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Mobile Payment Overview:Belgium Tim Wulgaert - Ernst & Young - Director

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Mobile Payment Overview: Tim Wulgaert - Ernst & Young - Director

Mobile Payment Overview: Tim Wulgaert - Ernst & Young - Director
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  • Goodmorning Looking at the number of registrations for this seminar, mobile business is clearly of interest. And if we are talking enabling business processes to be mobile, it could’t heart to talk about mobile payments. My name is Tim Wulgaert, and I am a director with Ernst & Young where I am leading a mobile money initiative within our Global Telecom Center. For those that don’t know Ernst & Young yet, we are a worldwide leader in assurance (or audit), tax and transaction advisory, over the last couple of years we have also established a growing advisory practice. The purpose for this sessions is to provide you with some insights on mobile payments, where are we today, what can we expect, who are some of the key players and what are the trends.
  • A lot of mobile money terms are currently used within the market. Therefore, I would like to start with some definitions, in order to ensure that we have the same understanding on the terminology used. Mobile remittance: Domestic mobile money transfer International remittances Mobile payment Online payment via mobile Point-of-sale payments Bill payment Mobile banking Microfinance Loans Insurance Repayment Disbursement Transactions Bill payment Brokerage services Information Account balance Account alerts Remark: Mobile Payment is also a subset of the wider concept of Mobile Commerce. Mobile commerce is the ability to conduct commerce using a mobile device, such as a mobile phone, smartphone, or tablet, and includes mobile advertising of products and services to enable commerce. E.g. people may use their mobile phone to research products and services and still pay physically. Knowing that many consumers act this way, adding mobile payment solution is the logical next step.
  • Different ways to organize it – from a technology point of view and from settlement point of view Remark electronic wallet assumes a kind of prepaid wallet which is again fed by credit card or bank account for settlement USSD : Unstructured Supplementary Service Data – transmitting strings of data over GSM network, much like SMS, however USSD is session oriented, whereas SMS is store and frward.
  • The mobile money ecosystem Core stakeholders – Supporting stakeholders - Facilitators mPass – Germany – involved: Telefonica, Vodafone, Deutsche Telekom ISIS – US – Mobile network operators: AT&T Mobility, T-Mobile USA, Verizon Wireless Banks: JP Morgan, Capital One and US Bank (expected as of December 2011, not yet confirmed) DeviceFidelity – Technology provider Gemalto – Digital Security Visa, MasterCard, Discover and American Express Citizy – France – Coordinated by Association Francais pour le Sans Contact Mobile (AFSCM) (Non-profit organisation promoting technical development of NFC) Mobile operators: NJR Mobile, Orange, SFR, Bouygues Telecom Nice's public transport operator: Veolia French banks: Credit Mutuel, Societe Generale, BNP Paribas Technology providers: Gemalto, Safran, Orange business services, Atos Worldline Visa and MasterCard Nice Council
  • Th mobile money ecosystem Core stakeholders – Supporting stakeholders - Facilitators Felica (Japan) Partners: NTT DoCoMo, Sony Corp, JR East. Public transport operator: JR East, All Nippon Airways, Japan Airlines. Retail: Seven-Eleven, McDonald’s, Coca Cola Japan, Yodobashi. Smart cards: bitWallet and JCB. Other vendors: Sharp, NEC, Fujitsu, Panasonic, Casio, Visa Inc., Samsung Electronics, Gemalto N.V. Project Oscar – UK: O2, Vodafone, Everthing Everywhere (T-Mobile/Orange) mPass – Germany – involved: Telefonica, Vodafone, Deutsche Telekom ISIS – US – Mobile network operators: AT&T Mobility, T-Mobile USA, Verizon Wireless Banks: JP Morgan, Capital One and US Bank (expected as of December 2011, not yet confirmed) DeviceFidelity – Technology provider Gemalto – Digital Security Visa, MasterCard, Discover and American Express Citizy – France – Coordinated by Association Francais pour le Sans Contact Mobile (AFSCM) (Non-profit organisation promoting technical development of NFC) Mobile operators: NJR Mobile, Orange, SFR, Bouygues Telecom Nice's public transport operator: Veolia French banks: Credit Mutuel, Societe Generale, BNP Paribas Technology providers: Gemalto, Safran, Orange business services, Atos Worldline Visa and MasterCard Nice Council WyWallet - Sweden - 4T Sverige: Telia, 3 sweden, Telenor, Tele2 mBanxafe – only added as this presentation was given to a belgian audience – the number of users is however marginal (mbanxafe is a product of ATOS Worldline in Belgium)
  • Th mobile money ecosystem – you are part of it
  • Different ways to get to mobile payment, mpayment is just one last mobile step Almost all combinations are possible (even starting fully physical and paying mobile or vice versa) mAdvertising – Promise of LBS USSD : Unstructured Supplementary Service Data – transmitting strings of data over GSM network, much like SMS, however USSD is session oriented, whereas SMS is store and frward.
