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Mobile Convention Amsterdam - 22 May 2013

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Mobile Convention Amsterdam - 22 May 2013

  1. 1. The Consumer Side of NFC and Mobile Payments Mobile Convention Amsterdam (22 May 2013) Dan Armstrong (dan.armstrong@takashimobile.com)
  2. 2. marketplaceMCI (1994-96)
  3. 3. marketplaceMCI (1994-96)
  4. 4. 1-800-MUSiC-NOW (1996)
  5. 5.  Speed & efficiency  Global markets  Products & choices  Comparison, reviews  The long tail  Social media  Viral movements & news  Monetising clicks  Spam  Porn The e-commerce shake out
  6. 6. … 2 fundamental types of transaction players? Transactions are the Channel ”I have a pipe and/or network and I want to monetise the investments I made in creating it.” ”I want as much to get through that pipe and the (mobile) phones accessing it as possible.” Transactions via the Channel ”I have stuff I want to do via channels. Enable my consumers to control their bank account, make a payment, get a ticket, see an ad, save or use loyalty points, etc.” ”I need as many (cost effective) channels and pipes to do it.”
  7. 7. How shall we define “transaction”? Bank Account Value Transfer, Payments Value Depletion, Prepaid, Wallets, Transportation Loyalty, Points, Coupons, Transformation Moments Eyeballs, Trust, Engagement, Action <?>
  8. 8.  50% of consumers will pay more for products they trust  78% of consumers will look first to trusted brands when in need of products or services  78% of consumers are willing to give trusted brands a chance, even if unsure of what value the product or service will bring to them  82% of consumers will choose to use a trusted brand’s products or services frequently, rather than move between brands  83% of consumers will recommend a trusted brand to others, often un-prompted Trust? Concerto Marketing Group, Vancouver BC, Canada / Ontrack Advisory, Singapore (April 2013)
  9. 9. “Mobile” Banking & Payments Space: 1 View CallCentre Banking IVR Banking & Payments SMS & Calling Alerts (spending, ATM usage, fraud, etc.) Transactions with Teller or Agent using Mobile Devices Mobile Banking & Payments Remote Payments & Electronic Wallets Mobile Contactless / Proximity Payments MNO “Mobile Money” Mobile Remittances Advertising-led Models = banks deploy = bank-led models = cooperative models = mobile operator-led models = mobile operators deploy = third-parties deploy = public transportation-led models Mobile Contactless / Proximity Payments
  10. 10. 2 Popular Starting Points for Mobile Proximity Payments Card Emulation Bypass Card Emulation  Phone takes the place of a physical card to transact at a physical merchant location  Consumers are comfortable with card operating models  Standardisation and ubiquity of acceptance points a must for economies of scale  Requires compatible card/mobile acceptance infrastructure  Trigger remote payment with phone (apps, other manner)  Confirmation can be pushed to merchant, but how to localise the payment location without NFC?  Receipt can be printed at POS  Latency in making payment this way vs. cards  EMV / secure PIN keypad  Card acceptance still required
  11. 11. Proximity Payments OfflineCounter EnablesPayment value on the card value in “the cloud’ Mobile Authentication EnablesPayment card-emulationbypasscard-emulation Card Authentication EnablesPayment
  12. 12. Mobile NFC PIN Emulation Trial @ C1000 (2007-2008)
  13. 13. Mobile NFC for Low-Value Payments in Vending (2007-08)
  14. 14. NFC Mobile as Retail Shopping Tool, Issued Device & Acceptance Point @ AH To-Go (2008)
  15. 15. 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?
  16. 16. Then, what do we expect from a transaction 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?
  17. 17.  Consumers seem to love and trust it • But who will pay for it’s implementation … merchants, banks, mobile operators, handset manufacturers?  Given the “app revolution” in so many of our markets, what value does NFC bring to payments? • Convenience? • Put all cards in one apparatus? The phone-shaped wallet .. • Addiction to mobile phones, but not to our wallets? • Leave cards at home? • Add value to transactions? The Consumer’s Perspective on NFC?
  18. 18.  Cards seem to be entrenched in many markets (like NL), and are likely to remain in play for the foreseeable future, simply increasing the issuer and acquirer costs.  But, is NFC is fundamentally different from previous steps forward in functionality .. ? The Consumer’s Perspective on NFC? SMS Mobile Data Apps Online Shopping & Payment
  19. 19. Virtualisation benefits are clear, from the business POV .. 0 50 100 150 200 250 300 350 400 450 500 1980 1985 1990 1995 2000 2005 2010 *1million Contacts via devices (e.g. web browser/internet, m obile phone, IVR) Total Customer Contacts Contact via a bank advisor, bank branch
  20. 20.  The case is clear for our creativity to make virtualised ecosystems work.  But it will take a lot more creativity, usability and value to become a real business driver.  And for banks, they also need to achieve this without sacrificing trust, security, longer-term relationships, and (a certain degree of) transparency. Virtualisation benefits are clear, from the business POV .. Information Some Branches or a Website Trust
  21. 21. For your consideration .. impulse purchase / spam
  22. 22. For your consideration ..
  23. 23.  Although you could still easily pay with a card when you get to the POS … For your consideration ..
  24. 24.  Limited smartphones  Limited (& expensive) mobile data  Limited (& expensive) fixed internet & electricity  Limited literacy  Limited trust in banks  High cost of ATMs & bank branches, limited in-country IT capabilities  Limited amount of people with official IDs  Everyone wants a card anyway, it’s modern  Limited cards issued & limited acceptance points (esp. NFC) Leap-Frogging Card Acceptance Infrastructure in Africa
  25. 25. Bank Branch: Rwanda No power, internet connectivity
  26. 26. Bank Branch: Rwanda Waiting for teller cash withdrawals
  27. 27. Bank Branch: Rwanda Teller
  28. 28. Bank Branch: Rwanda Teller
  29. 29. BPR Simbuka
  30. 30. BPR Mobile Road Shows & Sign-up Success
  31. 31. BPR Mobile Road Shows & Sign-up Success
  32. 32. Thank You! Dan Armstrong Takashi Mobile | Financial Services Rapenburgerplein 81 1011 VJ Amsterdam The Netherlands www.takashimobile.com dan.armstrong@takashimobile.com +31 652 085 071 skype: dd.armstrong

