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Mobile & emerging payments (CXPA event at qvik)

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The presentation held at CXPA Finland meetup hosted at Qvik on 28.2.1018. Credit card tokenization, mobile wallets and new possibilities enabled by PSD2.

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Mobile & emerging payments (CXPA event at qvik)

  1. 1. MOBILE & EMERGING PAYMENTS CXPA @ QVIK 28.2.2018 Matias Pietilä, head of design @mpietila#CXPAFinland
  2. 2. NOW WE’RE SO MUCH MORE WE WERE MOBILE FIRST @QVIK@MPIETILA#ixdahel TALLINK SILJAWHIM YLE UUTISVAHTI MUSTI JA MIRRIAURINKOMATKAT
  3. 3. @QVIK MONETISE
 THE CONSUMER’S POCKET DATA-DRIVEN DESIGN DELICIOUS UX FAST TIME-TO- MARKET BLEEDING EDGE TECHNOLOGY BEYOND 
 OMNI-CHANNEL HARNESS ARTIFICIAL INTELLIGENCE EXCELLENCESENABLERS NOW WE’RE SO MUCH MORE WE WERE MOBILE FIRST
  4. 4. YLE UUTISVAHTI +370 % ASIAKASKOHTAAMISIA @QVIK TALLINK SILJA KESKITYMME MITATTAVIIN TULOKSIIN puolen vuoden kasvuhakkerointi- projektin seurauksena 2.5 vuoden aikana +60 % KONVERSIO AURINKOMATKAT kaksi kuukautta uuden version julkaisun jälkeen 8X MOBIILIMYYNTI SWAP.COM verkkokauppaan verrattuna 3X 
 KONVERSIO
  5. 5. WHAT KIND OF ROLE DOES QVIK HAVE HERE? ‣ We help merchants find the best ways to do payments in their selected channels ‣ We do design/development/consulting with certain banks ‣ We are in talks with PSPs to help them improve their solutions ‣ We are in talks with certain fintech startups to understand what happens ‣ We want to stay on top of PSD2 development to be able to advise our customers @QVIK@mpietila#CXPAFinland
  6. 6. THAT ESCALATED QVIKLY @QVIK
  7. 7. PAYMENT LANDSCAPE CREDIT CARD TOKENISATION MOBILE WALLETS, INCL. APPLE PAY PSD2 AND FUTURE POSSIBILITIES 1 2 3 @QVIK@mpietila#CXPAFinland
  8. 8. PAYMENT TIMELINE IN FINLAND @QVIK@mpietila#CXPAFinland TOKENISATION PAST MIF/IFR KLARNA, PIVO MOBILE PAY, 
 SIIRTO, 
 MASTERPASS ETC. APPLE PAY PSD 2 BLOCKCHAIN (PISP & AISP) (XS2A) DISAPPEARING CASH DISAPPEARING CARDS FUTURE DISAPPEARING DISPOSABLE TUPAS CODES GOOGLE PAY PRESENT 2019 RTS INTO FORCE PISP & AISP XS2A GDPR
  9. 9. @QVIK@mpietila#CXPAFinland THE SAD REALITYPaytrail, fall 2017
  10. 10. CREDIT CARD TOKENISATION WHAT IS IT? ‣ Enabling invisible payments by storing customer’s credit card data ‣ Third party takes care of the regulated card storing ‣ Reduces friction and enables also recurring payments WHAT SHOULD YOU TAKE INTO ACCOUNT? ‣ Technically straightforward, many operators available ‣ Don’t think about the commission level alone ‣ Tedious for the user to save their card to each service separately (also trust issue) @QVIK@mpietila#CXPAFinland TOPIC 1
  11. 11. PSP COMPARISON @QVIK Commission Dynamic scoring Customisable UX Geographic availability POS support Role (acquirer / prosessor) Settlement time Who owns the customer? Adyen Verifone Nets Solinor Etc. MAJOR DIFFERENCES BETWEEN SERVICE PROVIDERS
  12. 12. @QVIK@mpietila#CXPAFinland THE SAD REALITY Paytrail, fall 2017
  13. 13. PAYMENT LANDSCAPE CREDIT CARD TOKENISATION MOBILE WALLETS, INCL. APPLE PAY PSD2 AND ISSUING YOUR OWN CARDS 1 2 3 @QVIK@mpietila#CXPAFinland
