Role of banks in m-paymentsUnderstanding the various optionsJeroen de Bel – January 31st 2012   tomorrow’s transactions to...
Jeroen de Bel – Innopay    • Studied Business Economics & Finance in      NL and USA, graduated Cum Laude in 2009    • Hel...
innopay. tomorrow’s transactions today                                                                                    ...
Innopay reference customers4   The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Role of banks in m-paymentsUnderstanding the various options                                    tomorrow’s transactions to...
Contents• Banks and the mobile opportunity• Role of banks in mobile NFC payments• Summary and conclusions6   The role of b...
The role of banks in payments:    Issuing, Acquiring and Clearing & Settlement    Consumer             ISSUING            ...
Banks already handling payments    … mobile payments seems a logical next step          BANK                              ...
Banks are uniquely positioned1.      Experience in handling payments:        • Issuing, Acquiring , Clearing & Settlement2...
Banks and card schemes enjoy highest trust                                                                     IT         ...
Gap between FI’s and others                                                                                         Percen...
However, mobile payments is a                  complex ecosystem12   The role of banks in m-payments. Jeroen de Bel – Janu...
Many stakeholders        Where are you? Where is the bank?         Payer                                                  ...
Multiple mobile payment categories         Which context do you want to address?            Source: Innopay Mobile payment...
Multiple technologies         Which technology best fits your needs?                                                      ...
Scope of today:         Banks’ role in mobile NFC payments            Source: Innopay analysis16   The role of banks in m-...
Role of banks in mobile NFC paymentsAnalysis per category                                 tomorrow’s transactions today
2a. C2B NFC paymentsACCOUNT                                            ISSUING        ACQUIRING              ACQUIRING DET...
2a. Role of banks in C2B NFC paymentsIssuing:• Get debtor bank account details on secure element• Cooperate with TSMAcquir...
2a. Position of banks in C2B NFC paymentsBanks hold a unique position• Banks already have large acquiring networks for car...
2b. Mobile PoS NFC payments                        ACCOUNT DETAILS                                                   ISSUI...
2b. Role of banks in Mobile PoS paymentsIssuing:• Issuance of contactless card by bank• Secure element is in cardAcquiring...
2b. Position of banks in Mobile PoSBanks can leverage on existing merchant services• Online card PSP is related to current...
1. P2P NFC paymentsACCOUNT                                            ISSUING        ACQUIRING              ACQUIRING DETA...
1. Role of banks in P2P NFC paymentsIssuing:• Get debtor bank account details on secure element• Cooperate with TSMAcquiri...
1. Position of banks in P2P NFC paymentsBanks may take some time:• Issue account details on secure element and allow banks...
Summary and conclusionsBanks’ roles and positions dependent on various factors                                            ...
Banks will have a role in m-paymentsIssuing: get account details on secure element• Banks can issue account details on sec...
Banks hold a unique position    … but its position may differ per category2a. C2B payments: the winner may differ per mark...
Mobile payments 2012 – My mobile, my wallet?To download this FREE report:• Visit innopay.com/publications• Click hereor• S...
Jeroen de BelThank you            e: jeroen@innopay.comFor your attention   t: @jeroendebel                          tomor...
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Innopay @ IQPC: The role of banks in mobile payments

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Innopay @ IQPC: The role of banks in mobile payments

