related concerns • Payments are charged directly from consumers’ credit/debit cards • No registration or e-wallet is required to avail the service, and users do not pay any transaction costs • No limit on the purchase value • Mobile transactions are processed in real-time Recently, at the World Mobile Congress in Barcelona (February 2010), paythru announced the launch of seven new products including: • paythru Charity • paythru Retail • paythru Gaming • paythru Subscriptions • paythru Ticketing • paythru Insurance • paythru P2P In December 2009, paythru partnered with pensio, a full-line supplier of payment solutions, to offer simpler and faster ways of account creation for merchants worldwide. The duo handles the complete process of account by coordinating with the acquiring banks. In January 2009, paythru agreed to become the mobile payments supplier for the fundraising activities of Rangers Football Club Development Fund. 27 Note: PCI DSS stands for Payment Card Industry Data Security Standard. © 2010, Portio Research. All Rights Reserved 59 In January 2009, paythru agreed to become the mobile payments supplier for the fundraising activities of Rangers Football Club Development Fund.
    • Mobile Payments 2010-2014 Chapter 4 Mobile In-application Payments 60 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Mobile In-application Payments Overview In-application payments (or in-app payments) allow users to make micro-transactions for purchasing digital assets within an application. These assets include virtual gaming goods (e.g. aircrafts, ammunition, car accessories, agricultural products, etc.), additional game levels, subscriptions and other forms of micro-transactions. An example is SGN’s game ‘Skies of Glory’ on Apple’s App store. The game itself is free to download, but users need to pay USD 1.9 to USD 2.8 for planes, USD 4.8 for a mission pack and USD 1.9 for a 'Multiplayer Bundle’ to add local Wi-Fi and Bluetooth capabilities. Another example is Namco Networks’ ‘Ace Combat Xi Skies of Incursion’, another gaming application available on Apple’s App store. While this game is not free, like ‘Skies of Glory’ it allows users to buy additional planes for 95 cents each. In-app payments have been around in the online world for quite some time now. For example, the X-Box Live Marketplace relies heavily on micro-payments, selling a significant amount of add-on content for a few dollars at a time. The online social network site Facebook generated about USD 75 million (roughly 13 percent of its revenues) from the sale of virtual goods in 2009. 28 In-app payments allow developers to lower the price of the application (or even offer it for free) and extend their audience by monetising the elements of the application. In-app payments are especially good for small developers who have so far been offering free applications to users. In-app payments are most popular in the gaming sector where users resort to a lot of impulse purchases of add-ons, additional levels, maps, etc. In-app payments allow developers to lower the price of the application (or even offer it for free) and extend their audience by monetising the elements of the application. As we write this report, Apple is the only player offering in-app payments in its App Store. RIM is reported to be planning to allow in-app payments in its application store, BlackBerry App World, by mid-2010. Revenue Potential Operators Apple’s App Store is network agnostic. Apple sells its applications directly to users and does not depend on operators for billing. In the company’s case, operators function as ‘pipes’ to transport data traffic for iPhone users. Currently, as Apple is the only application provider that allows in-apps payments, the potential for operators is still not clear. However, if in-app payments take off in the same way as the applications stores did, it is reasonable to expect that other applications providers will soon allow in-apps payments. For application storefronts that allow operator billing (e.g. Nokia’s Ovi store), operators can expect a share of the revenue for handling billing settlement—just the way it works for application downloads. Operator-branded application stores (e.g. Vodafone 360, O2 Litmus) will earn incremental revenues from in-app payments directly after passing on a certain share to developers. Currently, most operators pass on about 70 percent of revenues from application sales to developers. It remains to be seen whether the same sharing rule works for in-app payments. Application Developers Considering that most of the applications available on Apple’s App Store are free, in-app payments will open new revenue streams for developers. Even while providing an application for free, developers will be able to earn revenues if they build in in-app payment options in the application. The ability to upgrade from a free or lite version to a paid one from within the application is expected to stimulate consumer impulse purchases and add to the developers’ revenues further. 28 Source: http://www.businessinsider.com/breaking-down-facebooks-revenues-2009-7 © 2010, Portio Research. All Rights Reserved 61 Currently, most operators pass on about 70 percent of revenues from application sales to developers.
    • Mobile Payments 2010-2014 Handset Manufacturers Handset OEMs such as RIM, Samsung, Palm and Apple, offer their own applications stores which come pre-installed in their respective handsets. These manufacturers currently offer up to 80 percent of their revenues to their developers and some pre-defined share to operators unless their offering is network-agnostic like Apple’s App Store. As and when these handset manufactures launch in-app payments, they are expected to continue passing on the majority proportion of revenue from micro-transactions to their developers, sharing the rest among operators and themselves. In-app payment mechanism The in-app payment function is enabled within an application with the help of an application programming interface (API), which allows developers to embed a payment platform directly within their applications. Developers implement in-app purchases in their iPhone applications using Apple’s Store Kit framework. The Store Kit connects to the App Store on the developers’ behalf to securely process payments from the users. It prompts the user and collects the payment, then notifies the application so that it can provide the user the access to the add-on items purchased. Business Model Apple keeps 30 percent of the revenues from in-app purchases and the developers take the remaining 70 percent. Apple is not responsible for delivering the additional content; they simply approve and handle the payment, and the developers do the rest. Users are billed for their purchases through their iTunes accounts. The following figure provides the in-app payment business model for the App Store. 62 © 2010, Portio Research. All Rights Reserved Apple keeps 30 percent of the revenues from in-app purchases and the developers take the remaining 70 percent.
    • Mobile Payments 2010-2014 Figure 34: Apple App Store In-app Payments Model 1 Provision of Application Programming Interface Apple 2 In-app Payment Applications 4 Payment 6 70 percent of Payment Revenues from Step 4 3 Provision of Applications with In-app Payments User Developer 5 Delivery of Additional Content Steps Source: Portio Research Ltd. Case Study: Apple App Store The mobile applications market is dominated by Apple with its Apps Store. In 2009, an overwhelming majority of the mobile apps downloaded worldwide were from Apple’s App Store. Apple’s application store, called ‘App Store’ offers over 150,000 free and paid applications. The ‘3 billionth’ application was downloaded from this store at the beginning of 2010. The App Store is expected to stock more than 300,000 applications by the end of 2010. iPhone and iPod touch users in 77 countries worldwide can choose from a diverse range of applications in 20 categories, including games, business, news, sports, health, reference and travel. Apple launched its App Store in July 2008. Like all recent Apple products, the application storefront became an instant success, serving 10 million downloads within three days of launch. The following figure shows the App Store’s performance in the eighteen months since launch. © 2010, Portio Research. All Rights Reserved 63
    • Mobile Payments 2010-2014 Figure 35: Application Downloads from Apple’s App Store – Performance in the eighteen months since launch 29 Downloads (in Million) 3,500 3,000 3,000 2,500 2,000 2,000 1,500 1,000 500 10 100 Jul-08 (Within 3 days of launch) Sep-08 0 Sep-09 Jan-10 Period Source: Apple Up until mid-2009, the only way developers could make money from the applications they had made available in the App Store was by selling premium, paid applications. Given that the majority of applications in the store were offered for free, the revenue potential of the App Store was limited. In June 2009, Apple began allowing developers to provide for in-app payments in paid applications available through the App Store. Four months later, it extended the in-apps payment functionality to ‘lite’ versions (free teaser versions) of applications. The ability to add in-app purchasing of virtual goods from within an application is expected to provide developers and Apple with significant additional revenue streams. As a result, developers may be presently inclined to spend more time, money and effort developing applications for the iPhone rather than other smartphones, such as the Android devices or Windows Mobile devices. Besides, with in-app purchasing built into applications, developers can also expect greater control over their applications. They will be allowed to add levels to games and other add-on content without having to go through the App Store’s approval process every time. They will also not be required to spend development time and effort separately on the ‘lite’ version and the ‘full’ version of the application, as in-app purchases will allow users to upgrade to the paid version by paying from within the application. The following table lists some of the most popular applications with in-app payments in the App Store. 29 Note: These are cumulative numbers. 64 © 2010, Portio Research. All Rights Reserved The ability to add in-app purchasing of virtual goods from within an application is expected to provide developers and Apple with significant additional revenue streams.