Editor's Notes

  • ContentsSome thoughts on paradigm shiftsRe-thinking the nature of transactions and transaction actorsProximity mobile payments: card emulation or not? 3 case studies from The Netherlands to validate consumer acceptance of NFCRebooting the conversation from a consumer point-of-viewWhat do we expect from a wallet, or a payment instrument?Is NFC a “tech-push’ or a “consumer pull’?How to differentiate with NFC?1 case study from Rwanda, where cards and card acceptance are virtually nonexistant
  • 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.
  • MNOs tend to generate their revenues from “transaction-based business” (sale of SMS, data, voice calls), whereas margins on actual “transactions” for banks are thinning in most markets, and in some cases unprofitable in general.For banks, the question about the value of payments services is a burning one these days – especially for developed world banks, but also for the developing world as well.Deposit-taking and lending are major differentiating business lines of banks, although some MNOs and other parties are starting to make moves in this direction.
  • “Pinnen met je mobiel” retail shopping and payments trial using contactless PIN (NL direct debit) from Aug 2007- Feb 2008 Payment with a secure application on the mobile phone (Samsung x700)Also featured storage of value for recycled bottles on the phone – save your value, cash it in or donate it.Highly successful trial, proven consumer acceptance/trust a mobile as secure debit card replacement.
  • Proof-of-concept programme for NFC payment for soft drinks using MiniTixPartners: Capgemini, Coca-Cola, Rabo Mobiel, Yoonison, MiniTixBeginning in Apr 2007, 30 locations nation-wideProof-of-concept ‘Kroketjeuit de muur’ met je telefoon, Oct-Nov 2007 Capgemini, FEBO and Mertens GroupMiniTix NFC trial in Amsterdam (NFC mobile phones, cards)Proof-of-concept programme to explore cash management, saves coin traffic, fraud management
  • Major Dutch retailer Albert Heijn wanted to trial a new retail formula in their “To Go” storesNFC shelf-level tag shopping, as customer filled her basketCustomer built up a list of what they were buying, and performed self-checkout without queuing at busy store countersDiscounts and specials applied automaticallyReceipt can be printed upon existOccasional control checks to validate purchases
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