  1. 1. Role of banks in m-paymentsUnderstanding the various optionsJeroen de Bel – January 31st 2012 tomorrow’s transactions today
  2. 2. Jeroen de Bel – Innopay • Studied Business Economics & Finance in NL and USA, graduated Cum Laude in 2009 • Held multiple positions at various departments of major banks • Joined Innopay in 2010 • Advising major financial institutions and large corporates • Focus on strategy and innovation in retail banking (e.g. e-banking, mobile payments) • Author of ‘Mobile payments 2012 - My mobile, my wallet?’2 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  3. 3. innopay. tomorrow’s transactions today Online payment• Innopay is an independent full service consultancy firm, specialised in payments and related transaction services E-invoicing• E-payment, e-invoicing, e-identity, m-payment, cards, rules• From ‘Powerpoint to Production’ E-identity• Reputed player with active contribution to development of the industry. Member of a.o. EPCA, EBA en ECP/EPN Mobile payment• Truly independent from IT vendors & financial institutions Cards• Founded in 2000, employs 15 consultants, from Amsterdam − Founded by Chiel Liezenberg (1968) and Douwe Lycklama (1965) Rules − Extensive experience in consulting in complex organisations3 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  4. 4. Innopay reference customers4 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  5. 5. Role of banks in m-paymentsUnderstanding the various options tomorrow’s transactions today
  6. 6. Contents• Banks and the mobile opportunity• Role of banks in mobile NFC payments• Summary and conclusions6 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  7. 7. The role of banks in payments: Issuing, Acquiring and Clearing & Settlement Consumer ISSUING ACQUIRING Corporate CLEARING & SETTLEMENT7 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  8. 8. Banks already handling payments … mobile payments seems a logical next step BANK MOBILE OPPORTUNITY8 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  9. 9. Banks are uniquely positioned1. Experience in handling payments: • Issuing, Acquiring , Clearing & Settlement2. Direct access to funding: • Direct access to bank account and funds3. Capabilities to deal with regulation & compliance: • License to perform transactions and hold funds4. Banks are trusted as mobile payments provider • …9 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  10. 10. Banks and card schemes enjoy highest trust IT RETAIL MOBILE NETWORK BANK CARD SCHEME Source: Lexus Agency - Wallet Wars 201110 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  11. 11. Gap between FI’s and others Percentage of respondents expressing trust in brand Source: Ogilvy & Mather - The New Mobile Shopper: From Armed to Charmed11 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  12. 12. However, mobile payments is a complex ecosystem12 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  13. 13. Many stakeholders Where are you? Where is the bank? Payer Payee OEM PoS Mobile Network Operator Mobile Wallet E-Payment platform Issuing Bank Card network Acquiring Bank13 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  14. 14. Multiple mobile payment categories Which context do you want to address? Source: Innopay Mobile payment s 201214 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  15. 15. Multiple technologies Which technology best fits your needs? TEXT MESSAGING INTERACTIVE VOICE RESPONSE MOBILE INTERNET (SMS, USSD) HIGH FREQUENCY RADIO NEAR FIELD COMMUNICATION 2D BARCODE (mobile speaker & microphone) (chip based electronic)15 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  16. 16. Scope of today: Banks’ role in mobile NFC payments Source: Innopay analysis16 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  17. 17. Role of banks in mobile NFC paymentsAnalysis per category tomorrow’s transactions today
  18. 18. 2a. C2B NFC paymentsACCOUNT ISSUING ACQUIRING ACQUIRING DETAILS NETWORK CLEARING & SETTLEMENT18 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  19. 19. 2a. Role of banks in C2B NFC paymentsIssuing:• Get debtor bank account details on secure element• Cooperate with TSMAcquiring:• Arrange PoS terminals to have NFC capabilities for mobile NFC transactions• Invest in new infrastructure• Changes in business rules, e.g. security, liabilities, guarantees, interchange fees, user experienceClearing & Settlement:• Via regular bank and card networks19 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  20. 20. 2a. Position of banks in C2B NFC paymentsBanks hold a unique position• Banks already have large acquiring networks for cards• Card networks can create their own wallets, but also must first agree with banks on technical standards and business rulesCompetitors cannot go without banks and cards• E-wallets still have to secure their position in the terminal• E-wallets better positioned to provide value added services as couponingMultiple parties cooperating and/or competing• Combination of banks, e-wallets and card networks operating in this area• If banks already have issued contactless cards, mobile NFC seems small step• The ‘winner’ may differ per market20 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  21. 21. 2b. Mobile PoS NFC payments ACCOUNT DETAILS ISSUING ACQUIRING ACQUIRING NETWORK CLEARING & SETTLEMENT21 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  22. 22. 2b. Role of banks in Mobile PoS paymentsIssuing:• Issuance of contactless card by bank• Secure element is in cardAcquiring:• The terminal enables a mobile phone to receive contactless data• The terminal acts as a PSP for card transactions; online acquiring with a contactless card• The banks’ role of acquirer remains the same as online card transactionsClearing & Settlement:• Via regular bank and card networks22 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  23. 23. 2b. Position of banks in Mobile PoSBanks can leverage on existing merchant services• Online card PSP is related to current PSP services of offline PoS• However, banks also missed the opportunity for online PSP services• Risk of fraud making banks reluctantStartups also have ample possibilities• Only a nice application and an add-on card reader are needed to become a PSP for online card transactions• Add-ons must be distributed to merchantsInnovations expected from startups:• E-wallets may also issue their own add-ons (making it similar to P2P)• Banks may lack behind in innovative solutions but can leverage on current business23 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  24. 24. 1. P2P NFC paymentsACCOUNT ISSUING ACQUIRING ACQUIRING DETAILS NETWORK CLEARING & SETTLEMENT24 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  25. 25. 1. Role of banks in P2P NFC paymentsIssuing:• Get debtor bank account details on secure element• Cooperate with TSMAcquiring:• Enable communication with networks• Banks must cooperate and trust each others systems (4-party model), e.g. allowing RBS on iPhone to communicate with Barclays on BlackberryClearing & Settlement:• Via regular bank and card networks25 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  26. 26. 1. Position of banks in P2P NFC paymentsBanks may take some time:• Issue account details on secure element and allow banks to communicate with each other (4-party), e.g. different security and business rules• Advantage bank is that users already have an accountE-wallets seem to be in a better position:• E-wallets are platforms that serve both the debtor and creditor (3-party)• E-wallets product development more agile• E-wallets sign up enables quicker user adoptionE-wallets are likely to take the spot…• …but when banks have secured their place on the secure element, P2P is only a small step26 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  27. 27. Summary and conclusionsBanks’ roles and positions dependent on various factors tomorrow’s transactions today
  28. 28. Banks will have a role in m-paymentsIssuing: get account details on secure element• Banks can issue account details on secure element• Alternatives are e-wallets and card networksAcquiring: unique role through existing acquiring networks• Banks have a very important role in the acquiring through PoS• Alternatives must have their own acquiring networkClearing & Settlement: nothing new• Banks have exclusive access to clearing & settlement systems• Alternatives may settle within their own system when they have both the debtor and creditor (3-party)28 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  29. 29. Banks hold a unique position … but its position may differ per category2a. C2B payments: the winner may differ per market• Unique position for banks and card networks in the PoS acquiring network• E-wallets need to cooperate with banks and card networks to participate2b. Mobile PoS payments: startups likely to take the spot• Banks can leverage on existing merchant acquiring services• Startups seem better positioned to innovate1. P2P payments: e-wallets seem better positioned• Possibilities for alternatives as traditional acquiring network is not necessary• In near future e-wallets seem to be best positioned29 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  30. 30. Mobile payments 2012 – My mobile, my wallet?To download this FREE report:• Visit innopay.com/publications• Click hereor• Scan this QR code30 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
  31. 31. Jeroen de BelThank you e: jeroen@innopay.comFor your attention t: @jeroendebel tomorrow’s transactions today

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