2013 09-02 IMP-paper Fragmentation of mobile payment market in Sweden

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2013 09-02 IMP-paper
Fragmentation of mobile payment market in Sweden

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2013 09-02 IMP-paper Fragmentation of mobile payment market in Sweden

  1. 1. Trends Towards Fragmentation of the Mobile Payment Market in Sweden The 29th Annual IMP Conference, September 2, 2013, Atlanta Jan I. Markendahl, Associate Professor Tatjana Apanasevic, PhD Student Wireless@KTH, KTH Royal Institute of Technology, Stockholm, Sweden
  2. 2. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 2 Introduction General problem: Many mobile payment solutions, but they do not take off Mobile payment solutions can be applied in different areas There are a number of actors interested in these solutions (e.g. banks, mobile operators, transport companies, retail chains, etc.) Intence competition in each sector All actors try to offer a separate mobile payment solution Credit cards are very popular Multitude of solutions leads to a market fragmentation
  3. 3. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 3 Introduction Contribution: Overview of different cases Analysis of business networks in B2B2C context, and Discussion of a market fragmentation
  4. 4. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 3 Why Sweden? Before January 2013: A number of mobile payment service providers Different mobile payment solutions The main application areas: Transport ticketing Retail Parking payments, and Person-to-Person (P2P) money transfers
  5. 5. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 4 Why Sweden? Before January 2013: A number of mobile payment service providers Different mobile payment solutions The main application areas: Transport ticketing Retail Parking payments, and Person-to-Person (P2P) money transfers Actors:  Banks  Mobile operators  Payment service providers  SMS payment companies  New payment providers  Local transport companies  Retail chains
  6. 6. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 5 Why Sweden? Before January 2013: A number of mobile payment service providers Different mobile payment solutions The main application areas: Transport ticketing Retail Parking payments, and Person-to-Person (P2P) money transfers
  7. 7. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 6 Why Sweden? Before January 2013: A number of mobile payment service providers Different mobile payment solutions The main application areas: Transport ticketing Retail Parking payments, and Person-to-Person (P2P) money transfers A number of pilots in a test phase Stabile ecosystems of partners (mainly in transport ticketing, parking)
  8. 8. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 7 Why Sweden? Before January 2013:
  9. 9. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 8 Why Sweden? Before January 2013: SMS ticket
  10. 10. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 9 Why Sweden? Before January 2013: SMS ticket Ticket handling: • Issueing the SMS ticket • Sending it to the end-user • Creation of a “virtual” ticket in a data base • Validation of a ticket
  11. 11. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 10 Why Sweden? Before January 2013: SMS ticket Ticket handling: • Issueing the SMS ticket • Sending it to the end-user • Creation of a “virtual” ticket in a data base • Validation of a ticket • Management of customer data • End-user billing
  12. 12. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 11 Why Sweden? After January 2013: The Payment Service Directive – a new regulation of mobile payment services: The mobile operators are no longer allowed to handle payments and transactions for non-telecom services without being a payment provider The payment providers need to know the identity of persons doing the transaction Considerable changes in the mobile payment market New market actors
  13. 13. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 12 Why Sweden? Research Questions: Why do not mobile payments take off on a large scale although the technology is here? What is the impact of the multitude of solutions on the adoption of mobile payments? How are the value networks organized and what actors will take a leading position?
  14. 14. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 13 Agenda Methodology Analyzed Mobile Payment Cases Public Transport Ticketing PoS solutions in Retail Analysis of Results Summary
  15. 15. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 14 Methodology
  16. 16. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 15 Methodology Qualitative research: Data collection: Interviews with industry representatives before and after the change in the law 2010–2011 – the first round of interviews and workshops with representatives from different sectors (banking, parking, retailing, public transportation, mobile operators, and payment providers) 2012 – the second round of interviews (≈20) with the same actors After February 2013 (after the launch of the “new” SMS tickets for public transportation) – ≈10 interviews (five main public transportation companies and some of the payment and ticketing solution providers)
  17. 17. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 16 Methodology Analysis Approach: ARA model Actors, resources and activities (Håkansson and Snehota, 1995) Interaction between different actors Type of relation between end-users and providers Identification of actor(s) that organizes the network ARA relationships are presented as the actor-activity maps illustrating distribution of activities and resources between actors
  18. 18. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 17 Methodology Analysis Approach: ARA model Actor-activity map
  19. 19. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 18 Analysis Approach: Activity system approach (Zott and Amit, 2010) To analyze: The design elements of the business model: • Content • Structure • Governance of the activities Methodology
  20. 20. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 19 Analysis Approach: Activity system approach (Zott and Amit, 2010) To analyze: The design elements of the business model: • Content • Structure • Governance of the activities Methodology The activity design themes: • Novelty • Lock-in aspects • Complementarities • Efficiency