    • Mobile Payments 2010-2014 Top Applications with In-app Payments available from Apple’s App Store (November 2009) Table 8: Application Eliminate Pro Type Free Game Developer Ngmoco Rock Band Paid Game Electronic Arts Boxcar Free alert notification Boxcar The Sims Paid Game Electronic Arts MotionX GPS Drive Paid turn-by-turn GPS application MotionX I am T-Pain Paid Music personalisation Paid music app Smule Top in-app purchases Energy "power cells," which allow users to earn credits priced between 99 cents to USD 4.99. Credits can be exchanged for virtual goods Music tracks costing 99 cents each Additional services such as alerts for Facebook and Twitter costing 99 cents each Settings and costumes from the "campus life," "vampires and werewolves," and "castle life" sets A month of service for USD 2.99 or a year’s service for USD 24.99 Additional song tracks Tapulous Additional song tracks Tap tap revenge 3 Papaya Pro Homerun Battle 3D Paid game Paid Game (baseball) Com2uS Papaya credits Customised players and equipment ranging 99 cents to USD 19.99 Source: Business Insider © 2010, Portio Research. All Rights Reserved 65
    • Mobile Payments 2010-2014 Chapter 5 Mobile Ticketing and Coupons 66 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Mobile Ticketing and Coupons Overview Mobile tickets and coupons are probably the most promising business lines in the mobile payment domain. These services are fast catching the attention of users worldwide and are also gaining popularity among other stakeholders due to the associated benefits and ease of implementation. For distributors, mobile ticketing and coupons gives the advantage of reducing costs related to printing and distribution of paper tickets. This mode of availing tickets is also convenient for consumers as the process cuts down on the number of steps between buying and receiving a ticket. The normal delivery of mobile tickets and coupons requires the mobile ticketing systems to contact the back-end IP server to verify the ticket and record its use. This implies that mobile ticketing systems need real-time connection to the ticket database. However, in cases where the ticket is purchased just prior to its use and where scanning devices cannot have realtime access to servers/databases (for example ticket verifying machines on vehicles) encryption of data is used to facilitate off-line validation. In addition to providing mobile tickets, the infrastructure is also being used for the distribution of consumer vouchers and coupons. Distribution of mobile coupons is a form of targeted advertising as it stimulates demand. It also reduces the costs related to promotional campaigns. Furthermore, the uptake of mobile coupons is easily traceable, which is useful for running customised advertising campaigns. Mobile Ticketing Mobile ticketing has been able to capitalise on the legacy of the paper ticketing infrastructure and user base. Unlike several other services, mobile ticketing already had a ready-made user segment even before the service was launched to movie goers, sports fans, music lovers etc. Mobile ticketing gave these segments more freedom with anywhere-anytime buy options and eradicated their need to stand in long queues for hours. With such a value proposition, the service has gained traction in developed markets and is set to penetrate emerging markets. Mobile tickets are primarily issued using the following platforms: • SMS Based: The first ever mobile ticket was delivered through SMS. The process of obtaining a ticket through SMS is fairly simple and quick. Usually, a subscriber sends a short code through SMS to the service number, replying to which another SMS is sent to the user containing the ticket. Although the process of buying tickets through SMS is convenient compared to other platforms, it scores less on a security parameter. • Barcode Based: In this platform, tickets are delivered in the form of barcodes, either 1D or 2D, on users’ handsets. As these barcodes are normally sent through SMS or MMS, there is no need for a user to install an extra software or application in order to receive and redeem mobile tickets. Once the user receives the ticket, they can redeem the ticket by simply placing the mobile handset against the barcode scanner installed at the venue, which validates the user’s ticket. • NFC Based: In this form of mobile ticketing, an NFC-enabled mobile handset is first turned into a contactless smartcard by embedding RFID (Radio Frequency Identification) technology into the battery casing. Thereafter, users can buy their tickets by placing this NFC-enabled handset close to an RFID reader or receiver. © 2010, Portio Research. All Rights Reserved 67 Mobile ticketing gave users more freedom with anywhere-anytime buy options and eradicated their need to stand in long queues for hours.
    • Mobile Payments 2010-2014 The key areas where mobile ticketing is used are: • Movie ticketing • Concert and Event ticketing • Ticketing for mass transit systems • Airline ticketing Mobile Coupons Like mobile tickets, mobile coupons too did not appear as a new service to users, as paper or print coupons were already in use before the wireless version of coupons was introduced. Coupons are primarily used by retailers and consumer goods manufacturers to advertise their products and drive consumers to their stores. Since advertising is all about selecting the right user segment and targeting them as soon as possible, mobile coupons have gained popularity among retailers and other service providers by fulfilling both these requirements. For goods providers, mobile coupons are useful as they can reach wider audiences in less time, while for consumers it is a non-intrusive advertisement as they can choose to opt out at any moment. Moreover, coupons keep users updated about available offers and discounts on their favourite brands. Mobile coupons can be delivered to users in the following ways: • Consumer Initiated: Users can ask for coupons by sending a specific code through SMS, or they can download an application and activate it to receive mobile coupons. • Merchant Initiated: Retailers can push their advertisements along with coupons to users’ handsets through SMS, MMS or WAP. The coupon can be also be pushed through the application installed on users’ mobile handsets Drivers and Inhibitors Mobile ticketing and coupons infrastructure has significant ground to cover in most markets in order to facilitate mass adoption. Markets with successful service deployment include the developed markets of Japan, South Korea and the US. Western European markets and China are fast catching up on this service. Though the markets showing significant adoption for mobile ticketing and coupons are few in number, many more markets are anticipated to gain critical mass of users in the next couple of years. The growth of mobile ticketing and coupons is expected to be fuelled by its utility in providing tickets in the transportation and entertainment industries and by the growth of mobile advertisements. The figure below highlights the drivers and inhibitors for mobile ticketing and coupon services. 68 © 2010, Portio Research. All Rights Reserved The growth of mobile ticketing and coupons is expected to be fuelled by its utility in providing tickets in the transportation and entertainment industries and by the growth of mobile advertisements.
    • Mobile Payments 2010-2014 Figure 36: Drivers and Inhibitors – Mobile Ticketing and Coupons Inhibitors Drivers • • • • • Quick, convenient and safer mode of ticket purchase for users Compatible with the legacy ticketing infrastructure Reduced printing and distribution costs for content providers Pre-installed user base for MNOs and mobile ticketing and coupons providers Helps to build brand image for both MNOs and content providers • • • • Requirement of NFC and RFID enabled handsets to purchase mobile tickets Users’ security concerns regarding NFC and RFID enabled devices RFID readers to be installed at merchants’ locations, resulting in extra hardware and costs Potential compatibility issues with the hardware, software ticket applications Source: Portio Research Ltd. Key Players – Mobile Ticketing and Coupons Mobiqa Founded in 2002, Mobiqa is a privately held company and provider of boarding passes, mobile ticketing and coupons solutions. Mobiqa’s key focus is on delivery of barcodes to mobiles using the following channels: • SMS • MMS • WAP • E-mail Furthermore, it provides value added services; notable services include: • mobi-web: A tool that helps passengers by providing information on their smartphones • mobi-kiosk: A dashboard of travel services available on mobile phones • SMS services: A variety of SMS services to assist users in booking tickets, checking-in etc. • Mobile Internet/WAP: Users can book tickets on the move using their mobile handsets’ WAP browsers • mobi-voucher/mobi-coupon/Mobile advertising: A coupon, redeem voucher, or an advert from the partners which can be pushed along with the barcode Mobiqa offers services to the following sectors: • Airline • Entertainment (Cinemas & Live Events) • Rail • Retail Mobiqa has partnered with companies worldwide including Motorola (UK), NWA Airlines (US), Honeywell International (US), mticket (Spain), Arc Data (Italy) and Assicom (Brazil). © 2010, Portio Research. All Rights Reserved 69 Mobiqa has partnered with companies worldwide including Motorola (UK), NWA Airlines (US), Honeywell International (US), mticket (Spain), Arc Data (Italy) and Assicom (Brazil).
    • Mobile Payments 2010-2014 The figure below highlights Mobiqa’s major business deals and partnerships in the past year. Figure 37: Major Business Deals and Partnerships – Mobiqa Mar 2009 Mobiqa achieved the status of preferred partner in International Air Transport Association’s STB (simplifying the business) initiative Apr 2009 SAS Scandinavian airlines chose Mobiqa to provide mobile boarding passes for their passengers May 2009 Paylogic, a ticketing company based in the Netherlands, formed a partnership with Mobicodes (distributor of Mobiqa Ltd in Benelux) to deliver mobile tickets to its users Jun 2009 Eagle Eye solutions, a leader in voucher issue and redemption, partnered with Mobiqa to provide a secure mobile voucher and coupon redemption platform Aug 2009 Mobiqa and Asicom Mobile Solutions teamed with Movistar Nieve to launch the first mobile ski ticket/pass initiative in Chile Sept 2009 Spanair launched their mobile check-in and boarding pass system using Mobiqa’s technology Dec 2009 Book My Show (New Zealand) offers Mobiqa’s mobile ticketing services to its users Jan 2010 MovieTickets.com entered into a strategic partnership with Mobiqa to launch a mobile ticketing program Source: Company Website 70 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 NeoMedia Technologies NeoMedia is a company in the mobile barcode technology space. Founded in 1989, and headquartered in the US, NeoMedia is also present in Germany after the 2006 acquisition of Gavitec AG, a provider of barcode reading and mobile communication systems. In 2007, NeoMedia partnered with Publicis Groupe and Hewlett Packard Laboratories to create MC2 (Mobile Code Consortium), which focused on creating a mobile ecosystem around mobiles and 2D barcodes. MC2 later evolved and companies such as Deutsche Telekom, KPN, Nokia, Qualcomm and Telefonica O2 Europe became its members. NeoMedia provides the following solutions: • Neoreader: Barcode reading software that can process both 1D and 2D barcodes. This is a universal reader and can read major types of barcodes (Matrix, QR, Aztec, EAN, UPC and Code 128). Currently Neoreader is a free of cost software. • Neoreader Enterprise: This is a solution using the Neoreader technology focusing on routing transactions to the subscriber’s existing mobile web application • Neosphere: Campaign management software focused on advertising and marketing agencies. The three critical stages in a campaign that can be addressed using this solution are: Code creation Barcode management Reporting and analytics • Exio: A scanner used for reading 2D barcodes; this device scans barcodes from mobile screens as well as printouts • Xelia: A highly versatile and accurate 2D barcode scanner. This can also be easily integrated into any existing system. • MSS (Modular Solution Server): MSS supports third party ticketing, coupon systems and databases associated to these services and helps create customised solutions for the target audience © 2010, Portio Research. All Rights Reserved 71 In 2007, NeoMedia partnered with Publicis Groupe and Hewlett Packard Laboratories to create MC2 (Mobile Code Consortium), which focused on creating a mobile ecosystem around mobiles and 2D barcodes.
