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Emerging Technologies in  Financial Services Mercator Advisory Group Update George Peabody Director, Emerging Technologies...
Mobilizing Financial Services Mobile Banking Update <ul><li>Agenda </li></ul><ul><li>Mobile Commerce, Banking and Payments...
Cards and Mobile: the Mute User Interface Mercator Advisory Group 2010
A Very Interactive User Interface Mercator Advisory Group 2010
Enough said… Mercator Advisory Group 2010
Where We are Headed:  Pervasive Ambient Computing Mercator Advisory Group 2010
The Mobile Financial Services Aggregation Point is in Your Pocket Mercator Advisory Group 2010
Mobility has become part of our social DNA and data-oriented activity is rising <ul><li>262 million US subscribers, nearin...
Mobile Marketing has gone mainstream: Multiple industries and leading brands <ul><li>Consumer packaged goods </li></ul><ul...
Mobile  Banking and Payment Feature Hierarchy Source: CashEdge survey,  Mercator Advisory Group % Interested Mercator Advi...
The Mobile Channel, while just another channel, has unique attributes that amplify the others Mercator Advisory Group 2010
Situational Relevance: It's About the Data About the Payment <ul><li>Data Analytics </li></ul><ul><ul><li>Beyond “how much...
NFC-based Proximity Payments face business model barriers and technology competition  <ul><li>Business Model Barriers </li...
MNOs are still considering their moves into Financial Services <ul><li>Technically, there are few barriers </li></ul><ul><...
MNOs are still considering their moves into Financial Services <ul><li>Technically, there are few barriers </li></ul><ul><...
Key Takeaways <ul><li>Expectations of mobile access are rising </li></ul><ul><li>Convenience and Situational Relevance wil...
Contactless Card Payments Mercator Advisory Group 2010
The Contactless Cautionary Tale –  Failure is an Option Mercator Advisory Group 2010
Contactless cards could be considered a payments industry tactic without benefit to consumers Mercator Advisory Group 2010...
Contactless cards could be considered a payments industry tactic without benefit to consumers Mercator Advisory Group 2010...
Payment Gateways Mercator Advisory Group 2010
Gateways Have Been About Switching and Transaction Volume Mercator Advisory Group 2010 POS PED vPOS e-Commerce integration...
Gateway Features are the new Competitive Battleground – with some operating on the handset <ul><li>Potential Offerings </l...
Who  ISN’T  in the Gateway Business? Mercator Advisory Group 2010
All connecting to processors, Multiple Segment Types Provide Gateway Services to 4 Markets Super ISOs Payment  Technology ...
Wireless Point of Sale Mercator Advisory Group 2010
Wireless POS includes Purpose-built, Smartphone and Feature-phone Approaches Mercator Advisory Group 2010 Smartphones Gate...
In-person Mobile Payments Methods: AppPhones Move Up, More Evolution to Come How far up-market stream can the  AppPhone Ec...
<ul><li>Thank you </li></ul><ul><li>George Peabody </li></ul><ul><li>Director, Emerging Technologies Advisory Service </li...
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Emerging Payments Mobile Contactless Gateways v 1.ppt

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  • Gateways will offer a wider range of merchant and ISO facing services Competition will be defined by features and functions offered to both the channel partner and the end merchant account including: Security Tokenization, Encryption, 2FA Identity services Fraud detection Recurring Billing Account updating Merchant Management Onboarding Mobile Access Purpose-built device management AppPhone support USB / Wireless Card reader and printer support Line of Business Application support services
  • Transcript of "Emerging Payments Mobile Contactless Gateways v 1.ppt"

    1. 1. Emerging Technologies in Financial Services Mercator Advisory Group Update George Peabody Director, Emerging Technologies Advisory Service Mercator Advisory Group January 2010 Mercator Advisory Group 2010
    2. 2. Mobilizing Financial Services Mobile Banking Update <ul><li>Agenda </li></ul><ul><li>Mobile Commerce, Banking and Payments </li></ul><ul><li>Contactless and NFC </li></ul><ul><li>Payment Gateways </li></ul><ul><li>Wireless POS </li></ul>Mercator Advisory Group 2010 Fr: My Bank Checking 1,251.11 Pending 220.00 RLSCheck 199.11 Savings 3,215.32 VisaBal 613.23 Visa Avail 386.77
    3. 3. Cards and Mobile: the Mute User Interface Mercator Advisory Group 2010
    4. 4. A Very Interactive User Interface Mercator Advisory Group 2010
    5. 5. Enough said… Mercator Advisory Group 2010
    6. 6. Where We are Headed: Pervasive Ambient Computing Mercator Advisory Group 2010
    7. 7. The Mobile Financial Services Aggregation Point is in Your Pocket Mercator Advisory Group 2010