  21. 21. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 20 Analyzed Mobile Payment Cases Public Transport
  22. 22. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 21 Cases: Public transport ticketing SMS tickets: before February 2013 Payment service provision: Activity splited between mobile operators and the transport operator Tickets handled by agregators Billing: By mobile operators  
  23. 23. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 22 SMS tickets: after February 2013 Payment service provision: New actor – 4T Sweden WyWallet payment service Main changes: Due to public service procurement new actors entered the market   Cases: Public transport ticketing
  24. 24. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 23 Cases: Public transport ticketing Regional transportation company Provider of tehnological solution Provider of payment solution UL, Östgötatrafiken, etc Skånetrafiken Västtrafik SL/Stockholm (got the contract) SL (temporary solution) Mobill Plusdial IPX and Plusdial Unwire Mobill PayEx and OKB WyWallet Seamless Samtrafiken, DIBS PayEx and OKB
  25. 25. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 24 Cases: Public transport ticketing Change in the market structure: before February 2013  
  26. 26. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 25 Cases: Public transport ticketing Change in the market structure: after February 2013  
  27. 27. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 26 Analyzed Mobile Payment Cases PoS Solutions in Retail
  28. 28. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 27 Mobile payment solution Payment service provider Payment type Other parties involved SEQR Bart Payair ME Axfood, McDonalds Axfood Webhallen, shops and res- taurants as a part of a trail in Uppsala Beijing8 Collector (billing) Shops equipped with PoS terminals Webhallen Point (VeryFone company) Cases: PoS solutions Monthly bills Bank account Bank account Credit card Bank account Credit card
  29. 29. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 28 Mobile payment solution Payment service provider Payment type Other parties involved SEQR Bart Payair ME Axfood, McDonalds Axfood Webhallen, shops and res- taurants as a part of a trail in Uppsala Beijing8 Collector (billing) Shops equipped with PoS terminals Webhallen Point (VeryFone company) Cases: PoS solutions Monthly bills Bank account Bank account Credit card Bank account Credit card
  30. 30. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 29 Solutions linked to service accounts: SEQR Payment service providers: IT company (Seamless) Payment: - SEQR app - QR-code based - Separate service account and billing Trials: - Retail chain Axfood (380 shops) - Five McDonalds’ restaurants (2010) Cases: PoS solutions
  31. 31. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 30 Solutions linked to service accounts: SEQR Payment service providers: IT company (Seamless) Payment: - SEQR app - QR-code based - Separate service account and billing Trials: - Retail chain Axfood (380 shops) - Five McDonalds’ restaurants (2010) Cases: PoS solutions
  32. 32. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 39 Analysis of Results
  33. 33. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 40 Analysis of Results Transport Ticketing Using SMS Payments: The activity system content is the same (the same activities) The activity system structure and governance have changed since the activities are linked in new ways and performed by new actors. The mobile operators do not participate any longer, they are replaced by payment providers The novelty of the design scheme is about the structure, i.e. how the activities are linked and how they are governed The lock-in design theme seems to be an inverted one, many users liked the old SMS system and did not want to change it The efficiency as a design theme is not clear, no improved efficiency can be identified
  34. 34. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 41 Analysis of Results Mobile Payments for PoS and P2P Transactions: The activity system content is new The activity system structure is new. Activities are performed by actors providing a service or making use of a service The novelty is one of the design themes The lock-in design theme: • Banks and credit card companies want their customers to use existing accounts for mobile payments to increase the value of existing accounts • New payment solutions require user accounts The efficiency and complementarities are not drivers for new solutions
  35. 35. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 42 Summary
  36. 36. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 43 Summary Mobile operators have lost leading positions New actors from financial and IT areas enter the mobile payment market, however, their offered services overlap A multitude of offered mobile payment solutions leads to a high market fragmentation and problem of reaching a critical mass of consumers
  37. 37. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 44 Summary Creation and management of multiple accounts for mobile pay- ment are potential obstacles for a new service adoption by con- sumers The need to register new user accounts for buying SMS tickets resulted in a substantial reduction of the number of sold tickets and made transactions during February 2013 Limited infrastructure of mobile payments is another obstacle Most of the existing solutions are offten coupled with bank accounts/cards which have a wide infrastructure
  38. 38. Jan I. Markendahl and Tatjana Apanasevic, The 29th Annual IMP Conference, 2013-09-02, Atlanta | 45 Summary Entry Points for Mobile Payments: from a user perspective Public transport: Mobile payment and ticket solution may be accepted: • It is used frequently for the service • The phone is obvious as a ticket PoS solutions: Currently bank service would be the natural choice of many merchants Solutions offered by retail chains may be one entry point but this would not be the case for restaurants (less frequent visits)
  39. 39. Jan I. Markendahl janmar@kth.se Tatjana Apanasevic tatjanaa@kth.se Thank You

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