    • Mobile Payments 2010-2014 The figure below highlights NeoMedia’s recent major business deals and partnerships. Figure 38: Major Business Deals and Partnerships – NeoMedia Technologies Jan 2009 Texas Nameplate partnered with NeoMedia to create a new range of digital name plates Apr 2009 IQ Mobile, a mobile marketing company in Central Europe, selected NeoMedia to provide 2D barcoding services to be used in advertising campaigns Jun 2009 Prinovis, a print and communication solution provider, formed a partnership with NeoMedia to launch a mobile solutions business Jul 2009 Mobile Tag, Inc and NeoMedia entered into a non-exclusive licensing agreement for machine readable mobile codes, which falls under NeoMedia’s patent portfolio Aug 2009 Brown Printing Company, a premier magazine publisher and cataloger, launched a new mobile 2D scanner service called B.Mobile. This integrates services from NeoMedia and its partner Prinovis. Oct 2009 Bems, a 2D barcode solution provider in Spain, formed a partnership with NeoMedia for distributing 2D barcode solutions in Latin America Dec 2009 Announcement that NeoMedia’s barcode scanning program would be pre-loaded in Sony Ericsson’s mobile handsets Jan 2010 NeoMedia’s relationship with Neustar is expanded by licensing the patented mobile barcode ecosystem of NeoMedia in Mexico Source: Company Website 72 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Cellfire Cellfire is a mobile coupons and discounts service provider in the US. Its services are available to more than 180 million consumers and are compatible with 800 mobile devices. 30 Currently, all MNOs operating in the US are offering these services to their subscribers. The company came into existence in 2005 and its mobile coupons are accepted at more than 10,000 locations in the USA. Types of mobile coupons offered by the company include: • Click 2 Clip: Consumers need to click on the banner ad or URL to save the coupon in their Cellfire account • Text 2 Clip: Consumers need to send an SMS to a particular number to save the coupon to the Cellfire application on their handsets • Call 2 Clip: Consumers request a coupon which is sent to their handsets through a call using the IVR (Interactive Voice Response) technology • Scan 2 Clip: Advertisers use 2D barcodes to send coupons to the handsets of mobile users Cellfire has partnerships with the following entities: • Coupon Publishers: Money Mailer Direct Marketing and The Metro Super Saver • Handset Manufacturers: Nokia and BlackBerry The figure below highlights Cellfire’s major business deals and partnerships since January 2009. Figure 39: Major Business Deals and Partnerships – Cellfire Jan 2009 Cellfire extended its mobile coupon services through 2,400 stores operated by The Kroger Co. in the US Jun 2009 Cellfire added Safeway as a client. Safeway is one of the largest grocery providers in the US Feb 2010 Verizon partnered with Cellfire to launch ‘Spend SmartSM’, a free of cost digital coupon service for wireless and FiOS (Fibre Optic) TV users Source: Company Website 30 Source: http://info.cellfire.com/content/about-us-overview © 2010, Portio Research. All Rights Reserved 73 Cellfire’s services are available to more than 180 million consumers and are compatible with 800 mobile devices.
    • Mobile Payments 2010-2014 Market Size Mobile ticketing and coupons are forecast to witness steep growth during 2010-2014. The user-base forecasts between 2009 and 2014 are given in the figure below. Figure 40: Mobile Ticketing and Coupons Users — Worldwide (In Million, 2009 – 2014F) 383.3 Users (In Million) 400 266.7 173.3 200 109.7 40.6 64.0 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted The volume of mobile payments for mobile tickets purchased and mobile coupons redeemed is expected to increase at a CAGR of nearly 31.2 percent between 2009 and 2014. 31 Forecasts for mobile ticketing and coupon volumes are given in the figure below. Figure 41: Mobile Ticketing and Coupons Volume — Worldwide (In USD Billion, 2009 – 2014F) 100 Mobile Ticketing and Coupons Volume (In USD Billion) 83.9 74.1 75 62.2 50.1 50 32.9 25 21.6 0 2009 2010F 2011F 2012F 2013F 2014F Year Source: Portio Research Ltd. F – Forecasted 31 Note: Mobile payment volumes for mobile ticketing and coupons account for the face value of the tickets sold and coupons redeemed using mobile handsets. 74 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Value Chain – Mobile Ticketing The basic value chain of the mobile ticketing process starts with the generation of content and ends with consumers accessing that content with their mobile tickets. The various stakeholders involved in the value chain include: • Content Owners • Content Promoters • Mobile Ticketing Solution Providers • MNOs • Consumers A simplified mobile ticketing value chain is explained below. Figure 42: Basic Value Chain of Mobile Ticketing Content Generation Content Promotion Mobile Ticketing Solution Provision Ticket Delivery Validation and Billing Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 75
    • Mobile Payments 2010-2014 A basic mobile ticketing value chain is executed in the following steps: • Content Generation: The first entity in the mobile ticketing value chain is the content generator or owner who generates the content for consumers. Such entities include movie theatres, film companies, sports bodies etc. • Content Promotion: After the content is ready to be launched in the market, content owners approach marketing or promotion agencies in order to promote their content • Mobile Ticketing Solution Provision: This is the most important and complex step in the value chain. A content promoter makes the tickets available either through MNOs or directly through the mobile ticketing solution providers. Where a promoter partners with MNOs to offer the tickets, then it is the MNOs’ responsibility to offer mobile tickets with the help of mobile ticketing solution providers. After the channel for service provision is decided, tickets are made available either at the content promoters’ websites or through smart posters deployed at different locations. • Ticket Delivery: Once the tickets are available for sale, consumers can order these tickets by either filling their details in on promoters’ websites or by simply sending the code taken from the smart posters through an SMS/MMS • Validation and Billing: After receiving the ticket on a handset, the user has to get this ticket validated by placing this handset against the barcode scanner installed at the venue. The user is then billed for the ticket and gets access to the content/venue. 76 © 2010, Portio Research. All Rights Reserved Once the tickets are available for sale, consumers can order these tickets by either filling their details in on promoters’ websites or by simply sending the code taken from the smart posters through an SMS/MMS.
    • Mobile Payments 2010-2014 Business Models – Mobile Ticketing Mobile ticketing solutions can primarily be provided in the following two models: • Model I: Content owner/promoter partners with MNO to provide mobile tickets • Model II: Content owner/promoter approaches mobile ticketing solution providers to offer mobile tickets, thus bypassing MNO Model I In this business model, the content owner/promoter deals with an MNO to offer mobile tickets to its users. Once the agreement is set, it is the MNO’s responsibility to establish the mobile ticketing facility with the help of mobile ticketing solution providers. The MNO and mobile ticketing solution provider take a fixed amount from each ticket issued as per their agreement with the content owner/promoter. Apart from this revenue, the MNO earns from the SMS sent by users to order the ticket. This business model is briefly explained in the figure below. Figure 43: Mobile Ticketing – Business Model I Content Promoter Content Owner Content owner approaches marketing firms to promote their content Content promoter partners with MNO to offer tickets on mobile handsets for the users MNO MNO partners with mobile ticketing solution provider to initiate mobile ticketing process Mobile Ticketing Solution Provider Consumers Mobile ticketing solution provider sends tickets to users’ handsets through MNO’s network Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 77
    • Mobile Payments 2010-2014 Model II In this business model, the content owner/promoter deals directly with mobile ticketing solution providers to offer tickets on users’ handsets, barring the MNO’s direct participation in the value chain. In this model, the MNO makes revenue from the SMS sent by subscribers to order the tickets and the SMS sent by solution providers through the MNO’s network to deliver the tickets to users. The figure below briefly explains this business model. Figure 44: Mobile Ticketing – Business Model II Content Promoter Content Owner Content owner approaches marketing firms to promote their content Content promoter partners with mobile ticketing solution provider to offer mobile tickets to consumers (bypassing MNO) Mobile ticketing solution provider sends tickets to mobile handsets of users using MNO’s network Consumers Mobile Ticketing Solution Provider Source: Portio Research Ltd. 78 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Value Chain – Mobile Coupons The basic value chain of mobile coupons is akin to the value chain of mobile ticketing in principle. The stakeholders involved are the same in the two value chains and perform similar functions. Most of the vendors that offer mobile ticketing solutions also provide mobile coupons. The primary difference in the two value chains lies in the revenue sharing model, which is discussed later in this report. A simplified mobile coupons value chain is explained in the figure below. Figure 45: Basic Value Chain of Mobile Coupons Content Generation Content Promotion Mobile Coupons Solution Provision Coupons Delivery Validation and Billing Source: Portio Research Ltd. © 2010, Portio Research. All Rights Reserved 79
    • Mobile Payments 2010-2014 Business Model – Mobile Coupons The most widely deployed business model for mobile coupons is the ‘Pay per Redemption’ model. While MNOs and mobile ticketing solution providers receive a fixed amount or percentage of the value of each ticket issued in the mobile ticketing value chain, in the case of mobile coupons the MNOs and solution providers receive a fixed amount for each coupon redeemed by consumers rather than a share of each issued coupon. Figure 46: Mobile Coupons – Pay per Redemption Business Model Content Promoter Content Owner Content owner approaches marketing firms to promote their content Content promoter partners with mobile coupons solution providers to issue coupons Mobile Coupons Solution Provider Mobile coupons solution provider approaches MNO to use MNO’s network to issue mobile coupons MNO Consumers Mobile coupons are issued to users through MNO’s network Source: Portio Research Ltd. 80 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Case study Mobile Ticketing – Go North East Introduction Go North East, a subsidiary of Go-Ahead Group, is the largest provider of bus services in the North of England. Founded in 1883 and headquartered in Gateshead, the company offers bus services through two divisions—North Division and South Division. Launch of mobile ticketing service Go North East is the first bus services provider in the UK to offer its tickets on mobile handsets to passengers. The company introduced this service in January 2008 in partnership with Atos Origin, an international IT services company, and Swiftpass, a mobile ticketing specialist. The service is called ‘txt2go’ and enables users to order tickets anytime, anywhere by simply sending an SMS. Benefits The service offers the following benefits to passengers: • Passengers can order and receive tickets anytime, anywhere • Tickets can be ordered through an SMS making it easier for users, as SMS is the most widely used and most easy to use mobile data application • With tickets being digitally stored on handsets, there is no need to carry cash • With a reduced amount of cash carried by users and on the bus itself, it makes it safer for the passengers and driver as well • As the ticket is locked to the handset, it arguably removes the threat of theft Company’s performance post launch Go North East introduced the mobile tickets facility in January 2008. The company reported good financial results in 2008 and 2009; the launch of mobile tickets being helpful in improving the financial performance. The figure below compares the increase in the company’s revenue in recent years. Figure 47: Increase in Revenue of Go North East (In GBP Million, 2006 – 2009) 32 Launch of mobile tickets Increase (In GBP Million) 7 6.1 6 4.5 5 4 3 1.5 2 1 0 -1 -2 2006 -1.1 2007 2008 2009 Year Source: Company Reports 32 Note: Values are shown in local currency (not US dollars) as annual GBP/USD currency fluctuations mean that figures converted using the respective year’s exchange rate do not reflect the clear upward trend in revenues that Go North East has achieved. For reference, using the exchange rate at 31 December 2009, the end-2009 figure of GBP 6.1 million equates to USD 9.7 million. © 2010, Portio Research. All Rights Reserved 81 Go North East is the first bus services provider in the UK to offer its tickets on mobile handsets to passengers.