  14. 14. MOBILE WALLETS WHAT IS IT? ‣ Mobile wallets take care of card storage ‣ Certain wallets also deliver contact information to merchant: no sign-up required => less friction WHAT SHOULD YOU TAKE INTO ACCOUNT? ‣ A large number of operators, availability in different channels varies, a messy situation for consumers ‣ The level of integration defines the UX; the best experience tends to win @QVIK@QVIK@mpietila#CXPAFinland TOPIC 2
  15. 15. @QVIK@mpietila#CXPAFinland CURRENT SITUATION IN FINLAND
  16. 16. MOBILE PAY WHAT IS IS ABOUT? ‣ A payment solution by Danske Bank ‣ Started as peer to peer, added support for POS payment and online/mobile pay in 2016 ‣ The app has 370000 users in Finland (9/2016) ‣ Simple UX for payment confirmation ‣ Payments are charged from a credit card, stored in the service WHY IS IT RELEVANT? ‣ PISP kind of service, build on the existing credit card infrastructure to secure market position before PSD2 era ‣ The payment sums are not limited by the typical 25 € near-field payment limit ‣ The deal with S-group is a major move @QVIK
  17. 17. KLARNA WHAT IS IS ABOUT? ‣ A Swedish startup that provides the users with two major benefits: ‣ Easy, mobile-optimised payment flow ‣ Possibility to pay later or with an instalment plan ‣ Traditional credit card payment available, too WHY IS IT RELEVANT? ‣ The average order value of Klarna customers tends to be significantly larger than traditional credit card (up to 200%) ‣ The conversion of Klarna users tends to be higher (Adlibris has reported 80% higher) ‣ Because Klarna makes their profit on instalment plans, the transaction costs tend to be minimal (we have seen even zero-commission deals) @QVIK
  18. 18. PIVO WHAT IS IS ABOUT? ‣ A mobile payment solution, available for OP bank clients ‣ Payments are based on virtual Visa Debit/ Credit cards ‣ Also a tool for following and planning your consumption WHY IS IT RELEVANT? ‣ Works at any cash register that supports near field payments (Android) ‣ Could become a PISP/AISP kind of platform ‣ Opening up towards non OP-customers @QVIK
  19. 19. MOBIILIMAKSU WHAT IS IS ABOUT? ‣ A mobile payment solution, offered by Finnish telcos ‣ Billing automatically as a part of mobile phone subscription WHY IS IT RELEVANT? ‣ No friction, no registrations ‣ Suitable for sums smaller than 1€ ‣ High commissions (list price 15%) ‣ Max payment value 60 € ‣ Won’t work with people who have company subscriptions (only 20% of the market) @QVIK
  20. 20. APPLE PAY WHAT IS IS ABOUT? ‣ A payment solution by Apple ‣ Started as POS payment, online/mobile pay in 2016 ‣ Only works in Apple universe: iPhone, Apple Watch, Safari browser (!) WHY IS IT RELEVANT? ‣ Deeply integrated and great UX for affluent iOS users @QVIK
  21. 21. SIIRTO WHAT IS IT ABOUT? ‣ A peer to peer money transfer service in Finland, operated by Automatia ‣ Currently supported by Nordea, OP and S-pankki ‣ Not yet as polished as Mobile Pay WHY IS IT RELEVANT? ‣ Instant, no middleman ‣ Big merchants about to start using this for digital payments @QVIK
  22. 22. AKTIA WALLET WHAT IS IS ABOUT? ‣ Former Elisa Lompakko, developed further by Aktia ‣ A collection of multiple services, like virtual credit cards, P2P payments etc. WHY IS IT RELEVANT? ‣ Available for customers of any bank ‣ Could be on its way towards more generic PISP role @QVIK
