This document discusses trends in mobile proximity payments. It notes that mobile is becoming the dominant channel for activities like commerce, payments, and identity. Security and trust are also important topics. There are various hardware and software options for storing payment credentials, with host card emulation (HCE) currently a major trend. Interoperability between different components and ecosystems can be challenging. The document outlines the opportunities for diverse mobile transactions like ticketing, payments, access control, and loyalty programs. It discusses technologies like near field communication (NFC), QR codes, and Bluetooth low energy (BLE) that enable proximity payments and transactions. Collaboration between stakeholders in mobile commerce can take different forms, from joint marketing to fully integrated joint ventures. Overall

1. 1
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Mobile Proximity (Payments)
Amos Kater
Practice Leader Mobile & Payment Practice
May 22, 2014

2. 2
Three major global trends
?
Mobile is (becoming) the dominant channel
mGovernment, mCommerce, mPayments,
mID, mTicketing, etc
Security and trust are hot topic
Several data storage options
Multiple hardware SE options
Current major trend: HCE
Mobile solutions have to address many options
High variety of components: Handsets, OS, SEs,
And technologies: NFC, HCE, BLE, QR bar codes
Interoperability is an issue in starting and existing ecosystems

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The smart phone revolution is the next step for
all SPs
“In a similar manner as internet
revolutionized the way customers
experience, identify, shop and share,
the mobile phone is the next
evolutionary wave!”

4. 4
Tremendous convergence towards the smart
phone
ID Content
Social
PaymentMarketing
Access

5. 5
Endless possibilities
mobile transactions are diverse
Ticketing
get access to events, stadiums
or movie theatres
access trains,
buses or metro
Payment
electronic purse
debit/credit
pay with mobile handset
Access
physical access to
premises
logical access, e.g. to
corporate network
Loyalty
handset replaces
loyalty cards
Tag reading
retrieve data by
reading a tag
Peer-to-Peer
exchange data between
mobile handsets
Identity related tokens
e-passport
driving license
Automotive
related
services
key to start
up a car
personalize
automotive
services
Health care
health care ID
or health care
data in handset
mGovernment
Document signing
Web-portal access
Self-help portals

6. 6
Valuables are also moving onto mobile

7. 7
Mobile payments momentum is there
14.6
25.4
40
54.627.8
32.1
40.5
48.3
27.8
32.5
41.3
49.5
70.2
90
121.8
152.4
0
20
40
60
80
100
120
140
160
2014 2015 2016 2017
InUSDBillion
Global NFC Retail Payments, 2014-17
Europe
Asia
North America
Source: Juniper, 2012
Source: www.mobilepaymentsinsider.com,
May 2014

8. 8
Data transfer for proximity
BLE
NFC
QR/Bar
Codes

9. 9
How to protect data?
TEE
HW SE cSE (HCE)

10. 10
Differentiate between the type of transactions
Virtual world
(Remote)
Real world
(proximity)
• Non-
personalized
• OS-grade
security
• HCE/Android
KitKat
Secure Element
• Micro SD
• UICC
• Embedded
Enables mGov
Proximity
technology:
• NFC
• Barcode
• Infrared
• BLE
Enablement of:
• Identification
• Ticketing
• Payments
• Access
HWsecurityOSsecurity

11. 11
How to manage data?
Issuing and lifecycle management
Perso bureau
CardvendorBPO Supply
contract
SP TSM SEI TSM
BPO
Card vendor
Supply contract
GP interfaces
GP interface
SP
SP SEI
BPO & supply
contract

12. 12
Collaboration in m-Commerce range from
commercial JVs to similar technical solutions
Collaboration approaches
UL TS Research
1. No collaboration
2. SP requirements
3. Joint marketing
platform
4. Joint wallet
5. Joint TSM
6. Complete Joint
Venture
Commercialdomaincollaboration
Technical domain collaboration
4
1
2
3 5
Collaboration
over the
technical
domain
Collaboration
over the
commercial
domain
6

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TSM models
SP
MNO
MNO
MNO
SP
SP
TSM
TSM
TSM
MNO
TSM
SP
TSM
SP
TSM
MNO
MNO
MNO
MNO
MNO
TS
M
SP
TS
M
SP
TS
M
SP
TS
M
SP
TSM
SP
SP
TSM
MNO
TSM
MNO
TSM
MNO
Individual modelTSM hub
SP aggregatorSEI aggregator

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• The SP has their own app with services
linking to the SE
• Normally only 1 service, but it can be
more
Different “wallet”options
Neutral branded wallet
• The wallet will get a neutral brand name
(not linking to an SEI or SP)
White labelled wallet
SP branded app
• With SDK, individual parties can
customize their wallet
SE Issuer branded wallet
• SEI has multiple SPs within the SEI
branded wallet