    • Mobile Payments 2010-2014 The figure below highlights Go North East’s contribution to the Go-Ahead Group’s overall bus revenues. Figure 48: Go North East’s Contribution to Go-Ahead’s Bus Revenue (In Percent, 2005 – 2009) Launch of mobile tickets 18% 17.3% Contribution (In Percent) 15.3% 14.0% 13.7% 14.1% 2007 2008 2009 12% 6% 0% 2005 2006 Year Source: Company Reports Go North East’s contribution to Go-Ahead’s total bus revenue had been following a constant declining trend falling from 17.3 percent in 2005 to 13.7 percent in 2008. However, the contribution improved in 2009 with an increase of 0.4 percentage points. 82 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Mobile Coupons – Planet Funk Introduction Planet Funk is a clothing retailer operating in California, Texas and Colorado. Launch of mobile coupons Planet Funk launched its mobile coupons campaign in November 2008 with the help of mobileStorm, a digital marketing company. Planet Funk witnessed difficult times in 2008, primarily because of the wider economic turmoil, seeing its sales impacted significantly as consumers reduced shopping expenditure. In an effort to bolster its sales, Planet Funk introduced mobile coupons with varying discount schemes, such as a redemption of USD 10 coupon for spending USD 100-249 and a USD 30 coupon for spending USD 250-399. The company issued these coupons through its website, blog and the websites of malls where Planet Funk stores were located. The highlight of the campaign was that the discount could be redeemed through mobile coupons only. In an effort to bolster its sales, Planet Funk introduced mobile coupons with varying discount schemes. Outcome of mobile coupon campaign The mobile coupon campaign proved to be a huge success for the retailer. The campaign’s key benefits are highlighted below: Figure 49: Benefits of Planet Funk’s mobile coupons campaign 20 percent of the total revenue generated in December 2008 was an outcome of the mobile coupon campaign The return on investment (ROI) for this whole campaign was a staggering 377 percent with low costs involved in the whole campaign Nearly 2,000 coupons were issued in December 2008 and the redemption rate for those coupons stood at an impressive 91 percent 15 percent of consumers who redeemed their coupons opted for future mobile campaigns presenting the retailer with future business opportunities Source: Mobile Marketing Watch © 2010, Portio Research. All Rights Reserved 83
    • Mobile Payments 2010-2014 Opportunities and Benefits for Stakeholders The table below highlights the benefits and opportunities presented by mobile ticketing and coupons to the stakeholders. Table 9: Opportunities and Benefits of Mobile Ticketing and Coupons for Stakeholders Operators Benefits and Opportunities • • • • • • • Merchants Benefits and Opportunities Increased data traffic with issuance of mobile tickets and coupons over the network New revenue opportunities through partnerships with content owners and promoters Positioning ticketing and coupons as value added services and increasing subscriber loyalty Building brand perception with new services Opportunity to partner with vendors and merchants and acquire new potential subscribers Easy to deploy with existing infrastructure Leveraging existing user base of movie goers, sports fans, music lovers etc. • • • • • • • Extending potential user base with ubiquity of mobile handset Cost reduction with less paper tickets as it eliminates printing and distribution costs Leveraging the legacy ticketing infrastructure and user base Potential increase in tickets demand with anytime-anywhere availability option Increased impulsive spending with attractive discounts offered through coupons Better and precise advertising option with ease to maintain and track the target user base Reduced time required to launch an advertising campaign Vendors Benefits and Opportunities • • • • • Consumers Benefits and Opportunities New revenue streams Potential partnership opportunities with MNOs and merchants Potential acquisition opportunities by MNOs and big merchants or content generators Easy to implement by leveraging existing infrastructure of MNOs and merchants Less time required to establish and start business by leveraging existing user base of movie goers, sports fans, music lovers etc. • • • • • • • Better availability of content with anytimeanywhere option No need to stand in long queues for tickets With tickets on handsets, there is less requirement of cash to be carried, making it safer for consumers Since tickets are locked on handsets, there is no threat of ticket theft Attractive discount schemes available through discount coupons Regular updates available about several schemes run by big brands No need for high-end mobile handsets, as tickets and coupons are delivered through simple SMS Source: Portio Research Ltd. 84 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Chapter 6 Conclusion © 2010, Portio Research. All Rights Reserved 85
    • Mobile Payments 2010-2014 Conclusion Mobile payment services have come a long way from simple SMS-based services to advanced and sophisticated bar-coded tickets and much more, to such a point of evolution that some industry experts now believe that the mobile handset could replace the wallet altogether, through cashless and cardless payment systems. Mobile payment services have reached almost every market worldwide where penetration of mobile subscribers is substantial, and they continue to increase their presence. Today, mobile handsets are already being used for many payment related purposes such as transferring money to other accounts, and ordering tickets and discount coupons. Of course for the most part a mobile handset has to-date only been able to part-replicate the role of a consumer’s wallet, but user and volume figures from this sector suggest cause for optimism: the worldwide mobile payments volume stood at USD 68.7 billion in 2009, up from USD 45.6 billion in 2008; mobile payment users increased from 57.5 million in 2008 to 81.3 million by end-2009; by end- 2014, the respective figures for volume and users will have surged to USD 633.4 billion and 489.5 million. Like other mobile data services, mobile payment services were launched with various promises and – to be fair to this segment – have broadly performed in-line with expectations. Advanced mobile data services have a tendency of fairing well in advanced mobile markets and experiencing slow growth rates in the emerging or less advanced markets. Mobile payment services too are following the same growth pattern. Markets including North America, Western Europe, Japan and South Korea have witnessed encouraging uptake of mobile payment services, largely attributable to them being technologically-advanced markets where users have a penchant for mobile data services. Conversely, these services are still finding their feet in the emerging markets of Latin America, Africa and the Middle East. China and India are exceptions here; although these are less advanced markets compared to Japan and South Korea, the number of mobile payment users is still significant. This trend is explained by the mammoth subscriber base residing in these two countries, meaning that even if a small percentage of the total mobile subscribers in these two countries avail a service, the number of users becomes significant when compared to other mobile markets worldwide. The figure below highlights the regional contribution to worldwide mobile payment volumes in 2009. Mobile Payment Volumes (In USD Billion) Figure 50: Mobile Payment Volumes – Regional (In USD Billion, 2009) 32 28.7 24.8 24 16 9.8 8 2.7 2.7 Latin America Africa and the Middle East 0 Europe Asia Pacific North America Region Source: Portio Research Ltd. 86 © 2010, Portio Research. All Rights Reserved Today, mobile handsets are already being used for many payment related purposes such as transferring money to other accounts, and ordering tickets and discount coupons.
