A case for mobile wallets in UK

A CASE FOR MOBILE
WALLETS IN UK
“When you look at the real pain point for consumers…they
don’t want a wallet, they just want to pay and be done”
Senior Executive at Visa
Document Classification: Internal
Authored by Deepthi Rajan
June 2016

Table of Contents
Executive Summary….……………………………………………………………………………………3
Introduction………..………………………………………………………....…………………………….4
Definition of Mobile Wallet, Types of Mobile Wallets and Technology…………………………........6
Mobile Wallet Services…………………………………………………………………………………….9
Payment Channels…………………………………………………………………………………….….10
Payment Trends…………………………………………………………………………………………..12
Mobile Wallet Adoption…………………………………………………………………………………..14
Awareness, Perception, and Adoption………………………………………………………..14
Socio-Demographics’ Influence on Adoption…………………………………………….…..15
Benefits / Features Sought in Mobile Wallets in the US…………………..........................17
Security concerns, Loss of privacy and Ability to use……………………………………....18
Interoperability issues due to silos created by various mobile wallet providers………….19
Addressing the concerns……………………………………………………………………….20
Managing the Wallet…………………………………………………………………………….21
Snapshot of Mobile Wallet Providers and Payment Channels
Supported…………………………………………………………………………………….......22
Case Study – India……………………………………………………………………………….36
Potential Game Changers……………………………………………………………………….40
Bringing it all together…………………………………………………………………………….41

Executive Summary
Would customers demand for a mobile wallet the way they have come to expect online or
mobile banking from their banks? Most likely, no.
What about seamless customer experience during checkouts both online and at in-stores?
The problem of plenty still besieges customers when they have to choose among the many
mobile wallets and face the concomitant interoperability challenges. Customer experience
suffers when the mobile wallets are exclusive to select retailers, as is the case today. Lack of
universal acceptance is one of the biggest banes of mobile wallet’s existence.
Should banks then consider offering mobile wallets to customers? Absolutely yes.
Traditional business models of established industries are getting disrupted by new age
players whose focus is on redefining customer expectations. Banks should provide mobile
wallets not just as an alternative payment mode that is both secure and convenient but also
to avoid ‘commoditisation’ battling for the mind share and thereby, wallet share.
And that is not all. Mobile wallets have the potential for banks to propagate their brands
offering an unprecedented opportunity to reach out to consumers and providing a persistent
messaging channel on their smartphones.
Mobile wallets assume a different meaning in the context of the UK, which has the strongest
E-Commerce market in Europe, the third largest in the world, and is expected to grow to
£148 Bn by end of 2016.
With 51% of the online sales taking place on mobile devices, the need for conveniently and
securely paying across payment cards, loyalty programmes, and devices has become more
pressing than ever before.
Mobile wallets help address all these aspects when it comes to both payments and non-
payments. Mobile Wallets are broadly categorised as remote and proximity wallets. Remote
wallets enable customers to purchase online whereas proximity wallets facilitate in-store
transactions.
Key enablers of mobile wallets are money saving incentives, security, and widespread
acceptance.
Based on our evaluation of over 10 mobile wallet solutions, we think the bank should adopt
Chase Pay’s strategy and roll out the bank’s branded mobile wallet in addition to having tie-
ups with Apple Pay and Android Pay, to retain control over its brand and to maximise its
reach.
Both Visa and MasterCard offer white-label solutions to help banks deploy branded payment
solutions across online and offline channels.
Visa, in addition to Visa Checkout, has recently introduced Visa Digital Commerce App, a
mobile platform to build highly customisable mobile wallets with a wide range of value added
features to choose from.
Furthermore, Visa has announced a well thought out roadmap of planned innovations.
Most importantly, partnering with Visa or MasterCard will help banks retain their respective
brands and customer wallet share without being relegated to the side lines.