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The playground for contactless mobile projects
Source: NFC times, 2014

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Typical roadmap of TSM service

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SP Aggregators
Logo Name Coverage TSM provider Key point
• Visa Mobile
Provisioning
Service
• Global • Oberthur
• Connect to Samsung already
• Target 2/3 tier banks without
TSM
• Plan to connect also to MNO
• Trevica TSM • Poland • Morpho
• Payment processor's TSM,
connecting to 5 banks
• Plans to expand to Czech,
Hungary, Russia and Ukraine
• Mobiel
Betalen
Nederland
• Netherl
ands
• NA, pre-
provisioned
• Project of 3 major banks in the
Netherlands
• Partering with KPN,
MasterCard and others
• Samsung Galaxy Express

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Mobile Payments in The Netherlands
2005 2006 2007 2008 2009 2010 2011 2012 2013

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Mobiel Betalen Nederland
SP-led
SEIsSP
Model
SP TSM

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Partnering with
Mobile Payments in The Netherlands

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Contactless payment
Manual provisioning
From (debit)card to smartphone

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• Pincode can be
changed on the mobile
phone
• User can choose to
‘Always require
pincode’ during
payment
• Pincode is optional
• Limit on the total
amount without
pincode: €50,-
• Pincode is required
• Pincode can be pre-
entered, or the mobile
phone must be tapped
2x on the terminal
Payment < €25 Payment > €25 Settings
• Existing international payment products of Maestro and VPay
• Online and real-time payments (debit) , no stored value
• NFC Smartphone with banking payment app
• PoS terminal should support contactless
From (debit)card to smartphone

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Cooperative vs. Competitive

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Source: University of Maastricht & Panteia (measurement transaction times)
• Very positive results
– End score 7,8 from consumers
– End score 6,9 from merchants
– Most important advantages:
• Smartphone always within reach
• Transaction speed
• Ease of use
– Most important improvements
• Communication
• Technical stability (terminals)
• (Perception of) Security
• More type smartphones
Payment method Transaction
speed
Cash 18 seconds
Debitcard (contact) 17 seconds
Debitcard (contactless) 12 seconds
Mobile (single tap) 10 seconds
Mobile (double tap) 20 seconds
Results customer research

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Results customer research

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Results customer research

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Results customer research

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SEI Aggregators
Name Coverage TSM provider Key point
• EnStream • Canada • Bell ID
• JV of three biggest MNOs
Rogers, Bell and Telus.
• Also expand it service to SP-
TSM
• Payment, ID, and Loyalty
• WEVE • UK
• Not yet
finalized
• JV of three MNOs in UK
• Offer one stop shop for
mCommerce – retails,
advertise, payment, loyalty
• ISIS mobile
commerce
• US • Gemalto
• 3 biggest MNOs, ATT VZE TMO
• Also support iPhone with uSD
• A few banks on board: Chase,
Amex, Wells Fargo
• Payment and Loyalty

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MNO-led
Isis
MNO TSM SPsMNO
Model

31. 31
Isis Today
• Total 1,5 million activated Wallets, 20.00 new activation per day
• More than 200.000 merchant location
• Promotions like
• 20% cash back on all Isis taps with Serve – everywhere!
• A million free smoothies in partnership with Jamba Juice
• 3 Free Cokes and every 10th one free with Coca-Cola vending
machines
• Every 5th vend free at over 50,000 USA Technology enabled vending
machines
• Cash incentive by MNO’s paid on Serve account

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TSM Hubs
Logo Name Coverage
TSM
provider
Key point
• IDA
Singapore
• Nation
wide
• Gemalto
• Government initiated
• Connected to SingTel,
Starthub and M1
• Connected to DBS bank and
EZ-link
• User base is still small
• TSM New
Zealand
• Nation
wide
• Gemalto
• JV between 3 NZ MNO and
Paymark, the payment
processor
• Payment and loyalty
• TSM Nordic
• Nordic
Countries
• Gemalto
• JV between DNB and Telenor
• Provide natural brand for any
SPs and SEIs
• Offer payment and other
service in scope later

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Valyou
Collaborative
SPs/SEIsSP
MNO
Model
TSM

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Take home messages: it’s about an ECO-
system and not about an EGO-system
Conclusions Explanation
• Easy integration and possibility to build on top
• Do not lock in to existing solution (or even brand)Open & Flexible
• ID
• Bank
• Ticketing
• Other?
Multiple types of SP
• Ease of use
• Not simply substitution
• Low cost
Use case is key
Many options and technologies exist:
 NFC, QR code, BLE
 HW SE, cSE (HCE)
Let’s technology not
distract you

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Questions?

36. 36
Thank you
Amos Kater
amos.kater@ul.com
Mobile: +31 653423967
Marcel Suers
Marcel.suers@ul.com
Mobile: +31 630943808