    • Mobile Payments 2010-2014 Mobile payment services have gained traction in several markets worldwide. However, the growth rate of services has been capped by similar factors in different markets. Probably the biggest hurdles to the adoption of mobile payment services are the complex business models and absence of clear revenue sharing models. Several business models deployed worldwide are in some way or the other biased towards one of the particular stakeholders: be it the MNOs, banks or mobile payment service providers. Each stakeholder realises the potential of mobile payments in increasing their revenues and acquiring new users, yet – as a generalisation - none are willing to lead the way. The primary reasons behind the reluctance of stakeholders to take initiatives to promote the services are the liability to set up the basic infrastructure and the high risks involved. Mobile payment services were launched 13 years ago and yet they retain the perception of being a new, largely unknown, untested medium fraught with uncertainties and with no discernible guarantees of success when they are launched in a new market. Rightly or wrongly, framed like that stakeholders’ procrastination is at least understandable. As mentioned, some experts envisage that with the growing popularity of mobile payment services, mobile handsets will replace users’ wallets and credit/debit cards in the near future. However, the analysis undertaken in this report of the inherent risks associated with this transformation, and the apparent unwillingness of stakeholders to bear any unnecessary risk, makes this timescale – and indeed the transition as a concept, period – seem somewhat far-fetched. Some experts envisage that with the growing popularity of mobile payment services, mobile handsets will replace users’ wallets and credit/debit cards in the near future. MNOs are unlikely to want to assume the role of credit card service providers because of the complex business models and security issues, and not least because it is outside their area of expertise. If MNOs provided these services, there is also a high probability that it would create more doubts in the minds of users, who are already apprehensive about the pricing models of advanced mobile data services. In addition, in this scenario huge amounts of money are involved, which further increases the risks and complexities. In all probability, neither MNOs nor subscribers would be comfortable with such sums being carried over mobile networks. After assessing the current scenario, the ideal business model which seems to have the potential to flourish in the future is the one in which mobile handsets will be used only to make purchases, and not for payments. In this model, users would avail mobile handsets, and not credit/debit cards, to initiate the purchase process by placing their handsets against merchants’ POS, and would then enter the PIN to complete the process. However, this is where a mobile handset’s role would end. The transaction amount would appear on the users’ credit card bill and not the monthly mobile bill. Thus, a mobile handset would replace a credit card only physically at the point of purchase. As discussed, it seems highly improbable that a mobile handset will assume the role of a credit card, at least in the foreseeable future, and this obviously limits several potential opportunities for stakeholders. However, there are certain areas where the payment potential of a mobile handset can be utilised to its maximum, including micro-payments and in-app payments. Micro-payments do not require MNOs to handle sizable amounts of cash, thus reducing the risk and complexity in their business model. In addition, since small amounts are involved in this case, it makes an ideal platform for MNOs to sell their applications and for consumers to buy those applications without being overly concerned about the pricing model. Mobile payment services do hold the potential to yield sustainable revenue streams for all stakeholders. However, in order to convert mobile payment services into a reliable source of revenue generation, all relevant parties have to unite to eliminate the biggest hurdles in the way of the growth of mobile payments — apprehensions about security and complex © 2010, Portio Research. All Rights Reserved 87 There are certain areas where the payment potential of a mobile handset can be utilised to its maximum, including micro-payments and in-app payments.
    • Mobile Payments 2010-2014 business models. Unless these issues are addressed, mobile payment services will sadly never fulfill their huge potential. 88 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Chapter 7 Appendices © 2010, Portio Research. All Rights Reserved 89
    • Mobile Payments 2010-2014 Appendices This market study has been written in a way that avoids excessive use of market acronyms (except where appropriate) and industry technical talk, as we have tried to keep the text open to all readers, not just those with in-depth knowledge of the world’s mobile markets. Because this study covers all geographical regions and many emerging markets, a great deal of the data contained within this study will potentially be of interest to investors, financial analysts, consultants, venture capitalists and others all around the world who do not work within the mobile industry itself every day of their lives. To many of these people, some of the industry technical talk and acronyms may be confusing, so we have attempted to write this study in a self explanatory way that assumes little prior knowledge, but in doing this, some of the speech chosen may seem somewhat "obvious" to our more knowledgeable readers. We hope this offers the best possible solution to everyone, and we hope this does not cause any confusion or inconvenience. Where we have used technical terms or acronyms, we offer an explanation of those expressions below. 90 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Glossary 1G or First Generation Packet Data Networks Packet data networks include Cellular Digital Packet Data (CDPD), Advanced Radio Data Information Service (ARDIS) and Mobitex are regional as opposed to national networks. 2G or Second Generation Packet Data Networks The second-generation packet networks recently introduced consist of combined voice and packet data networks based on global standards. 2.5G 2.5G describes the state of wireless technology and capability usually associated with General Packet Radio Services (GPRS) - that is, between the second and third generations of wireless technology. The second generation or 2G-level of wireless is usually identified as Global System for Mobile (GSM) service and the third generation or 3G-level is usually identified as Universal Mobile Telecommunication Service (UMTS). Each generation provides a higher data rate and additional capabilities. There is also a fourth generation (4G) of technology in the planning and research stages. 2.5G protocols extend 2G systems to provide additional features such as packet-switched connection (GPRS) and enhanced data rates (HSCSD, EDGE). 3G or third generation 3G is an International Telecommunication Union (ITU) specification for the third generation (analog cellular was the first generation and digital PCS 33 was the second generation) of mobile communication technology. Third generation Wireless Wide Area Networks (WWAN) communication systems are characterised by high-speed data rates (144 Kbps 34 to 2+ Mbps 35 ) suitable for multimedia content. 3G technologies typically are packet-switched and use Code Division Multiple Access (CDMA) technology to communicate. Examples of 3G include EDGE 36 , 1xRTT, HDR and W-CDMA. 37 3G protocols in mobile telephony support higher data transmission rates, measured in Mbps, intended for applications other than voice. 3G support broadband and bandwidth applications, such as full-motion video, video conferencing and Internet access. 4G or fourth generation 4G or fourth generation WWAN communication systems are characterised by high-speed data rates at 20+ Mbps, suitable for high-resolution movies and television. The initial deployment of 4G communication systems is expected in 2006-2010. The proposed features of these systems include 100 Mbps speed, location sensing and self-tailoring to user needs. A2P Application-to-Peer: In the mobile messaging world A2P messages are defined as messages generated by an application and sent to subscribers, for example, the advertisements sent through SMS/MMS on subscribers’ handsets. AAC Advance Audio Coding: It is an advanced audio compression algorithm used for downloading music files, streaming video, audio and satellite-radio applications. 33 Personal Communications Service (PCS) Kilobits per second (Kbps) 35 Megabits per second (Mbps) 36 Enhanced Data for Global Evolution (EDGE) 37 Wideband Code Division Multiple Access (W-CDMA) 34 © 2010, Portio Research. All Rights Reserved 91
    • Mobile Payments 2010-2014 AMR Adaptive Multi-Rate: It is a data compression tool used for coding audio forms, such as speech. It makes use of different modes of encoding, such as ACELP, DTX, VAD and CNG, to tackle unlikely network conditions AMPS Advanced Mobile Phone System: A 1G standard, which operates in the 800-900MHzfrequency band. It is still widely used in the United States. Application Programming Interface (API) It is an interface implemented by a software program to communicate with other software. Operating systems and applications use API to determine the way to call or send requests to other software. Average Profit per User (APPU) Measures the average monthly profit generated for each customer unit, such as a handset or pager that an operator has in operation. Average Revenue per User (ARPU) Measures the average monthly revenue generated for each customer unit, such as a handset or pager that an operator has in operation. Backhaul It refers to the process of transmitting voice and data traffic from a remote site to a central site. BMP BMP is an extension for files containing graphics. It is used as a graphics file format on the Microsoft Windows platform. It stores image formats of different bit sizes. It regenerates the image in its own form and does not have any compressing capabilities. However, it can adapt itself to other image software’s running on other operating systems. This graphic format also comes with .DIB (device-independent bitmap), .XBM, .XPM and .TGA extensions. BMP files can support lossless data compression algorithms because of their spare capacities. BoP Bottom of Pyramid: It refers to poorest socio economic groups. BREW Binary Runtime Environment for Wireless: It is an application development platform developed by Qualcomm. It enables wireless users to download and run applications, such as enhanced e-mail, location positioning, games, etc., to BREW-enabled handset. BREW was first introduced and developed for CDMA handsets, but it now supports GSM/GPRS and UMTS handsets as well. Broadcast Technologies for Mobile TV Some of the broadcast technologies for mobile TV worldwide are: DVB-H 38 (Digital Video Broadcast – Handheld): DVB-H technology allows simultaneous broadcast of television, video and radio channels on mobile, and helps operators to preserve network bandwidth for other data and voice services. It has been accepted as the standard by the European Telecommunications Standards Institute (ETSI). ISDB-T (Integrated Services Digital Broadcast – Terrestrial): It is the transmission standard that has been developed in Japan to help the radio and television stations support digital content. 