Cracking Ubiquitous Payments

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A discussion about the mobile payments industry in the US and the problems it has faced in achieving broad market penetration.

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  • Here’s an example: in Hong Kong, they’ve got this contactless payments system that started as a subway card reader. It’s pretty popular now as a regular payment system. Know when it was invented? 1997! In 1997, people in the US were JUST TALKING about mobile payments. What gives?
  • Cracking Ubiquitous Payments

    1. 1. Cracking Ubiquitous Payments<br />What the heck happened to mobile payments?<br />
    2. 2. My (Rough) Agenda<br />Scope of the discussion<br />Credit card industry overview<br />Mobile phone industry overview<br />Implications for mobile payment businesses<br />How those models have played out<br />Why it ain’t working<br />Why it works elsewhere<br />Staggeringly brilliant insights and takeaways<br />
    3. 3. SMS + e-commerce<br />Technologically feasible since 1995!<br />SMS, part of GSM protocol, approved in 1985<br />First text message in history sent in 1992<br />The message: “Merry Christmas”<br />Later messages less cheerful<br />
    4. 4. RFID + cell phone saturation<br />Real market since 1997<br />
    5. 5.
    6. 6. So what happened?<br />
    7. 7. Scope of the discussion<br />Mobile Payments: Not Really All That Rare<br />
    8. 8. 1997!<br />
    9. 9. 10%<br />~ 2%<br />~ 1%<br />?<br />
    10. 10. So now we ask: what happened in the US?<br />And what was different about Asia, and now Europe?<br />
    11. 11. We need to understand the two pertinent markets<br />Credit Cards vs. Mobile Phones<br />
    12. 12.
    13. 13. The US credit card industry<br />… by which I mean “cards with magnetic stripes you pay for stuff with”*<br />*I’m not going to argue with you about actual credit<br />
    14. 14. “Invented” in 1888<br />Eddy Bellamy: Interesting dude<br />
    15. 15. Used in the 20’s as a gas card<br />Reached ubiquity by the late ’50s<br />
    16. 16. Many moving parts<br />
    17. 17. Value chain is split across function<br />
    18. 18. Card Networks<br />The alphas of the group<br />
    19. 19. Retail banks<br />Split beta duties with merchant banks<br />
    20. 20. Merchant banks<br />Like retail banks on the merchant side<br />
    21. 21. Payment gateways<br />The nerds who make it work*<br />* and consequently are overlooked and undervalued<br />
    22. 22. Merchants<br />Getting the short end of the stick since the ‘70s<br />
    23. 23. Consumers<br />Getting the short end of the stick since day 1<br />
    24. 24.
    25. 25. The US mobile industry<br />… by which I mean “phones you can carry around”<br />
    26. 26. Launched in 1983<br />Analogue network<br />
    27. 27. 2G (all digital) in 1991<br />GSM: set the stage for scalable networks<br />
    28. 28. Telecommunications Act of 1996<br />13,550% growth once interoperability enabled<br />
    29. 29. Side effect: massive consolidation<br />Today, only three nationwide networks<br />
    30. 30. Nice simple value chain<br />
    31. 31. Right?<br />Content Providers<br />App Stores<br />Standards Boards<br />3rd Party Services<br />Software Vendors<br />
    32. 32. Right, guys?<br />Content Providers<br />App Stores<br />Standards Boards<br />FCC!<br />3rd Party Services<br />Software Vendors<br />
    33. 33. Handset Manufacturers<br />Increasing power in high-demand markets<br />
    34. 34. Carrier networks<br />Pretty much run the commodity handset manufacturers and the poor consumer<br />
    35. 35. App stores<br />Successfully maneuvered out of carrier control<br />
    36. 36. SMS gateways<br />More nerds, beholden to carriers<br />
    37. 37. Consumers<br />*Still* getting the short end of the stick<br />
    38. 38.
    39. 39. Technology Solutions<br />Like technology alone ever solved a problem…<br />
    40. 40. 1. SMS powered<br />Digital wallet or carrier billing<br />
    41. 41. 2. Mobile internet powered<br />Free from direct carrier intervention<br />
    42. 42. 3. Hardware powered<br />Awesome, but require cooperation<br />
    43. 43. Four distinct business models<br />
    44. 44. Bank’s Involvement<br />High<br />High<br />Low<br />Carrier’s Involvement<br />Low<br />
    45. 45. Banks vs. Telecoms vs. Hardware vs. Software<br />Telecoms losing the fight<br />
    46. 46. Security vs. Ease of Use<br />i.e., banks vs. independents<br />
    47. 47. What needs to happen?<br />Collaboration on a massive scale<br />
    48. 48. The Road to Collaboration<br />Leverage mobile standardization<br />Leverage bank security<br />Leverage independent innovation centers<br />
    49. 49. Will it work?<br />Theoretically…<br />
    50. 50. La Caixa, Movistar, Visa<br />Perfect coordination between the players<br />Utilizing NFC!<br />Under way now<br />
    51. 51. So what about the US?<br />
    52. 52. Thanks guys!<br />

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