Mobile Payment Value Chain and Business Models Concept Business Model Reality Check Technology Disclaimer: Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and do not reflect the views and/or opinions of their employer.

Concept

Business Model

Reality Check

Technology

Mobile Payment is not a new concept and industry is littered with failed launches of mobile payment platforms. To be successful, companies will need to find solutions to alter consumer spending habits. Concept

Most of the mobile payment platforms fall into four categories - Mobile Banking: This will enable users to transfer money from account to account, pay bills, manage/monitor account e.g. spending limits, credit fraud. Its success depends on the ease-of-use and robustness of the platform and the capability to aggregate accounts from multiple financial institution. e.g. Mobile banking platform providers - mFoundry and Firethron. Remote Purchase: Using the mobile phone to purchase goods through a secure portal, instead of a computer on the internet. e.g. PayPal’s "Text-to-Buy" enables users to make remote purchases. Person to person mobile payments: Where a mobile device can be used to complete a person-to-person transaction. In my humble opinion - it’s a useless concept. Point-of-Sale: Using a mobile device at a physical store front, at the cash register to purchase inexpensive products quickly and easily. “Almost useless“. Thankfully, cost of implementation and standardization issues will kill this before you finish reading this presentation. Concept

Most of the mobile payment platforms fall into four categories -

Mobile Banking: This will enable users to transfer money from account to account, pay bills, manage/monitor account e.g. spending limits, credit fraud. Its success depends on the ease-of-use and robustness of the platform and the capability to aggregate accounts from multiple financial institution. e.g. Mobile banking platform providers - mFoundry and Firethron.

Remote Purchase: Using the mobile phone to purchase goods through a secure portal, instead of a computer on the internet. e.g. PayPal’s "Text-to-Buy" enables users to make remote purchases.

Person to person mobile payments: Where a mobile device can be used to complete a person-to-person transaction. In my humble opinion - it’s a useless concept.

Point-of-Sale: Using a mobile device at a physical store front, at the cash register to purchase inexpensive products quickly and easily. “Almost useless“. Thankfully, cost of implementation and standardization issues will kill this before you finish reading this presentation.

Operators’ involvement Banks’ involvement Independent service provider models Low Business Model High High Low Collaborative Models Bank-Centric Models Point-of-sale NFC payments Mobile Banking - Multiple Banks Customer->Bank->Vendors Operators Customer->ISP->Merchants Operators Customer->Mobile Operator->Merchants Banks Operator Centric Models

Point-of-sale NFC payments

Mobile Banking - Multiple Banks

End Customers - Not much Operators - They have fared well in becoming part of mobile commerce transactions where the items being sold are delivered on the mobile devices (Ring tones, wall papers, etc..). Most of the discussed payment systems do not benefit an operator beyond driving increased usage of SMS and data services. Revenue share model from Near field communication (RFID) payment would be a challenge. Merchants and Vendors - If already registered on eBay, merchants may provide remote purchase or text-to-pay but brick-and-mortar merchants will need to see reduced transaction and implementation cost, and access to precious customer data to track spending habits. Technology Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution. Independent service providers will have to establish trusted brands before they will ever get any money. Device Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution. Financial institution- Financial transaction fees All the players in the entire value chain must work toward an easy-to-use interface. Reality Check: What's in it for me?

End Customers - Not much

Operators - They have fared well in becoming part of mobile commerce transactions where the items being sold are delivered on the mobile devices (Ring tones, wall papers, etc..). Most of the discussed payment systems do not benefit an operator beyond driving increased usage of SMS and data services. Revenue share model from Near field communication (RFID) payment would be a challenge.

Merchants and Vendors - If already registered on eBay, merchants may provide remote purchase or text-to-pay but brick-and-mortar merchants will need to see reduced transaction and implementation cost, and access to precious customer data to track spending habits.

Technology Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution. Independent service providers will have to establish trusted brands before they will ever get any money.

Device Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution.

Financial institution- Financial transaction fees

All the players in the entire value chain must work toward an easy-to-use interface.

Change = f (User’s Crisis v user’s Total Perceived Pain of Adoption) Crisis Indifference Low http://www.coburnventures.com/About_CHANGE/The_Change_Framework.html Crisis TPAA Mobile Banking Remote Purchase Point of Sale Person to Person Person to Person Point of Sale Remote Purchase Mobile Banking High Reality Check: The Change Framework

Mobile Payment Technologies Near Field Communication (NFC) is an evolution of contact-less and short range RFID technologies. Its based on existing RFID technologies (ISO 14443 A and Sony FeliCa) Working distance of up to 10cm RF technology by Philips and Sony, standardized in ISO (NFCIP-1 = ISO 18092) Suitable for fast and convenient “swipe” transactions and impulse transactions (vending machines, ticketing, parking, etc.) SMS: Cons: Biggest challenge for mobile services based on SMS system would be inter-operability between competing services and security. Pros: familiarity with SMS functionality. Over the air data connectivity: Https, SSL, web browser, XML. Security is comparable to the internet model.

Near Field Communication (NFC) is an evolution of contact-less and short range RFID technologies.

Its based on existing RFID technologies (ISO 14443 A and Sony FeliCa)

Working distance of up to 10cm

RF technology by Philips and Sony, standardized in ISO (NFCIP-1 = ISO 18092)

Suitable for fast and convenient “swipe” transactions and impulse transactions (vending machines, ticketing, parking, etc.)

http://www.mobiletransaction.org Industry Initiatives http:// www.mobilepaymentforum.org http://www.mobeyforum.org http://www.openmobilealliance.org