38 Source: http://www.strategiy.com/inews.asp?id=20041127000355 92 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 DMB (Digital Media Broadcast): It is a transmission standard, which transmits video feed via satellite (S-DMB) or terrestrial (T-DMB) mode. The standard is currently deployed in Korea and is being increasingly used in other parts of Asia as well as Europe. MBMS (Multimedia Broadcast/Multicast Service): This standard allows the transmission of multimedia content over the UMTS and GSM network. BTS Base Transceiver Station: It is the equipment that facilitates the wireless communication between user equipments such as mobile handsets, computers etc., and the mobile network. BWA Broadband Wireless Access: It is a form of fixed wireless access system. CAPEX Capital Expenditure: It refers to the cost of developing a product or system. CDMA Code Division Multiple Access: In a CDMA system, each voice circuit is labelled with a unique code and transmitted on a single channel simultaneously along with many other coded voice circuits. The receiver uses the same code to recover the signal from the noise. CDMA2000 1x CDMA2000 1x: This is regarded as the first phase of CDMA2000 technology used for providing voice and data services over mobile networks. Data speeds of 307kbps are using a single channel while with two channels speeds of 614kbps are possible. Churn Rate It is the rate at which the subscribers cancel their subscription with the existing operator and sign up with another operator. Concatenate It refers to the operation of joining of two character strings end to end Disposable income Disposable income is gross income minus income tax applicable on that income, and hence the amount of income left to an individual after taxes have been paid that is available for spending and saving. DoJa It is a JAVA-based technology/application developed for DOCOMO's i-mode mobile handset. It allows users to access more interactive applications or content than the conventional HTML-based i-mode content. DRM Digital Rights Management: It refers to a set of technologies used for the administration of digital content. It authorises the nature and restricts the frequency of the usage based on the administrative policy settings. It sustains the revenue of the mobile network operator by regulating the usage of content at end user. DSL Digital Subscriber Loop: It is a technology that provides digital data transmission over the copper lines of a PSTN network. © 2010, Portio Research. All Rights Reserved 93
    • Mobile Payments 2010-2014 DVB-H Digital Video Broadcasting-Handheld is a mobile TV format. Broadcast services can be brought to mobile handsets using this technical specification. EBITDA margin EBITDA margin is the ratio in percentage of EBITDA to the total revenue earned by an MNO. EBITDA is the earnings of an MNO before accounting for Interest, Taxes, Depreciation and Amortization. EDGE Enhanced Data rates for Global Evolution: An enhanced modulation technique designed to increase network capacity and data rates in GSM networks. EDGE should provide data rates up to 384 Kbps. EDGE will let operators without a 3G license compete with 3G networks offering similar data services. Emoticon Emoticons are symbols or combination of symbols used to convey emotional content in messages. EV-DO Evolution Data Only, Evolution Data Optimised: It is a wireless radio broadband data protocol being adopted by many CDMA operators. It is being used as a part of CDMA2000 networks in Japan, Korea, the United States and Canada. It provides better data speeds in comparison to GSM technologies such as GPRS and EDGE. ExEn Execution Environment: It is an application developed by Infusio for developing games for higher-end mobile devices. GIF Graphics Interchange Format: It is a file extension to a different kind of bitmap image. This format of file is capable of compressing the size of the file, unlike a normal BMP format file. The compression process does not result in loss of data. This feature ensures the quality of image by simultaneously reducing the downloading times by a considerable amount. This format is only suitable for images of 256 and less colours. It causes limitation in formatting picture files. GPRS General Packet Radio Service (GPRS) is a packet-based standard for mobile communication, which runs at speeds up to 115 kilobits per second, compared with GSM systems' 9.6 kilobits per second. GPRS supports a wide range of bandwidths and makes efficient use of limited bandwidth. It is particularly suited for sending and receiving small bursts of data, such as e-mail and web browsing, as well as large volumes of data. Applications for GPRS may include any of the following: chat, text and visual information, still images, moving images, web browsing, document sharing/collaborative working, audio, job dispatch, corporate e-mail, Internet e-mail, vehicle positioning, remote Local Area Network (LAN) access, file transfer or home automation. GSM Global System for Mobile communications, the most widely used digital mobile phone system and the mobile telephone standard in Europe. It was originally defined as a panEuropean open standard for a digital cellular telephone network to support voice, data, text messaging and cross-border roaming. GSM is now one of the world's main 2G digital wireless standards. GSM is present in more than 160 countries and according to the GSM 94 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Association, accounts for approximately 70 percent of the total digital cellular wireless market. GSM is a time division multiplex (TDM) system. Implemented on 800, 900, 1800 and 1900 MHz frequency bands. GUI Graphical User Interface (GUI) is the front-end interface and navigation design of an application. This includes standard formats for representing text and graphics. GUIs have become the standard ways for interaction between users and digital devices. HTML Hyper Text Mark-up Language: It is a syntax based language used for designing web pages. The content of HTML, written in standard syntax, when opened in a web browser takes the form of Web page. The nascent version of HTML was used with easy syntax rules in comparison to existing HTML and MHTML versions of it. In recent times, the official standards of World Wide Web recommend Web developers to use XHTML 1.1, XHTML 1.0 and HTML 4.01 versions. IC An Integrated Circuit which is also known as a chip is a small electronic circuit made out of semiconductor material. IC is used in almost all electronic equipment in use today. iMelody It is a standard format through which music tones can be transferred between devices. The format has volume modifiers to vary the volume throughout the tone duration, codes for flashing phone’s backlight and other features. iMelody was developed by the irDa association (infrared communications). Instant Messaging Instant Messaging is an Internet-based service that alerts users when their friends or colleagues are online and allows them to communicate with each other in real-time through private online chat areas. With instant messaging, users create a list of other users with whom they want to communicate. When a user from their list is online, the service alerts them and enables an immediate contact with the other user. While instant messaging has primarily been a proprietary service offered by Internet service providers such as AOL and MSN, businesses are starting to employ instant messaging to increase employee efficiency and make expertise more readily available to employees. Integrated Mobile Broadcast (IMB) It is a 3GPP Release 8 Standard that empowers MNOs to offer Multimedia Broadcast Multicast Services in a spectrally efficient manner in the 3G TDD bands. It is deployed existing 3G FDD unicast technology. Intranet The intranet is a private network inside a company or an organisation, and uses software similar to that used on the Internet. Companies use intranets to manage projects, provide employee information, distribute data and information, etc. i-mode i-mode is a proprietary packet-based information service for mobile handsets. It delivers information (such as mobile banking, and train timetable) to handsets and enables exchange of e-mail from mobile handsets on the PDC-P network. Launched in 1999 by NTT DOCOMO, i-mode is very popular in Japan (especially for e-mail and transfer of icons). IMPS IMPS (Instant Messaging and Presence Service) is an instant messaging system designed for mobile environments. Presence refers to the availability of a user for communication. © 2010, Portio Research. All Rights Reserved 95
    • Mobile Payments 2010-2014 IMS IMS IP Multimedia Subsystem is an extension of the GSM / 3GPP GPRS core Network. It uses SIP (Session Initiation Protocol) to set up, maintain and terminate packet-switched voice and multimedia sessions. Interoperability This is defined as the ability of a network to operate with other networks, such as two systems based on different protocols or technologies. J2ME Java2, Micro edition: The Micro Edition of the Java 2 Platform provides an application environment that specifically addresses the needs of commodities in the vast and rapidly growing consumer and embedded space, including mobile handsets, pagers, personal digital assistants, set-top boxes, and vehicle telematics systems. Java A simple platform-independent object-oriented programming language used for writing applets that are downloaded from the World Wide Web by a client and run on the client's machine. JPEG Joint Photographic Experts Group: This is the most commonly used format for storage and transmission of images on the Internet. The format uses lossy compression techniques wherein the compressed data is very close to the original form. An advanced form of the JPEG standard known as JPEG File Interchange Format (JFIF) is capable of formatting the size of graphics according the storage capacity of computer and transmission medium. LTE Long-Term Evolution (LTE) is the standard being developed by 3GPP to achieve download rates of 100Mbps, and upload rates of 50Mbps for every 20MHz of spectrum and is termed as a 4G standard. LTE will have support for bandwidths ranging from 1.25MHz to 20MHz. The LTE group is expected to come up with concrete recommendations by September 2007. M2M Machine-to-Machine: M2M generally means the communication between machines. However, in the mobile world, it is sometimes defined as Mobile-to-Mobile, which basically refers to communication that involves only mobiles and not landlines. MIDI Musical Instrument Digital Interface: It is a protocol which acts as an interface between musical notes of an electronic instrument and computer. The orchestral performance and notes are defined (formatted) into a form, which can be understood and played by computers, i.e., MIDI is capable of playing the actual piece of orchestra unlike a recorded version. MNO market penetration It is the mobile subscriber base of an MNO expressed as a percentage of total population of the country of operation. Mobile Number Portability (MNP) MNP is a facility which allows mobile subscribers to retain their mobile number when moving between mobile networks. Mobile penetration It is the mobile subscriber base in a country expressed as a percentage of its total population. 