    8. 8. Mobility has become part of our social DNA and data-oriented activity is rising <ul><li>262 million US subscribers, nearing 100% penetration </li></ul><ul><li>58% of mobile subscribers have done non-voice data activities </li></ul><ul><li>53% are active text users, 149 M </li></ul><ul><li>> 12% of subscribers have flat rate data plans </li></ul><ul><li>> 15% now own smartphones </li></ul><ul><li>iPhone – 7 million sold in Apple’s 4 th quarter alone. One million 3G S sold in one week, 70 million sold. </li></ul><ul><li>120,000 apps, 2 B downloads in 18 months. </li></ul>Mercator Advisory Group 2010 20% of all mobile subscribers are prepaid account s using both text and voice (Mercator Primary Data Series research) 250 Million iPods 1 Billion PCs 1 Billion Accounts 1.5 Billion Cards 1.6 Billion Internet 2 Billion TVs 3.6 Billion Mobile Phones
    9. 9. Mobile Marketing has gone mainstream: Multiple industries and leading brands <ul><li>Consumer packaged goods </li></ul><ul><li>Apparel </li></ul><ul><li>QSRs </li></ul><ul><li>Electronics </li></ul><ul><li>Sporting goods </li></ul><ul><li>Financial Services </li></ul><ul><li>Manufacturing </li></ul>Mercator Advisory Group 2010
    10. 10. Mobile Banking and Payment Feature Hierarchy Source: CashEdge survey, Mercator Advisory Group % Interested Mercator Advisory Group 2010
    11. 11. The Mobile Channel, while just another channel, has unique attributes that amplify the others Mercator Advisory Group 2010
    12. 12. Situational Relevance: It's About the Data About the Payment <ul><li>Data Analytics </li></ul><ul><ul><li>Beyond “how much?” – answer “Who, What, When and Where?” </li></ul></ul><ul><li>Customer Experience Management / Social Networking </li></ul><ul><li>Fraud Analytics / Risk Analytics </li></ul><ul><li>Rewards and Loyalty, Merchant Funded Discount Networks </li></ul><ul><li>Give accountholders and customers information about their money and their value to you. </li></ul>Mercator Advisory Group 2010
    13. 13. NFC-based Proximity Payments face business model barriers and technology competition <ul><li>Business Model Barriers </li></ul><ul><ul><li>Entry of MNOs into payment ecosystem a cause for stress in FI and card network communities </li></ul></ul><ul><ul><li>Trusted Security Manager (TSM) role is expected to provide neutral third-party role and business model breakthrough but that has not yet happened </li></ul></ul><ul><ul><li>MNOs are still considering their moves </li></ul></ul><ul><li>Competitive Software Technologies </li></ul><ul><ul><li>Barcode scanning to create “physical web” similar to NFC “smart posters” </li></ul></ul><ul><ul><li>Consumer Experience Management on the handset </li></ul></ul><ul><ul><li>What will Google do? </li></ul></ul><ul><ul><li>“ There are four or five of us and each of us wants 40% of the action.” - Sprint VP </li></ul></ul>Mercator Advisory Group 2010
    14. 14. MNOs are still considering their moves into Financial Services <ul><li>Technically, there are few barriers </li></ul><ul><ul><li>MNOs experimenting with NFC and POS acquiring </li></ul></ul><ul><ul><li>Over The Air (OTA) provisioning well understood </li></ul></ul><ul><ul><li>Reliable networks and messaging applications </li></ul></ul><ul><li>But Financial Services industry comes with regulatory oversight </li></ul><ul><ul><li>MNOs already under supervision by OCC </li></ul></ul><ul><ul><li>Scrutiny by financial regulators will be burdensome </li></ul></ul><ul><li>Blended approaches may emerge </li></ul><ul><ul><li>NCF may grow based on merchant use for merchandising, mobile commerce and marketing and then payments </li></ul></ul><ul><ul><li>Card Issuing via partnership with major bank </li></ul></ul>Mercator Advisory Group 2010
    15. 15. MNOs are still considering their moves into Financial Services <ul><li>Technically, there are few barriers </li></ul><ul><ul><li>MNOs experimenting with NFC and POS acquiring </li></ul></ul><ul><ul><li>Over The Air (OTA) provisioning well understood </li></ul></ul><ul><ul><li>Reliable networks and messaging applications </li></ul></ul><ul><li>But Financial Services industry comes with regulatory oversight </li></ul><ul><ul><li>MNOs already under supervision by OCC </li></ul></ul><ul><ul><li>Scrutiny by financial regulators will be burdensome </li></ul></ul><ul><li>Blended approaches may emerge </li></ul><ul><ul><li>NCF may grow based on merchant use for merchandising, mobile commerce and marketing and then payments </li></ul></ul><ul><ul><li>Card Issuing via partnership with major bank </li></ul></ul>Mercator Advisory Group 2010 Mobile Operators could lose their grip Apple could step in to be a Trusted Services Manager to link FIs and MNOs. The company could expand iTunes into a payments wallet.