  • Market researcher Gartner has placed NFC payments in the 'Peak of Inflated Expectation' in its Hype Cycle for Emerging Technologies 2011 report. The Hype Cycle graphic has been used by Gartner since 1995 to highlight the common pattern of over-enthusiasm, disillusionment and eventual realism that accompanies each new technology and innovation. "Mobile technologies continue to be part of most of our clients' short- and long-range plans and are present on this Hype Cycle in the form of media tablets, NFC payments, QR codes and color codes, mobile application stores and location-aware applications,“ Forrester (2011): In terms of what will drive the eventual adoption of mobile payments, Ms. Freeman said that it will be ubiquitous mobile phones and connectivity, mass market smartphones, open software platforms and millions of NFC-enabled phones.
  • Pro Faster transaction times: It helps boost transaction times over cash, chip-and-PIN payment scenarios, especially for high footfall environments (e.g., Retail. ticketing, transport). Micropayments: High convenience seen well suited to sub-US$20 payments in retail or transport environment. Added information richness: Chips can store more information than magnetic strips and can be updated by end-user or service providers. Transaction histories can be repurposed for location-sensitive advertising, in-store loyalty schemes, reward programs etc. Prepaid amounts can be stored on chips. Security: Additional information stored on chip can be highly encrypted. Multiple account storage: NFC phones can store multiple payment options and funding sources, compared to contactless cards. Rising policy support: Increasing policy focus on more efficient and sustainable payments channels is leading to greater government and regulatory focus on e-payment and m-payment. Contra Ecosystem complexity: Unstable partnerships of banks, operators, card issuers, technology specialists, handset providers where customer ownership considerations preclude effective co-operation. Scalability: Many successful NFC trials have been local in nature; historic bilateral cross-industry tie ups have limited addressable markets while many ecosystem players are trialling a range of solutions. Technology cost and complexity: Multiple sites of NFC capability integration e.g. SIM-based chips, credit card chips, contactless stickers creates fragmentation. NFC chips in phones can cost an extra US$10-US$15 per handset. Contactless readers are still not widespread in many markets. Low customer awareness: User awareness remains low while overall contactless payments systems are still in their infancy. Security concerns are high, heightened by growing user perception of smartphone- and app-related privacy and security issues. Regulatory scrutiny: Competition inquiries into operator JVs can delay time to market, e.g., Netherlands.
  • Contra Ecosystem complexity: Unstable partnerships of banks, operators, card issuers, technology specialists, handset providers where customer ownership considerations preclude effective co-operation. Scalability: Many successful NFC trials have been local in nature; historic bilateral cross-industry tie ups have limited addressable markets while many ecosystem players are trialling a range of solutions. Technology cost and complexity: Multiple sites of NFC capability integration e.g. SIM-based chips, credit card chips, contactless stickers creates fragmentation. NFC chips in phones can cost an extra US$10-US$15 per handset. Contactless readers are still not widespread in many markets. Low customer awareness: User awareness remains low while overall contactless payments systems are still in their infancy. Security concerns are high, heightened by growing user perception of smartphone- and app-related privacy and security issues. Regulatory scrutiny: Competition inquiries into operator JVs can delay time to market, e.g., Netherlands.