96 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 MP3 It is an expert compressing tool, which has been widely used in musical content rendering. It is capable of compressing audio files up to 10 percent of its original size. MPEG layer-3 (MP3) format can retain the full quality of an actual song by unperceivable deviations. MVNO Mobile Virtual Network Operator: Term used for a mobile operator who does not own its own spectrum and usually does not have its own network infrastructure. Instead, MVNOs have business arrangements with traditional mobile operators to buy minutes of use (MOU) for sale to their own customers. Near Field Communication Near Field Communication (NFC) is a wireless communication technology which uses shortrange high frequency to enable the exchange of data between devices in proximity with each other. The distance between the communicating devices has to be less than 10 centimetres. NFC-capable devices can communicate with smartcard readers as well as other NFC-capable devices. Node - B It is a term used in Universal Mobile Telecommunications System (UMTS) to refer to the Base Transceiver Station (BTS). Nokia Binary It is an audio format developed by Nokia, which allows mobile users to send ringtones to some Nokia handsets and other brands. It is also known as SCKL, since all the messages begin by //SCKL. ODM An original design manufacturer (ODM) is a firm involved in designing and manufacturing a product according to specifications provided by another firm. The products are sold under the brand of the firm which gives the manufacturing contract to the ODM. OEM An original equipment manufacturer (OEM) is a firm which acquires a product (or a component) for reuse or incorporation into the products branded under its name. OMA-IMPS Open Mobile Alliance-Instant Messaging and Presence Service: It is an open mobile alliance enabler for instant messaging and presence. The first cut of this specification was developed by the Wireless Village consortium. OPEX Operating Expenditure: It refers to the ongoing costs for running or operating a product or system. Packet Data Packet data is a method of transmitting information in small packets each containing a certain amount of the information. Packet data networks allow transmission of high-speed data to and from devices connected to the network. Packet Data is similar to dial-up Internet access available in homes or in businesses with cable modems, ADSL 39 lines, etc. P2P Peer-to-Peer: In the mobile messaging world, P2P messages are defined as messages exchanged between subscribers. These messages originate from and terminate to mobile subscribers’ handsets. 39 Asymmetric Digital Subscriber Line (ADSL) © 2010, Portio Research. All Rights Reserved 97
    • Mobile Payments 2010-2014 PCO Public Call Office: It refers to the telephone facility located in a public place. PCS networks Personal Communications Service Networks: In the U.S., the 1.9 GHz band has been allocated for PCS systems; the allocated spectrum is 120 MHz wide and is licensed as two 30 MHz segments for the 51 major trading areas, and three 10 MHz segments for the 493 basic trading areas. PDA Personal Digital Assistant: A portable computing device capable of transmitting data. This device makes possible services such as paging, data messaging, electronic mail, computing, facsimile, date book and other information handling capabilities. PDC This stands for Personal Digital Cellular, a Japanese cellular standard. PHS system This stands for Personal Handy phone system, a Japanese cordless standard. PIM Personal Information Manager: Also known as a "contact manager," is a form of software that logs personal and business information, such as contacts, appointments, lists, notes, occasions, etc. PNG Portable Network Graphics: This tool replicates the GIF format in its functioning with compression as an added feature. This format similar to GIF is capable of working on different platforms, backed by library functions. It is a non-lossy compression tool. POS Point of sale (POS) refers to the location of a transaction. Generally, hardware or an instrument is installed at the merchant’s location to execute the transaction process. Purchasing Power Parity (PPP) Purchasing Power Parity is the amount of adjustment required on the exchange rate between two countries to take into account each currency's purchasing power for identical goods in those countries. PTT Push to Talk is a two way communication system which allows only one user to talk at any given time. This system, comparable to walky-talky is unlike mobile handsets which allow multiple users to speak at the same time. QCP QCP is a format used for ringtones. The format was developed by Qualcomm PureVoice. RAN Radio Access Network: It is a component that exists between the mobile handset and the core network. It performs the radio functionality of the network and provides connection to the core network. RFID Radio frequency identification (RFID) denotes a system employed to convey a unique serial number using radio waves. It does not require contact or line of sight for communication. An example of the deployment of this technology is in electronic toll collection using RFID tags. 98 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 SIM card It is a smart card that gives GSM handset its user identity. The card is inserted into a GSM/TDMA or GSM-only mobile handset containing subscriber-related data. The card contains 18 digits code for GSM markets and 20 digits code for TDMA markets. SIM Toolkit Subscriber Identity Module Application Toolkit: It is used by network operators to provide a user friendly interface on a subscribers’ handset to access value-added services provided by them. These applications also provide a mechanism for storing and using any service specific parameters. These applications are built within a SIM card by mobile network operators. SIMPLE SIMPLE (Session Initiation Protocol for Instant Messaging and Presence Leveraging Extensions) is an open standard instant messaging (IM) protocol. SIP Session Initiation Protocol or SIP is a standard multimedia and telephony protocol for initiating an interactive user session over mobile networks. The services under SIP may include call forwarding, number delivery, authentication and other telecoms applications. Smartphone A smartphone is a mobile handset which runs on operating system (OS) software and offers some of the capabilities of a PC. It provides standardised interface and platform for application developers and are enabled with advanced features, such as, e-mail, Internet and e-book reader. Some of the other features expected from a Smartphone include built-in full keyboard/external USB keyboard, powerful microprocessors, memory, built-in modem and large screens. SMS TV This is defined as the use of SMS for variety of applications, such as voting, teletext chat for TV programmes. SMSC Short Message Service Centre (SMSC) provides the routing of all SMS or text messages in any mobile network. Similar to e-mail server, the SMSC handles large volumes of messages sent between two mobile handsets or a mobile handset and a software application. SoC System on Chip: It refers to the process of integrating all the components of an electronic system into a single integrated circuit or chip. SS7 SS7 is a global standard for telecommunications defined by ITU Telecommunication Standardisation Sector (ITU-T). The standard defines the procedures and protocol by which network elements in the public switched telephone network (PSTN) exchange information over a digital signalling network to effect mobile (cellular) and wire-line call setup, routing and control. Thin Client Thin Client refers to a client computer or client software in client-server architecture networks. The primary purpose of Thin Client is to convey input and output between the user and the remote server. TIFF Tagged Image File Format: It is a platform free image format, which enables reproduction of an image created on a platform, such as Macintosh, on other platform such as an ordinary © 2010, Portio Research. All Rights Reserved 99
    • Mobile Payments 2010-2014 PC. It is an advanced tool for storing bit map or graphic image on different platforms. TIFF format supports scanned image, fax and other applications involving editing of image. TDD Time Division Multiplex: This is a scheme for allowing simultaneous transmission and receiving of data at the same frequency, but with the different time slots allocated to them. TDMA Time Division Multiple Access: A TDMA channel is a single FDMA channel divided up in time into multiple time slots. TDMA system is able to transmit multiple voice circuits per channel. Three users can take it in turn to share one radio channel. The channels can vary in bandwidth and depending on the type of system, the time slots can transmit all or part of a voice circuit. Each user's speech is stored, compressed and transmitted as a quick packet, using controlled time slots to distinguish them-hence the phrase 'time division'. It uses 30 KHz channels and a vocoder rate of 8 Kbits/sec. At the receiver, the packet is decompressed. TD-SCDMA Time Division Synchronous Code Division Multiple Access: It is an air interface used in UMTS mobile telecommunications networks. It has been deployed in China to replace WCDMA technology. UMTS Universal Mobile Telecommunications System: This is the future transmission network for third generation mobile telephones, as defined by the International Telecommunications Union (ITU). In time, UMTS could reach transmission capacities of 2 Mbits/sec. (compared to 9.6 Kbits/sec. for GSM). Initially UMTS will offer rates of 144 to 384 Kbits/sec. This standard will make the development of new multimedia services having very wide bands and new uses, notably in the transmission of video, images and sound possible. UMTS TDD Universal Mobile Telecommunication System (UMTS) Time-Division-Depleting (TDD): UMTS TDD Mobile Broadband technology is a packet data implementation of the international 3GPP UMTS standard and is designed to work in a single unpaired frequency band. It is designed to generate typical data transfer rates of up to 2 Mbps. UMTS FDD Universal Mobile Telecommunication System (UMTS) Frequency Division Duplex (FDD): It is designed to generate typical data transfer rates of up to 384 Kbps and is suitable for wide area coverage due to potentially high reach. USSD Unstructured Supplementary Service Data (USSD) is a standard for transmitting information over GSM networks. It is primarily used to access the information on prepaid balances and similar details. VAS Mobile operators offer various services which are not part of the basic voice offer. These services are availed off separately by the mobile subscribers. It includes services such as SMS, MMS, mobile e-mail, mobile games, mobile music etc. These also include services such as WAP, voicemail, call diversion, etc. vCalender It is a standard format used to exchange information about schedules and activities electronically via an e-mail attachment. vCalender requires a personal information manager (PIM) type of application program. The format was developed by a consortium founded by Apple, AT&T, IBM and Siemens. 100 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 vCard vCard is an electronic business card used for exchanging personal information digitally. It contains name, address information, company logos, URLs, photographs and sound clips. It was developed by a consortium founded by Apple, AT&T, IBM and Siemens. WAP Wireless Advance Protocol: WAP is a specification for a set of communication protocols to standardise the way mobile devices, such as handsets and radio transceivers, can be used for Internet access. The WAP standard is based on Internet standards (HTML, XML and TCP/IP). It consists of a Wireless Markup Language (WML) specification, a WMLScript specification, and a Wireless Telephony Application Interface (WTAI) specification. The WAP protocol is the leading standard for information services on wireless terminals such as digital handsets. Some examples of WAP for accessing information include the following: checking train timings, purchasing tickets, flight check-in, viewing traffic information, checking weather conditions, looking up stock values, looking up phone numbers, looking up addresses or looking up sport results, and there are countless more. WAV It is a widely used audio format for wireless devices which is limited to files less than 2 GB in size. WBMP It is a graphic file format used for sending Web content to wireless devices. The format is designed to support multiple image types for WAP-enabled wireless phones. WiBro Wireless Broadband: The technology was formulated by South Korean telecom industry as an equivalent to mobile WiMAX international standard. Wi-Fi Wireless Fidelity: It is used to provide wireless local area network through enhanced interoperability of the network. Services such as Internet, VoIP phone access, and gaming, etc., can be provided using Wi-Fi. WiMAX Worldwide Interoperability for Microwave Access: It is a telecommunication technology used for wireless data transfer over long distances through point-to-point links as well as mobile cellular type access. It is based on standards that are useful in wireless broadband access. Wireless MAN Wireless Metropolitan Area Network: The technology is used to provide wireless network over a larger area as compared to local area network. WLL Wireless Local Loop: It refers to the wireless devices that are situated in fixed locations. The signal transmissions occur through the air and it provides connectivity to the users in remote and isolated areas without the need for laying new cables. WMA Windows Media Audio: It is a compression format with Digital Rights Management features incorporated in it. It compresses the content to half of what an MP3 can do with the same content. This feature makes it more adaptable to lower memory devices such as handsets. © 2010, Portio Research. All Rights Reserved 101
