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Dan Armstrong - The Mobile Wallet - LBMA 2012

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As presented at LBMA Amsterdam Event March 21st, 2012

As presented at LBMA Amsterdam Event March 21st, 2012

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  • So I was thinking about some of the old conceptions of “e-commerce” and the “e-wallet” that we used to have at Netscape and MCI (1994-1996), when we were first deploying HTTPS.
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    • 1. Thoughts on the Mobile WalletLBMA EMEA ChapterAmsterdam, 21 March 2012Dan Armstrong (Takashi)dan.armstrong@takashimobile.com
    • 2. marketplaceMCI (1994-96)
    • 3. marketplaceMCI (1994-96)
    • 4. 1-800-MUSiC-NOW (1996)
    • 5. The e-commerce shake out  Many shifting paradigms; however, once the supply chain and logistics matched people’s awareness, appetite and feelings of trust for e-commerce settled, clear winning business models emerged (my personal way of summarising): • Efficiency (Paypal, Netflix, online photo printing, online flight tickets/car rental/hotels, UPS/FedEx tracking, Amazon.com) • Products (HP, Netflix, Thomann.de, Amazon.com) • The Long Tail ( eBay, Marktplaats, publishing on demand, … and of course Amazon.com) • … plus of course, monetising clicks (Facebook, Google, YouTube, TripAdvisor, pornography)  Many of these internet-based e-commerce models began in the USA, but gained popularity in Western Europe and Asia, South America and are picking up somewhat in Africa and South Asia.  But internet transaction capability in Africa and South Asia is really taking off via mobile access.
    • 6. What is the Mobile Wallet?
    • 7. What is the Mobile Wallet? IVR Banking & SMS Alerts Multi-Channel Payments Balance-Checking Full-Service Mobile Remote Payments & Mobile Contactless / Banking & Payments Electronic Wallets Proximity Payments “Mobile Money” Mobile Remittances Advertising-led Models = banks deploy = bank-led models = cooperative models = public transportation-led models = mobile operator-led models = mobile operators deploy = third-parties deploy
    • 8. So, taking a step back.
    • 9. First of all, what do we expect from a wallet?  A place to store cash?  A place to store payment tokens?  A place to store other tokens?  A personal object?  A private object?  Something small enough to be portable/mobile?  … but … do we need a physical object?
    • 10. Then, what do we expect from a payment device?  Identification of myself, my rights and capabilities, memberships.  Identification of myself, an authentication tool for payment.  Secure, multi-factor  Tamper-resistant/evident  Personal and private  Easy to use  … but … do we need a physical object?
    • 11. What are we doing when using cards, fobs, NFC cards?  Authorising transfers/payments remotely of course … • Personal authorisation (machtiging) • Check • Signature • Card + Signature • Card + PIN • Card + PIN + Biometrics Four Corner Model • Card Three Corner Model • Biometrics • … you get the idea  Some payments are different, as they don’t always require a card in the first place for transaction, but other authentication (e.g. PayPal, MiniTix).
    • 12. Innovative .. but card-based payments, for obvious reasons …Everyone’s got cards. And of course, allowing traditional credit card payments, without a card present ..
    • 13. NFC can be a bridging technology But the Secure Element (SE) standardisations discussions have led to stalling the ubiquity of Single Wire Protocol- enabled phones and NFC acceptance devices world- wide since 2007.
    • 14. Cardless payments, some people trying to figure out “proximity payments”without an additional token (like NFC or cards) WALLET But then again, if you were a merchant - you could also just say you accept PayPal too .. But the per transaction charges of moving online payment to the supermarket are usually prohibitive.
    • 15. Two ways I find handy of thinking about the mobile wallet .. Card Emulation Forget Cards A mobile phone that takes the Next-generation authentication place of a physical card using that could leverage a POS for different authentication methods merchant speed and to enact a transaction at a vs. convenience, but doesn’t require physical location. one for payment. Can be EMVCo-based or New “opt-in” models required scheme-based, but allows the for auto-payment and phone to pay, like a super card. confirmations, transparency. • Can leverage the card/NFC POS locations. • Hard to forget the POS though. It’s what the Consumers are comfortable with cards. merchant needs to validate the payment quickly, and on-the-spot (see Square Card • Must face the standardisation jungle if the Case, later). phone is to co-exist at these acceptance points. • Consumers must feel like they are in control • Consumers don’t like to have loads of wallets, of the process. Otherwise its not to going to so this all has to be connected seamlessly on work. the back end.
    • 16. Two ways I find handy of thinking about the mobile wallet .. Card Emulation With the ubiquity of A mobile phone that takes the cards in the place of a physical card using marketplace, and POS different authentication methods devices in place for to enact a transaction at a physical location. electronic payments, this is hard to ignore in Can be EMVCo-based or the EU, Asia, North scheme-based, but allows the America. phone to pay, like a super card. • Can leverage the card/NFC POS locations. Consumers are comfortable with cards. • Must face the standardisation jungle if the phone is to co-exist at these acceptance points. • Consumers don’t like to have loads of wallets, so this all has to be connected seamlessly on the back end.
    • 17. But “collaboration” on mobile phone-based payments is tricky Category 1 Player: Category 2 Player: “I have a pipe and want to monetise my “I have stuff I want to do via channels. Make investments in my GSM license, radio and access payments, provide ticketing, sell ads, general network, etc. I want as much to get through that loyalty models, etc. and I need as many (cost pipe and my re-sold mobile phones as possible.” effective) channels and pipes to do it.”
    • 18. In some places, we’ve not got a lot of smartphones ..How can we enable this merchant to accept mobile payments?  Limited smartphones  Limited (and expensive) mobile data  Limited (and expensive) fixed internet & electricity  Limited literacy  Limited trust in bank accounts  High cost of ATM and branch operations, limited in-country IT capabilities  Limited amount of people with official IDs  Everyone wants a payment card.
    • 19. Bank Branch: RwandaNo power, internet connectivity
    • 20. Bank Branch: RwandaWaiting for cash withdrawals
    • 21. Bank Branch: RwandaTeller
    • 22. Bank Branch: RwandaTeller
    • 23. Two ways I find handy of thinking about the mobile wallet .. Card Emulation Forget Cards A mobile phone that takes the Next-generation authentication place of a physical card using that could leverage a POS for different authentication methods merchant speed and to enact a transaction at a vs. convenience, but doesn’t require physical location. one for payment. Can be EMVCo-based or New “opt-in” models required scheme-based, but allows the for auto-payment and phone to pay, like a super card. confirmations, transparency. • Can leverage the card/NFC POS locations. • Hard to forget the POS though. It’s what the Consumers are comfortable with cards. merchant needs to validate the payment quickly, and on-the-spot (see Square Card • Must face the standardisation jungle if the Case, later). phone is to co-exist at these acceptance points. • Consumers must feel like they are in control • Consumers don’t like to have loads of wallets, of the process. Otherwise its not to going to so this all has to be connected seamlessly on work. the back end.
    • 24. So, in Africa, South Asia, Southeast Asia perhaps … Forget Cards Limited no. of POS in Next-generation authentication place, limited no. of that could leverage a POS for cards in the market. merchant speed and convenience, but doesn’t require Great opportunity for one for payment. mobile payments. But not via smartphones! New “opt-in” models required for auto-payment and confirmations, transparency. • Hard to forget the POS though. It’s what the merchant needs to validate the payment quickly, and on-the-spot (see Square Card Case, later). • Consumers must feel like they are in control of the process. Otherwise its not to going to work.
    • 25. Thank You