  • We tend to see the future in a linear, cummulative continuation of the present evolution However, a lot may happen, many trends exist. In the beginning of this year that we examined these trends. We looked for key trends (those that impact many other trends) that have an uncertainty factor. Together with a panel of TMT strategists we selected two key trends which when combined define 4 scenario’s. All 4 scenario’s have been confirmed as possible future scenarios. Important to realize is that mPayment may be totally different in each scenario: Full Speed Ahead – mPayment is easy to use, standardized, and has many possibilities – potentially only a few core players, but room for niche players to build value added services, fully integrated in shopping, daily life Rollercoaster – mPayment is fragmented, and lacks trust – many different non-integrated players Gear down – mPayment is not trusted, marginal in use if even offered at all Speed Limit Control – mPayment is subject to so many restrictions that it is not convenient, nor user friendly, use of this payment method is marginal, potentially it can only be offered by banks, credit card companies
  • Internet is broadband per household Mobile is subscribers / person Most retailers have an internet presence with some form of commerce however mobile is much bigger Fixed broadband for households only 8% worldwide as per ITU However more with access (i.e. not at home, but e.g. at work Even in Europe, broadband penetration only 60-70% , whereas mobile penetration is beyond 100%
  • Nedap: Zowel bij aanvang als einde van ieder bezoek scant de zorgverlener met de mobiele telefoon de pas van de cliënt. De zorgverlener kan na afloop van ieder bezoek op de mobiele telefoon aangeven welke type zorg is geleverd. Bovendien is de medewerker in staat met de mobiele telefoon online additionele cliëntgegevens te raadplegen. Inmiddels is het product verder ontwikkeld zodat er met het systeem tevens deuren geopend kunnen worden (i.c.m. een NFC deurbel en ZigBee slot) en geografische informatie (zoals de actuele locatie van de zorgverleners) via Google maps inzichtelijk gemaakt kan worden. Tapit – JCDecaux and Tapit – Advertising Touch & Trave l – Deutsche Bahn BMW NFC car key
  • Two belgian examples De Lijn : Bus company P-Mobile and Mobile For 4411 both facilitate parking meter payments in cities P-Mobile in 9 cities Mobile For 4411 in 15 cities Why are they successful? Monopoly – with benefits for merchants (e.g. De Lijn – safety, less expensive and often vandalized ticket machines Use of SMS (ubiquitous) Advantage of simple pricing
  • To shop, subway riders can simply use their phones to take a picture of Quick Response, or QR, codes on photographs of groceries that adorn the walls of a Seoul subway station. The groceries are then automatically ordered for delivery and those placed by 1:00 p.m. arrive in time for dinner. The store also sells electronics, office supplies and toiletries. ComScore (February 2011) research indicates that in December 2010 alone, 9.8 million or 10 percent of Japanese mobile subscribers used their mobile wallet to make a purchase. 7.6 million consumers made a purchase in a retail/convenience store; 3.2 million purchased from a vending machine; 2.7 million paid for public transport; 2.6 million purchased in a grocery stores; and 1.5 million paid a restaurant bill all using their mobile phone, instead of cash, card or check. • 47 million Japanese have adopted tap-and-go phones in three years – this is one of the fastest roll outs of electronic products in human history. East Asians will continue lead this market because governments and industry stop inter-industry haggling enabling projects that benefit the nation go ahead
  • One in five Starbucks transactions was already made using a Starbucks Card, and mobile payment via barcodes extends the way the customers experience and use of the Starbucks Card Using the QR app takes on average 10 sec less per client Starbucks has processed more than 20 million mobile payment transactions (9.000 locations in the US), the company revealed during its Q3 2011 results briefing (Jan-Sep). Starbucks Mobile Pay, the company’s pay-by-mobile application and in-store scanner system, was rolled out nationwide in January. The system, available at roughly 9,000 locations, lets iPhone, Android and BlackBerry users with the Starbucks or Starbucks Card Mobile applications pay with their phones by scanning 2D barcodes on the screen at store registers. Available now in the US , Canada and UK