  23. 23. MASTERPASS WHAT IS IS ABOUT? ‣ Mobile wallet by MasterCard ‣ Stores your credit card and shipping info to simplify payment WHY IS IT RELEVANT? ‣ Easy to integrate, will be pushed heavily by MC ‣ Operated by banks ‣ Provides more value than just payments @QVIK
  24. 24. APPLE PAY BENEFITS @QVIK PHYSICAL WORLD DIGITAL CHANNELS CONSUMER MERCHANT & ISSUER 1 2 3 4
  25. 25. 1 CUSTOMER BENEFIT IN PHYSICAL WORLD ‣ Payment without card ‣ Tight integration with the device/OS: no need to open anything ‣ Near field payment without 25€ limit ‣ Safety and feeling of safety ‣ No need to remember PIN codes ‣ Safer than normal card: the number is not passed for the merchant @QVIK 1 2 3 4
  26. 26. @QVIK@mpietila#CXPAFinland VIDEO: PHYSICAL PAYMENT
  27. 27. 2 MERCHANT AND ISSUER BENEFIT IN PHYSICAL WORLD ‣ Works directly (hardware + software) ‣ Give customers their preferred way of payment ‣ Faster transactions at POS (no PIN codes) ‣ Smaller fraud risk (issuer pays a small commission for Apple) @QVIK 1 2 3 4
  28. 28. While the deals struck between Apple and the banks are confidential, the tech group receives about 15 cents per $100 transaction in the US, while in the UK it gets “significantly less” — only a few pence per £100 transaction — according to banking insiders. Apple declined to comment. https://www.ft.com/content/ 02287f44-2a3d-11e5-8613-e7aedbb7bdb7 HOW LARGE IS THE COMMISSION? @QVIK@mpietila#CXPAFinland
  29. 29. 3 CUSTOMER BENEFIT IN DIGITAL CHANNELS ‣ Effortless payment that works the same way, every time ‣ No need to register ‣ No need to enter payment info during onboarding ‣ No need for any extra app @QVIK 1 2 3 4
  30. 30. @QVIK@mpietila#CXPAFinland PAYMENT INSIDE AN APP
  31. 31. 4 MERCHANT BENEFIT IN DIGITAL CHANNELS ‣ Apple takes care of credit card tokenisations ‣ High conversion rates ‣ Anonymous payments (Apple returns customer contact data after payment) ‣ Easy to integrate @QVIK 1 2 3 4
  32. 32. HOW MUCH WILL IT COST FOR THE MERCHANT? @QVIK PHYSICAL WORLD ‣ Nothing! (No extra to standard card payment) ‣ Issues commission isn’t public infor (Rumours: US = 0,15 %, Europe one tenth of this) DIGITAL CHANNELS ‣ Negotiated separately with Apple ‣ Based on our knowledge, fully competitive compared to credit card tokenisation
  33. 33. WHAT DOES IT TAKE? @QVIK PHYSICAL WORLD ‣ NFC capability for POS system ‣ No extra contracts DIGITAL CHANNELS ‣ Compatible PSP (DIBS is likely not supported at the moment) ‣ Typically one-week development project
  34. 34. WHAT ABOUT ANDROID? ‣ Google Pay (ex Android Pay) expected to be launched soon in the Nordics ‣ Other mobile wallets already available on Android ‣ Physical channel: Pivo, Nordea Pay ‣ Digital channel: Pivo, Mobile Pay, Masterpass @QVIK@mpietila#CXPAFinland
  35. 35. ADYEN BRAINTREE MPGS STRIPE WORLDPAY (VERIFONE) (NETS) APPLE PAY COMPATIBLE PSPS? @QVIK https://developer.apple.com/apple-pay/
  36. 36. PAYMENT LANDSCAPE CREDIT CARD TOKENISATION MOBILE WALLETS, INCL. APPLE PAY PSD2 AND FUTURE POSSIBILITIES 1 2 3 @QVIK@mpietila#CXPAFinland