    • Mobile Payments 2010-2014 WML Wireless Mark-up Language is an XML and a HTML-based language used for creating content, which can be delivered to wireless hand-held devices. This language supports WAP (Wireless Application Protocol) standards just as HTML supports World Wide Web (http) standards. WML is useful in accessing text on web pages over hand-held devices. W-CDMA Wideband Code Division Multiple Access: The third generation standard offered to the International Telecommunication Union by GSM proponents. This is a 3G technology that increases data transmission rates in GSM systems by using CDMA instead of TDMA. W-CDMA has become the Direct Sequence mode in the ITU's 3G specification, which includes the 1x Multi-Carrier mode (1x MC) and 3x Multi-Carrier mode (3x MC). 1x MC (formerly known as cdma2000) and 3x MC comprise the 3G upgrade paths for operators already using CDMA. 102 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Portio Research Classifications Geographical Regions: There is sometimes a difference in the way research firms classify the major geographical territories. At Portio Research, we follow 'obvious' geographical lines, but for the record, here are the regional definitions we follow, unless otherwise stated in the report: Western Europe: Standard classification includes Iceland and various islands Central and Eastern Europe: Includes standard list of Central and Eastern European countries, and the Baltic states, Balkans, Russia, Greece and Turkey Asia Pacific: Includes Australasia, the Indian Sub-Continent, Pakistan, Afghanistan, Sri Lanka, Maldives and the Former Soviet Union Central Asian republics North America: Standard classification, including Hawaii and islands to the North Latin America: Includes all South and Central American countries including Mexico, The Caribbean and The West Indies Middle East: Includes Israel and all Middle Eastern countries East of Egypt, South of Turkey and West of Afghanistan Africa: Standard classification includes territories in Western Indian Ocean Mobile Subscribers Generally, we count active SIMs, and we consider active as being used within 3 months, but, of course there is some room for variance, depending on what figures operators themselves publish or report to us when we interview them. When running spot-checks on operator numbers, we are governed by the figures they give us, and as we are all aware, many individuals and companies around the world count their subscribers/subscriptions by a number of different criteria. We refer to "total subscribers" for a network/country or globally, as a count of the total number of active subscriptions those networks have, and as such this can cause a slight distortion of any country-penetration rate. Currency and Monetary Values All monetary values quoted in this report are in US Dollars as the most widely recognised benchmark internationally. The currency conversion has been done on the year average basis. Whilst researching global mobile markets, we use http://www.oanda.com/ for all currency conversion calculations. © 2010, Portio Research. All Rights Reserved 103
    • Mobile Payments 2010-2014 Companies Mentioned in this Report Company Airtel www.airtel.in American Express www.americanexpress.com Apple www.apple.com Assicom www.assicom.com Atos Origin www.atosorigin.com Barclays www.bank.barclays.co.uk Brown Printing Company www.bpc.com Celcom www.celcom.com.my Cellfire www.cellfire.com Citi Bank www.citibank.com Coca-Cola www.coca-cola.com Com2uS www.com2us.com Delbros www.delbros.com East Japan Railways www.jreast.co.jp eBay www.ebay.com Electronic Arts www.ea.com Friendster www.friendster.com Gemalto www.gemalto.com Globe Telecom www.globe.com.ph Go North East www.simplygo.com Go-Ahead Group www.go-ahead.com Grameenphone www.grameenphone.com Gulf African Bank www.gulfafricanbank.com HDFC Bank www.hdfcbank.com Hewlett Packard www.hp.com Honeywell International www.honeywell.com ICICI Bank 104 Website www.icicibank.com © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Company Website IQ Mobile www.iq-mobile.com KDDI www.kddi.com KPN www.kpn.com MasterCard www.mastercard.com Maxis www.maxis.com.my McDonalds www.mcdonalds.com mCheck www.mchek.com Mitsubishi www.mitsubishi.com MoBank www.mobank.co.uk Mobile Tag www.mobiletag.com mobileStorm www.mobilestorm.com Mobilkom Austria www.mobilkom.at Mobiqa www.mobiqa.com MotionX www.motionx.com Motorola www.motorola.com mticket www.mticket.net Namco www.namcogames.com NeoMedia www.neom.com NeuStar www.neustar.biz Nokia www.nokia.com NoWcard www.nowcard.org NTT DOCOMO www.nttdocomo.com NWA Airlines www.nwa.com O2 www.o2.co.uk Obopay www.obopay.com O-C Group www.ocgroup.com Palm www.palm.com © 2010, Portio Research. All Rights Reserved 105
    • Mobile Payments 2010-2014 Company Paybox www.paybox.net Paylogic www.epaylogic.com paythru www.paythru.com pensio www.pensio.com Planet Funk www.planetfunk.com Prinovis www.prinovis.com Qualcomm www.qualcomm.com Rackspace www.rackspace.com Rangers FC www.rangers.co.uk RIM www.rim.com Roshan www.roshan.af Safaricom www.safaricom.co.ke Samsung www.samsung.com Smart Communications www.smart.com.ph Smule www.smule.com Sony www.sony.net Standard Chartered Bank www.standardchartered.com State Bank of India www.statebankofindia.com Sybase 365 www.sybase.com Tapulous www.tapulous.com Tata DOCOMO www.tatadocomo.com Telefonica www.telefonica.com Texas Nameplate www.nameplate.com Verizon Wireless www.verizonwireless.com Visa www.visa.com Vodacom www.vodacom.com Vodafone 106 Website www.vodafone.com © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 About the Authors Vikas Kumar Vikas Kumar is working as a Senior Business Analyst with Portio Research and Evalueserve. He has worked on various projects related to telecom domain. He graduated from IIT Delhi, India. He has been working with Portio Research and Evalueserve since July 2007. Deepak Mahajan Deepak Mahajan is working as a Senior Business Analyst with Portio Research and Evalueserve. He graduated from Delhi College of Engineering, India. He has been working with Portio Research and Evalueserve since May 2008. Natarajan P Natarajan is working as a Senior Business Analyst with Portio Research and Evalueserve. He graduated from Madras University, India. He has been working with Portio Research and Evalueserve since February 2010. John White John White has been Editor and contributing author for this report. John is Business Development Director for Portio Research and has over 18 years experience in the technical publishing industry. Working in the IT sector previously and in the telecoms industry for the last 11 years, John has extensive experience in the mobile sector. © 2010, Portio Research. All Rights Reserved 107
    • Mobile Payments 2010-2014 Feedback Form Please use this form to provide feedback about this report. Your feedback is valuable, both to us and also to you – the more you tell us then the better we can make our future reports and directories and hence the better we can serve you in the future. Please be as honest as you like – you can tell us anything here, good or bad - and then you can fax this page to us, anonymously if you prefer, to +44 (0)1249 656967 Mobile Payments 2010-2014 Please tell us what you like about this market study? Please tell us what you don’t like about this market study? Anything else you want to say? Optional: (If you would like a response, further information or further assistance) Your Name: __________________________________________ Your Job Title: ________________________________________ Company: ____________________________________________ Your E-mail Address: ___________________________________ Thank you! We truly appreciate your feedback and we will study your comments carefully, and in the strictest confidence. 108 © 2010, Portio Research. All Rights Reserved
    • Mobile Payments 2010-2014 Also available from Portio Research Limited Portio Research Ltd is a UK-based research company focussing on the mobile space, providing reports, handbooks, directories and database products. New and Best Selling Reports include: Mobile Messaging Futures 2010-2014: The highly anticipated fourth edition of our best selling messaging report is now available to order. This new edition is packed with detailed market analysis, traffic and revenue forecasts and a brand new vendor survey. This massive 355-page market study gives you all the data you need for SMS, MMS, mobile e-mail and mobile IM markets worldwide, and includes a BONUS 26-slide Executive Summary presentation. With essential insight into a market that is forecast to be worth USD 233 billion by end-2014, this is one of the most detailed and popular reports ever written on the worldwide mobile messaging market. Please click here for more details. Smartphone Futures 2009-2014: This timely new report examines the changing scenario of the Mobile Handset industry and the exciting emergence of the Smartphone segment, including the evolution of the mobile handset industry and its changing dynamics induced by the growth of smartphone sales and the impact of recession. We also look at the value chain related to products and services pertaining to the Smartphone market, and study key developments in the Smartphone market, highlighting the repositioning of smartphone vendors with the market entry of potential challengers for Nokia and RIM, such as Apple, HTC and more. The report includes an overview of the major Smartphone Operating Systems and the applications market, looking at App Stores and other factors affecting the overall development of the growing high-end handset market. Please click here for more details. Worldwide Mobile Industry Handbook 2009-2014: This detailed handbook offers you all the essential market data required for business strategy and planning purposes: including in-depth subscriber growth forecasts for leading countries, subscriber figures for key network operators across all major geographies, market share data, quarterly handset shipment figures, handset and infrastructure vendor profiles, analysis of popular handsets, ARPU data, churn figures and so much more. Includes an introduction with performance comparisons of mobile vs. other media and major industries, to demonstrate how massive mobile truly is. You will find this essential 167-page market report an invaluable touchstone to refer back to again and again for meetings, presentations and business plans. Please click here for more details. If you have any questions or if we can be of any assistance to you, please contact us by e-mail: info@portioresearch.com Copyright 2010. Portio Research Limited 2010 www.portioresearch.com © 2010, Portio Research. All Rights Reserved 109