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Towards cash free day

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  • 1. Gabriele Zuliani, MasterCard WorldwideNovember 25, 2010Towards a Cash Free DayDelivering Innovation with Insights©2010 MasterCard.Proprietary and Confidential ADVANCING GROWTH. ADVANCING COMMERCE.
  • 2. In 2010, we started looking more closely at the Today we explore some of ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 2
  • 3. order to understand how to better meet their needs Could I live How much cash without cash? do I like to keep in my purse? What do I What would& my family spend make me use on everyday, my card more? week, month or year? What are Where do I want to everyday payment What stresses needs & are they use my card where its & frustrates me currently being not accepted or when I want met? welcomed ? to pay? ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 3
  • 4. We used 5 different methodologies designed MasterCard Advisors Transactional Data AnalysisLife of44 countryEthnography 360°Study without Cash 6 country blog 6 country POS experience 5 country Quantitative Study ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 4
  • 5. How much cash do I like to keep in my purse? How much do I usually draw from the ATM? How often do I actually pay with cash ?What do I spend on everyday, week, month or year? ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 5
  • 6. Each month, an average German consumer pays about 21x in out of ± 32 payment transactions. Total Nr of payment 42 32 37 35 32 txs 3 1 3 1 3 Credit 14 16 12 5 8 Debit 23 21 24 17 12 Cash PL DE IT NL SEQ8. Frequency of usage of payment means last 12 months, by country Base: All Source: TNS, Towards a Cash Free Day research, 2010 ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 6
  • 7. For same everyday payments, Germans use mainly cash vs. heavy card habit Swedes who use cash in just 40% of payment occasions 100 Parking fees Newspaper tolls Newspaper% low value payments (>10 ) Parking feestolls Public transport Food/snacks/ 80 day ticket Beverages/sandwiches Public transport day Foodsnacksbeverag Books and ticket Books and essandwiches magazines Parking fee/tolls magazines Food 60 snacks Everyday groceries beverages sandwiches from corner shop 10 30 50 70 90 40 Everyday groceries from Everyday groceries supermarket from supermarket Everyday groceries from corner shop 20 Everyday groceries from corner shop Everyday groceries from supermarket 0 % paid for in cash money Base: 5 countries, Payment occasions yesterday, Categories: Transportation, Groceries / household items, Source: TNS, Towards a Cash Free Day research, 2010 Entertainment /hobbies / leisure ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 7
  • 8. What is my path from a cash only consumer to a more regular debit user? ©2010 MasterCard. December 2, 2010ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 8
  • 9. Understanding where cardholders are on their Cash Content Incidental Use Confidence Builds Comfort Sets In Habit is Formed emergency grocery & fuel plateau grocery & fuel clothes & shoes (core debit territory) socialisingdraw cash from big ticketbranch or ATM health & personal care rail & bus impulse Expanding merchant acceptance & continuous industries 18.4 communication are key to migrating customers along the card adoption pathSource: MasterCard Advisors Transactional Data Analysis ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 9
  • 10. What are my everyday payment experiences? ©2010 MasterCard. December 2, 2010ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 10
  • 11. What are my everyday payment needs? ©2010 MasterCard. December 2, 2010ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 11
  • 12. around speed, no matter the sophistication levelof the country! 1. Speed be on my way quickly 2. Avoid carrying cash, going to 1. Speed be on my way quickly ATM 2. Avoid carrying cash 3. No transaction cost 3. Use my preferred payment Very functional needs method Very functional needs 1. Speed be on my way quickly 2. Feel in control of my spending 3. Go with the norm, pay as everyone does, not stand out, not hold up the queue1. Speed be on my way quickly Most emotional needs2. Feel in control of my spending 3. No transaction cost or fee 1. Speed be on my way quickly 2. Feel reassured, not hold up the queue, easy merchant interaction 3. No transaction cost or fee Their payment needs are less extensive as if other thingsSource: TNS, Towards a Cash Free Day research, 2010 matter more ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 12
  • 13. scale groceries where what matters most is NOT having to carry cash Consumer Payment Needs for Specific Everyday Payment OccasionsEmotional Go with the norm Control Parking Everyday groceries Public transport day ticket Food/snacks/beverages/ Newspaper sandwiches No transaction cost Avoid carrying cash or fee Large scale groceries Fuel Fuel Books and magazines Speed be on my way Security AcceptanceFunctional Speedquickly Basic condition, but not top of mind Basic condition Consumers do not know what they are liable for. Very different from the Source: TNS, Towards a Cash Free Day research, 2010 online world where security is the key concern. ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 13
  • 14. Could I live a week without cash? ©2010 MasterCard. December 2, 2010ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 14
  • 15. and preconceived notionsHabit! Cash gives me power Card makes me feel liberated Feel empty without it I dont have to go to ATM all the time Physical incarnation of money (look, feel, smell) Its fast and easy Cash is comfortable, its accepted Card is easy its widely accepted everywhere Not accepted everywhere Go with the norm - socially not always accepted to pay by card More electronic payments could mean less meaningful interaction with merchant last penny slips out of your hand Less need to spend Its safe Not safe (carrying large amounts & pick pockets) Card fraudSource: TNS, Towards a Cash Free Day research, 2010 ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 15