    16. 16. Key Takeaways <ul><li>Expectations of mobile access are rising </li></ul><ul><li>Convenience and Situational Relevance will drive mobile banking and payments success </li></ul><ul><li>Mobile ways to pay will proliferate: Amazon, Twitpay, Facebook payments, PayPal's Adaptive Payments API, embedded in the “App for That” </li></ul><ul><li>The smartphone as aggregation point for multiple financial services functions and brand manager </li></ul><ul><li>The shift from online to mobile </li></ul><ul><ul><li>Consumer reticence falling to convenience and familiarity </li></ul></ul><ul><ul><li>One size won’t fit all: </li></ul></ul><ul><ul><ul><li>SMS, WAP and platform-optimized websites (iPhone sites) provide good value </li></ul></ul></ul>Mercator Advisory Group 2010
    17. 17. Contactless Card Payments Mercator Advisory Group 2010
    18. 18. The Contactless Cautionary Tale – Failure is an Option Mercator Advisory Group 2010
    19. 19. Contactless cards could be considered a payments industry tactic without benefit to consumers Mercator Advisory Group 2010 Uptake is low Out of the 1,096 million cards in use in 2007, just 45 million cards are contactless, just 4% with remarkably low usage 400,000 readers in 80,000 merchant locations Contactless feature activation rates are 10% - 30% 90% of those using contactless feature use it less than once per week Industry has ignored the Consumer and not helped the Merchant Value proposition for contactless cards has primarily benefited issuers and processors eager to shift cash transactions on to plastic Network rules allowing no signature transactions at QSRs for under $25 have reduced need for contactless What benefits do contactless cards provide the consumer? Not many!
    20. 20. Contactless cards could be considered a payments industry tactic without benefit to consumers Mercator Advisory Group 2010 Uptake is low Out of the 1,096 million cards in use in 2007, just 45 million cards are contactless, just 4% with remarkably low usage 400,000 readers in 80,000 merchant locations Contactless feature activation rates are 10% - 30% 90% of those using contactless feature use it less than once per week Industry has ignored the Consumer and not helped the Merchant Value proposition for contactless cards has primarily benefited issuers and processors eager to shift cash transactions on to plastic Network rules allowing no signature transactions at QSRs for under $25 have reduced need for contactless What benefits do contactless cards provide the consumer? Not many! And now, Best Buy is refusing to accept Visa contactless payments because of the signature debit rates it is charged for those transactions
    21. 21. Payment Gateways Mercator Advisory Group 2010
    22. 22. Gateways Have Been About Switching and Transaction Volume Mercator Advisory Group 2010 POS PED vPOS e-Commerce integration App integration Mobile integration wPOS Gateway Channels Processors
    23. 23. Gateway Features are the new Competitive Battleground – with some operating on the handset <ul><li>Potential Offerings </li></ul><ul><li>Merchant-facing: </li></ul><ul><li>Recurring payments </li></ul><ul><li>Tokenization </li></ul><ul><li>Signature Capture </li></ul><ul><li>Mobile payment support (CNP) </li></ul><ul><li>Fraud controls </li></ul><ul><li>Rewards/Loyalty </li></ul><ul><li>Smartphone / AppPhone support </li></ul><ul><li>USB / Bluetooth card reader and printers (Woosim, Blue Bamboo) </li></ul><ul><li>Mobile Enterprise Application support via Web Services, APIs, etc. </li></ul><ul><li>Others… </li></ul><ul><li>Consumer-facing: </li></ul><ul><li>AppPhone payment terminals (iPhone, RIM, WinMo, Android, Palm Pre) </li></ul><ul><li>“ Sellers” card readers (Square, Inc.) </li></ul>Mercator Advisory Group 2010
    24. 24. Who ISN’T in the Gateway Business? Mercator Advisory Group 2010
    25. 25. All connecting to processors, Multiple Segment Types Provide Gateway Services to 4 Markets Super ISOs Payment Technology Enablers POS Hardware Vendor Mercator Advisory Group 2010 Mobile E-Commerce PayPal vPOS POS Gateway Pureplays Mobile Channel Experts E-Commerce Channel Experts Direct to Merchant ISO Channel Software VAR Payment Service Provider
    26. 26. Wireless Point of Sale Mercator Advisory Group 2010
    27. 27. Wireless POS includes Purpose-built, Smartphone and Feature-phone Approaches Mercator Advisory Group 2010 Smartphones Gateway Mobile Networks Purpose-built Terminals Feature Phones <ul><li>Plenty of Mobile Merchants </li></ul><ul><li>1,300,000 Service Pros </li></ul><ul><li>320 Amusement Parks </li></ul><ul><li>570 Ski Areas </li></ul><ul><li>16,000 Golf Courses </li></ul><ul><li>15,000 Specialty Retailers </li></ul><ul><li>44,000 Temporary Retailers </li></ul><ul><li>75,000 Taxis </li></ul><ul><li>Plus enterprise fleets and growing “sellers” cadre </li></ul>Processors
    28. 28. In-person Mobile Payments Methods: AppPhones Move Up, More Evolution to Come How far up-market stream can the AppPhone Ecosystem swim? Mercator Advisory Group 2010 Merchant Size P2P Sole Proprietor Service Fleet Small Biz (2 – 5) Taking Pmts “ Seller”
    29. 29. <ul><li>Thank you </li></ul><ul><li>George Peabody </li></ul><ul><li>Director, Emerging Technologies Advisory Service </li></ul><ul><li>[email_address] </li></ul><ul><li>781-419-1716 </li></ul>Mercator Advisory Group 2010
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