  • 5 billion is eBay !!! In the 4 th Quarter of the year, John Donohoe said mobile was key to the company’s growth with mobile commerce expected to bring in almost $5 billion in revenue this year. EBay also upped its estimate of mobile payments volume this year to $3.5 billion, up from $3 billion earlier this year after recording $750 million all of last year. (numbers relate to first 3 quarters) Paypal is not one the strongest believers in NFC With 4 billion in mobile payments, Paypal exceeded every quarter its expectations, which started at 1 to 1,5 in the beginning of the year, even after Q3 expectations were still only 3,5 The acquired Zong in 2011 and in 2012 also launched PayPal Here – Mobile Payment POS solutions (much like square)
  • Some estimations are way higher: Yankee Group (June 2011): Global mobile transactions predicted to be US$241 billion in 2011 growing to more than $1 Trillion by 2015. Portio Research (March 2010): There were 81.3 million people worldwide using their mobile device to make payments (including in-app payments, mobile ticketing and mobile coupons) in 2009. By the end of 2014, this is forecasted to rise to nearly 490 million (8 percent of mobile subscribers). The volume of m-payments i.e. face value of purchases and transactions was US$68.7 billion in 2009, rising to US$633.4 billion by end-2014. Juniper Research (July 2011 ): Total value of mobile payments for digital and physical goods, money transfers and NFC (Near Field Communications) transactions will reach $670bn by 2015, up from $240bn this year. • Estimates include mobile ticketing, NFC contactless payments, physical goods purchases and money transfers. • Active mobile money users will double by 2013. • Digital goods is the largest segment and will account for nearly 40% of the market in 2015.
  • iPhone may once again be the one that sets the wheels in motion It may certainly instigate user awareness and adoption Apple holds several NFC patents, and as always the rumours are there that the next iPhone will have NFC embedded.

Mobile Payment Overview:Belgium  Tim Wulgaert - Ernst & Young - Director Mobile Payment Overview:Belgium Tim Wulgaert - Ernst & Young - Director Presentation Transcript

  • Mobile Monday BrusselsMobile Payments4 June 2012
  • Introduction
  • Mobile MoneyMobil ebankin Mobile g ticketi Mobile ng remitta Mobile payment nce Mobil e shoppi ng Mobile Mobile prese advertising nce Mobile Commerce View slide
  • Different flavors and combinations Front end technology Back-end settlement Proximity payment Electronic wallet (e.g. via NFC) Mobile phone as POS Bank account SMS / USSD Credit card Mobile internet / apps Telecom bill View slide
  • Who’s involved?A whole eco system Regulator CardTechnology association/ innovators network M re t l n e t u ia io r a Clearing Application it c c il house / t n vendor h s a a er Hub in Fin n Customer t / NFC chip Integrator manufacturer Mobile operator Payment Handset network manufacturer Government
  • Banks, credit card companies and operatorsvery active Regulator CardTechnology association/ innovators network M re t l n e t u ia io r a Clearing Application it c c il house / t n vendor h s a a er Hub in Fin n Customer t / NFC chip Integrator manufacturer Mobile operator Payment Handset network manufacturer Government
  • But also many newcomers Regulator CardTechnology association/ innovators network M re t l n e t u ia io r a Clearing Application it c c il house / t n vendor h s a a er Hub in Fin n Customer t / NFC chip Integrator manufacturer Mobile operator Payment Handset network manufacturer Government
  • A sample … But also
  • mPayment: just one additional mobile step Marketing Ordering Distribution Payment Go / e-mail / fax / Traditional Go to shop Traditional phone to shop “Normal” web “Normal” web Mobile = POSTraditional + QR Physical delivery QR scan or NFC NFCMobile presence NFC Digital to PC SMS / USSD mAdvertising SMS / USSD mCoupons Mobile web / app Digital to phone Mobile web / app
  • Do we need it? Some of the potential gains: Consumers Merchants► Phone ► Lower always at transaction hand (even cost more than ► Reduced wallet) transaction► Convenience processing► Usability time► Facilitates ► Reduced micro labor costs payments ► Ubiquitous► More secure channel to accept► Lower customer transaction payments cost
  • Is the technology thereyet?