  • 16. Merchants reactions have significant impact CARDS ACCEPTED Large shops Large amounts reaction Surprise First reluctance, after acceptance of CARDS NOT ACCEPTED card Smaller shops Feeling embarrassed Small amounts Irritation Cash only accepted he/she Refusing the card can do, leave shop brought so without goodsParticipants were very inventive on seeking solutions, but these were only temporary. In everyday situations cardholders land up using the method most insisted on by merchant or following societal norms ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 16
  • 17. Do I want to use my card where its not accepted or welcomed ? What reaction do I get ? What stresses & frustrates me when I want to pay ? ©2010 MasterCard. December 2, 2010ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 17
  • 18. Merchants in Munich & Turin had most card unfriendly attitude, refusing card acceptance, even at indicated minimum spend Rotterdam 100% card acceptance Gothenburg 100% No restriction for Expressed preference for card 1% card transactions Refused card offered 1% Minimum amount 4% Card transaction surcharged 1% Manchester No terminal 6% Minimum amount 3% Warsaw Card transaction surcharged 2% for card transactions 100% card acceptance 100% No restriction Munich Turin No terminal 25% Expressed preference for cash 8% Refused card offered 6% Refused card offered 15% Minimum amount 7% Minimum amount 19%Italians and Germans had highest cash usage at 75% and 71% respectively ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 18
  • 19. What do consumers want ? Payment solutions that can simplify and facilitate their day to day lives For the industry & all its stakeholders, its about delivering ©2010 MasterCard. December 2, 2010ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 19
  • 20. Personal Finance 1 Tollroads 10 Management 2 Parking 9 3 Transit Internetbanking & security Identification 4 LVP solutions / e-purse 8 Card 7Retailer Loyalty 5 e-Com 6 Multiple Credit and Debit cards ADVANCING BANK ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. COMMERCE. Proprietary and Confidential Page 20
  • 21. one card! Relevance Mass Small Youth Loyalty Families Mass Affluent 50+ affluent Business Small ticket items Eg. tolls, parking, Improve coffee etc. Remove barriers Increase appeal convenience Everyday Convenience ControlConvenience necessities Making debit faster, easier Giving consumers ways eg. groceries, and universally accepted of managing their money petrol etc. Increase across channels more effectively Increase relevance relevance Large necessities eg.bills, rent, Security Relevance insurances etc. Improving all aspects of Tailoring payment solutions payment security from to the needs of different Improve Large indulgences prevention to recovery consumer segments convenience eg. electronics, holidays etc. Enhance security Improve control ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 21
  • 22. Expanding Debit cards into Low Value Payments Debit cards accepted onItalian, French, Croatian,and Polish Tollways since2009 1 Tollroads Parking (garage and on-street) debit card solution 2 Parkingnow available First transit PayPass 3 Transitcontactless transitsolution introduced inTurkey (Asya Bank) 4 e-purse National e-pursemigration plans toMaestro/MC PayPassimplementing BANK ©2010 MasterCard. Page 22 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential
  • 23. MasterCard Low Value Payments strategy is developed around 3 pillars addressing the core needs of all stakeholders Need to drive profitability Mixed view on the cost of cash Increase POS use Think of cards as just more costs Develop acceptance for new Acquirers Retailers Believe card transactions are card sectors slower than cash Believe LVP transactions are Perceive cash as free loss making Issuers Consumers Expect ubiquitous acceptance Free-cash trap Believe card transactions are ATM to POS migration slower than cash requires time and investments 1. New Technology & 2. Lower Cost 3. Marketing & Solutions Model Awareness Increase speed and Lower end-to-end Change Consumers / Retailers acceptance transaction cost attitude towards cash vs. debitThere is no one-solution in the LVP space, but a combination of solutions that must fit each stakeholder and offer an improvement over cash ©2010 MasterCard. ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 23
  • 24. MasterCard view of the opportunity for Low Value Payments The key LVP objectives: Transaction Debit LVP Today Opportunity Increase card usage by: Value extending the acceptance of debit cards at Existing New Merchant categories Facilitating card Merchants A payments at existing Supermarkets debit card accepting ATV Petrol merchants Taxis, Doctors, Butchery, Groceries Bakery Current Fast-Food Expanding to newBreak-even Movies B B Point acceptance channels by leveraging the latest Future technologiesBreak-even Point A Provide an attractive solution for all stakeholders that is a faster, more secure, more convenient and a more economic equivalent to cash Acceptance Locations and bring the barrier down ©2010 MasterCard. ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 24
  • 25. Migration from e-purse to mobile/contactless A cost-effective way out of the cash trap and long-term vision for Low Value Payments Mobile Integrated NFC PayPass PayPass Mobile tag Mobile Info EMV chip EMV Chip with PayPassFront-End Technology Magstripe Dip & Go No CVM(customer experience) Pre-Load/ Online/offline/ Auto top-up Structural Online only e-purse chip pre-auth. e-purse (Back-end) ©2010 MasterCard. Page 25 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential
  • 26. One card to unlock the door to simpler cash free ©2010 MasterCard. December 2, 2010 ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 26
  • 27. ©2010 MasterCard.ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential

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