Wallet Wars
Retail Forum 2012
Kees Wesdorp
Mobile payments at the top of
expectations …
What are the 3 payment channels which will experience the greatest growth
in ...
4
... and is taking many forms and shapes –
an extremely fragmented space
The stakes are high for
merchants and consumers ...
Merchant
mWallet recommended
to send my vouchers to
consumers they now...
6
... as well as for a variety of payment
solution providers
Marketing/
advertising
Funding
advantage
Conversion of
cash t...
Some theory: there are three different
types of “wallet solutions”
eWallet
Scheme accepted in its own right by
merchants, ...
eWallets account for 40% of the CNP
transaction value
8
There are 11 major roles in the
eWallet value chain
Produce eWallet and
distribute to consumers
Load funds onto the eWalle...
10
mWallets: it’s an even more complex
ecosystem ...
Create the mWallet and
distribute to consumers
Load and store informa...
11
... with an ongoing battle over the control
point
Implementation design
depends on the technology
used to securely stor...
In the meantime mega-merchants are
developing their business models...
“... own all consumer information...
and facilitate...
... and as a result, boundaries are
blurring
Online only
(eCommerce)
Multichannel Offline only
(POS)
mWalletsOnline vaults...
Closing thoughts …
Source: EDC – Payments, Cards & Mobile 2012 Advanced Payments Survey
% agree
14
Winners and losers?
Dri...
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WorldPay Wallet Wars 2012

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WorldPay Wallet Wars 2012

  1. 1. Wallet Wars Retail Forum 2012 Kees Wesdorp
  2. 2. Mobile payments at the top of expectations … What are the 3 payment channels which will experience the greatest growth in importance in your country over the next 5 years? (Percent of Total Respondents) Source: EDC Payments Survey 2011, survey of payments professionals globally on key industry dynamics in their markets. The response to this year’s survey involved 645 professionals representing 52 countries. 3
  3. 3. 4 ... and is taking many forms and shapes – an extremely fragmented space
  4. 4. The stakes are high for merchants and consumers ... Merchant mWallet recommended to send my vouchers to consumers they now eat Chinese a lot mWallet has just told me about a new Chinese restaurant nearby – I love Chinese food My customers like being able to click on mWallet and pay directly, like they do in the store with their phone This is great – I do not need to re-enter my card number if I just click on mWallet on this website mWallet has been working with us to create offers – we seem to have more returning customers I love getting the latest offers from Waitrose on my favourite products I love the fact I can just swipe my phone at the till, pay with mWallet and be out in one minute WorldPay helped me with the software upgrades; I did not have to do anything to accept mWallet and customers seem to like it Consumer Consumer data flow Online adoption Voucher coordination Offline adoption 5
  5. 5. 6 ... as well as for a variety of payment solution providers Marketing/ advertising Funding advantage Conversion of cash to e-money Mobile devices and data Estimated UK profit pool ~£140M ~£20-40M ~£20M ~£180M Description • Distribute marketing messages, vouchers online and offline • “Reselling” credit/ debit cards • Lower funding cost • Potential interest from holding balances • Incremental acquiring transactions • Increased smart phone sales • Increased data usage Accrues to voucher provider Accrues to eWallet providers Accrues to merchant acquirers Accrues to MNOs, O/ S providers, and OEMs
  6. 6. Some theory: there are three different types of “wallet solutions” eWallet Scheme accepted in its own right by merchants, holds a balance, allows transfers between wallets within the scheme; scheme economics driven by funding mix Examples: PayPal, Moneybookers, Neteller Payment mechanisms (e.g. credit/ debit cards, alternative payments, direct bank transfers, inter-wallet P2P) Merchant Consumer “Online vault” Tokenised consumer payment data (currently payment schemes, billing and delivery address information) offered to merchants as a bundle of scheme, gateway, acquiring and processing Examples: Google Checkout, Amazon Checkout POS terminal (offline) Gateway (online) Existing link Potential link mWallet (“Mobile vault”) Technology for storing data on a secure element in a mobile device (payment schemes, loyalty schemes & vouchers, personal ID) Examples: Google Wallet, O2 wallet (announced) 7
  7. 7. eWallets account for 40% of the CNP transaction value 8
  8. 8. There are 11 major roles in the eWallet value chain Produce eWallet and distribute to consumers Load funds onto the eWallet Process payments with eWallet Merchant account eWallet value chain – PayPal example Online gateway Software platform eWallet owner Card schemes Bank accounts eWallet acquirer Card issuers Inter-wallet transfersSoftware developer eWallet processor Consumers Online gateway eWallet data storage Consumer marketing 1 2 3 5 4 6 7 8 9 10 11 WorldPay 9
  9. 9. 10 mWallets: it’s an even more complex ecosystem ... Create the mWallet and distribute to consumers Load and store information on the mWallet Process payments with mWallet mWallet owner Payment mechanisms Vouchers/ coupons Trusted Service Manager NFC chip manufacturer Mobile device manufacturer mWallet app developer Operating system MNO Software Hardware Card scheme Card issuer Merchant account Contactless Terminal ISO Merchant acquirer & processor 1 2 3 4 5 7 8 11 10 Alternative schemes 12 9 6 4 5 6 mWallet value chain – Google example
  10. 10. 11 ... with an ongoing battle over the control point Implementation design depends on the technology used to securely store the electronic data for the mWallet Secure element is embedded on the phone Secure element is a removable memory card Secure element is on SIM card mWallet implementation Data is stored in the device hardware Data is stored in the “cloud”
  11. 11. In the meantime mega-merchants are developing their business models... “... own all consumer information... and facilitate targeted advertising, discounts and offers” •  Launched “Google Checkout” •  Launched “Google Wallet” •  Merging “Checkout” and “Wallet” in 2012 to a single multichannel wallet •  Critical gap: historical, individual transaction data across broad range of merchants “full service provider for merchant interactions with consumers” •  Founded as an eWallet •  Expanded throughout full suite of payment services •  Developing multi-channel wallet •  Expanding into payments for more merchant segments •  Critical gap: effective offline distribution 12
  12. 12. ... and as a result, boundaries are blurring Online only (eCommerce) Multichannel Offline only (POS) mWalletsOnline vaults eWallets Holds own balance in own scheme Combination “Vault” for other schemes Selected examples 13
  13. 13. Closing thoughts … Source: EDC – Payments, Cards & Mobile 2012 Advanced Payments Survey % agree 14 Winners and losers? Drivers for adoption?Scope of the mWallet? Just payment? MNO organised consortiums MNO / bank JVs Banks and fin. institutions Mobile network operators Other innovators Card networks / schemes Google / PayPal Reduced merchant fees Incentives offered to merchants Deals, offers, and incentives to consumers Convenience, ease of use or speed of payment 75% 80% Consumers will want to use mWallets for prepaid only Consumers will prefer one mWallet for all secure credentials Consumers will prefer one mWallet for all their cards mWallets will become a preferred tool for mobile payments Coupons using simple tech are most likely to succeed in short term Mobile provides valuable information on buying habits Mobile advertising spending will continue to increase significantly mCommerce will be driven by a bundle of value added services 49% 56% 63% 73% 85% 98% 78% 90% 94% 96% 59% 68% 70% 73% 81% 82% 91%

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