  • NFC might be overhyped NFC Payment Media tablet Location-Aware Applications Mobile application QR / stores Color codertner, Hype Cycle for Emerging Technologies 2011
  • What do we need for mobile payments to happen? Enabl ed Regul hands ation Us er Stabl Conven e x p a n s io n ets p ro mo te s e eco- ience us a g e s c e ne syste & e x p a n s io n Usag m usabili Positiv e scen ty User expa e e expa feedba nsion nsion ckScala Trust Cyclebility and Us age s c e ne ofStand aware Cost e x p a n s io n p ro mo te ssoluti ard ness us e r e x p a n s io n ons
  • NFC = important enablerB u t s t ill is s u e sw it h : Enabl ed Regul hands Stabl ation Conven ets e eco- ience syste & m usabili tyScala Trustbility and ofStand aware Costsoluti ard ness ons
  • Not all future scenarios include mPayment Four scenarios based on scenario analysis – how will we communicate in 2020 Integration of internet and consumer life A Fully integrated & seamless B ‘ F u ll S p e e d ‘ R o lle r c o a s t e r ’ Ahe a d’ Security and privacy Not in controlIn control ‘ S p e e d L im it ‘ G e a r D ow n’ c o n t r o l’ Fragmented & separated C D http://www.ey.com/NL/nl/Industries/Telecommunica tions/telecoms2020
  • Should you wait?It may happen sooner thanyou think
  • broadbandtrends, Feb. 2012 and ITU, Nov. 2011
  • 5 Smartphones on the rise 100 million activated Android devices (Google IO 2011) 2hones shipped in Europe 2011 are smartphones11) 400.000 new Android devices activated per day (Google IO 2011) 468 % million smartphones shipped in 2011
  • 9Of youth (age 12-18) inEurope has amobile phone How many have a credit card? (Source: EY, compiledfrom several national studies)
  • Digital natives are coming
  • Also … NFC is more than mobile payments► Identificatio n► Physical access► Time registration► Mobile ticketing► Car rental► Information provider► Advertising► Medical
  • Again … Should you wait?It is alreadyhappening
  • De Lijn Mobile For 3 Million 3,5 MillionSMS tickets in 2011 mobile parking tickets (25% YoY increase)
  • Japan 9,8 million users (10% mobile subscription base) Where are they paying? Source: ComScore, 201
  • 28% 24%l revenue growth 2011 payment volume ( Total growth in $ 5 billi eBay revenue on $ 4 billi Mobile payments originating from on volume 2011 mobile commerce in 2011
  • What’s ahead?
  • 2 What’s ahead? $ 245 billion mobile payment value by 2014 (Gartner, 2011) 0ries are expected to launch 40 rvices in the coming 18s % of all phones will be NFC enabled by 2015 (Ovum, 2011) 32,8 % of global m-payments transactions will be NFC driven by
  • Some recent thought leadershipAvailable via our EY Insights app or online http://www.ey.com/NL/nl/Industries/Teleco mmunications/telecoms2020
  • Ernst & YoungAssurance | Tax | Transactions | Advisory C o n t a c t d e t a ilsErnst & YoungAssurance | Tax | Transactions | AdvisoryAbout Ernst & YoungErnst & Young is a global leader in assurance, tax, transactionand advisory services. Worldwide, our 152,000 people are unitedby our shared values and an unwavering commitment to quality.We make a difference by helping our people, our clients and ourwider communities achieve their potential.For more information, please visit www.ey.com.www.ey.com© 2012 EYGM Limited.All Rights Reserved.Ernst & Young refers to the global organization of member firmsof Ernst & Young Global Limited, each of which is a separatelegal entity. Ernst & Young Global Limited, a UK company limitedby guarantee, does not provide services to clients.This publication contains information in summary form and istherefore intended for general guidance only. It is not intended tobe a substitute for detailed research or the exercise ofprofessional judgment. Neither EYGM Limited nor any othermember of the global Ernst & Young organization can accept anyresponsibility for loss occasioned to any person acting orrefraining from action as a result of any material in thispublication. On any specific matter, reference should be made tothe appropriate advisor.