  37. 37. CREATE MORE OPENNESS AND FOSTER COMPETITION BY INCREASING REGULATION PURPOSE OF PAYMENT SERVICE DIRECTIVE 2 @QVIK@mpietila#psd2qvik (IT SOUNDS SO BIZARRE IT JUST MIGHT WORK)
  38. 38. NOW! (SINCE JANUARY 2018) WHEN WILL IT HAPPEN? @QVIK@mpietila#psd2qvik
  39. 39. NOW! (SINCE LAST SATURDAY) WHEN WILL IT HAPPEN? @QVIK@mpietila#psd2qvik LIKELY IN SEPTEMBER 2019 (18 MONTHS AFTER RTS IS PUBLISHED IN THE OFFICIAL JOURNAL)
  40. 40. WHAT DOES IT ENABLE? @QVIK@mpietila#CXPAFINLAND PAYMENT INITIATION SERVICE PROVIDERS (PISP) may initiate payment transactions directly from customer’s account (X2A) THIRD PARTY PAYMENT SERVICE PROVIDERS (TPP) EMERGE once banks are required to open their APIs. ACCOUNT INFORMATION SERVICE PROVIDERS (AISP) can aggregate and enrich banking data from various bank accounts 1 2 3
  41. 41. PSD2 AND LEVEL PLAYING FIELD @QVIK@mpietila#CXPAFINLAND
  42. 42. PSD2 AND LEVEL PLAYING FIELD @QVIK@mpietila#CXPAFINLAND XS2A XS2A
  43. 43. PSD2 AND LEVEL PLAYING FIELD @QVIK@mpietila#CXPAFINLAND TPP AISP XS2A XS2A
  44. 44. @QVIK@mpietila#CXPAFINLAND EXPERIENCE Payment Scheme PISP Third-party payment initiation An updated payment model including a Payment Initiation Service Provider (PISP) PRESENT FLOW FUTURE FLOW PSD2 AND OPEN BANKING FORCES BANKS TO OPEN UP PAY PARTIES Customer’s Bank Merchant’s Bank Customer Merchant Third-party account access An updated interaction model including an Account Information Service Provider (AISP) NT FLOW RE FLOW UP PAYMENTS, ACCOUNT AND PRODUCT DATA TO THIRD Customer Customer’s Bank Customer’s Bank Customer’s Bank AISPAPI Copyright © 2017 Accenture. All rights reserved Source: Satu Pulkkinen, Accenture
  45. 45. PSD2: CONSUMER PROTECTION WHAT IS IS ABOUT? ‣ PSD 2 will require two-factor authentication for online payments ‣ Unconditional chargeback right for direct debits is introduced to consumers (details still unclear) WHY IS IT RELEVANT? ‣ Payment process will become more complex than currently ‣ It becomes essential to provide the users with effortless two-factor authentication services @QVIK
  46. 46. LEVEL 1 @QVIK@mpietila#CXPAFinland ✓ TOKENISED PAYMENT CARD IN THE APP LEVEL 2 ✓ MOBILE WALLET INTEGRATION (APPLE PAY) LEVEL 3 ✓ INDIVIDUAL FINANCE OPERATOR (CF. PSD2) EXAMPLE: ST1 VS.LEVELS OF PAYMENT
  47. 47. RECAP: PAYMENT LANDSCAPE CREDIT CARD TOKENISATION MOBILE WALLETS, INCL. APPLE PAY PSD2 AND FUTURE POSSIBILITIES 1 2 3 @QVIK@mpietila#CXPAFinland
  48. 48. LET’S CREATE IT TOGETHER www.qvik.com matias@qvik.fi +358 5050 60 201
  49. 49. TRENDS FOR THE FUTURE? WHAT’S NEXT @QVIK QUESTIONS
  50. 50. S-PANKKI + MOBILE PAY @QVIK@mpietila#CXPAFinland
  51. 51. GOOGLE PAY SCHEDULE? @QVIK@mpietila#CXPAFinland
  52. 52. MAJOR PSP SUPPORT FOR APPLE PAY (ONLINE IS THE BEEF FOR AP, ANYWAY) @QVIK@mpietila#CXPAFinland
  53. 53. APPLE PAY PENETRATION DEVELOPMENT IN FINLAND @QVIK@mpietila#CXPAFinland
  54. 54. OMNI-CHANNEL & USING PAYMENT CARD AS A LOYALTY TOKEN @QVIK@mpietila#CXPAFinland
  55. 55. WILL SIIRTO GET OF THE GROUND? P2P? B2C? @QVIK@mpietila#CXPAFinland
  56. 56. WILL WE SEE ANYTHING PSD2 RELATED PAYMENTS DEVELOPMENT DURING THE TRANSITION PERIOD? @QVIK@mpietila#CXPAFinland
  57. 57. PSD2 REQUIREMENTS’ EFFECT ON PAYMENT USABILITY? @QVIK@mpietila#CXPAFinland

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