Introduction
While mobile payments are gaining in popularity, they still have a way to go before they
reach critical mass, especially when it comes to mobile wallets.
The success story of mobile wallets has not been a consistent one across geographies. In
this report, to understand more about mobile wallet acceptance and usage, we have also
looked at countries such as US and India where the wallets have been adopted with varying
success.
Mobile wallets have seen huge success in India, a country with far more mobile and internet
connections than bank accounts. Clearly, there was a gap that mobile wallets helped bridge.
Another interesting practice was of heavily incentivising consumers to use mobile wallets by
offering cashbacks, discounts and reward points. This has resulted in intensive marketing by
the providers in their attempts to grab a share of the mobile wallet market pie. However, this
is not a sustainable practice as many of the wallet providers are burning through their cash
piles and taking massive hits to their bottom lines, with an increasing number of providers
starting to scale back their offerings.
However, an upside has been that mobile wallets adoption has soared and consumers have
increasingly grown comfortable with mobile payments.
In the US, where contactless technology is not as prevalent as it is in the UK, mobile wallets
have struggled to gain traction with customers. For mobile wallets from leading companies
such as Apple and Google, to become the preferred payment mode, the fragmented
ecosystem has to converge and act in unison. This will lead to the emergence of clear
market leaders.
Of the three, the UK has the most mature mobile payments ecosystem. Unlike a mobile
banking app, a mobile wallet is not a must have for customers when it comes to payments or
managing finance. It has been observed that UK consumers are comfortable using
contactless cards for offline transactions and use a mix of bank issued cards and digital
wallets such as PayPal when shopping online.
UK therefore, also faces the biggest challenge in terms of offering a strong value or benefit
proposition for customers to switch to mobile wallets.
Consumer Reasons for Not Adopting Mobile Purchasing

Retailers are both in favour of and
against mobile wallets.
While the wallets help in faster
checkouts, merchants find the
tokenisation feature, employed by
proximity wallets, highly limiting when
it comes to getting access to
customers’ data.
The uprising of major US retailers
(Walmart, Target, Best Buy) against
Apple Pay and endorsing Apple Pay’s
rival Chase Pay is a case in point.
On the other hand, banks also find
the charges levied by wallet providers
such as Apple Pay to be exorbitant.
The other major concern banks are
struggling with is the
‘commoditisation’ of banking
products and services. While mobile
wallets become the focus of
customers’ experience, banks have
to battle it out to remain at the “top of
the wallet”.
In addition, banks also risk losing out
cross-selling opportunities when the
bank’s brand is no longer at the front
of the customer’s mind; it becomes a
much harder sell and translates into
higher conversion costs
OTHER SIDES TO THE
CONUNDRUM
Evangelising mobile wallet usage presents unique but
surmountable challenges.
Customers are unsure of how mobile wallets differ from a credit
or debit card. Mobile wallets are often promoted as being a faster
and easier mode of payment. In reality, the time saved with a
digital wallet (i.e., tapping a button on the phone and holding it
near a scanner) versus pulling a card out of a wallet and swiping
it, isn’t discernible. And a digital wallet is certainly not easier than
a physical card if the digital wallet is not accepted at the point of
sale.
Many consumers are holding back from using mobile wallet
because of security and privacy concerns. Even when customers
understand the benefits of tokenisation (a security measure
adopted by mobile wallets for masking bank accounts or payment
cards details), there remains a significant proportion of the
customer base that is not convinced about switching to mobile
wallets.
The long-term viability of mobile payments therefore, is about
more than just overcoming technology constraints. It’s really
contingent upon the entire ecosystem to deliver much more of a
demonstrable value-add for the consumer above and beyond the
traditional physical card payments.
‘Know me, Understand me, and Reward me’
Consumers want their banks to provide solutions that are
contextually relevant.
Mobile wallets need to differentiate themselves by tracking
customer spending across both physical and online retailers
and across all payment methods while providing basic
budgeting tools. The need to track and encourage loyalty
through tangible rewards is perceived by customers as an
important incentive.
Control and preference management options are of particular
interest when provided via the mobile channel. Receiving alerts
each time a transaction is made with a card or the ability to
temporarily disable an account to prevent unauthorised
transactions are other examples of features valued by
customers.

What is a Mobile Wallet?
A mobile wallet is a mobile-based virtual wallet, the digital equivalent of the physical wallet. It
is a container (or vault) to store digitised valuables for authorisation.
These valuables grant permission for usage or access to goods, services or places. Users
can preload a certain amount in one’s account created with the mobile wallet service
provider.
Depending on the service provider, one can also pay through app, text message, social
media account or website.
The digital wallet was first popularized by e-commerce giant PayPal in the early
2000s as a way to securely pay for goods online using a credit card
Mobile wallets offer the same security and convenience in addition to being
portable
1. Mobile wallet users first create a digital wallet with MasterCard, Visa, or
one of several other providers
2. All of their credit and debit card information is then available in one place
3. Mobile users then activate their mobile wallet on their mobile device by
downloading the provider's corresponding app
Mobile Wallet or Digital Wallet – What’s in a name?
Source: IBM, Quora

Types of Mobile Wallets
Remote Wallet
With a remote wallet (also called mobile wallet, digital wallet, cloud wallet or e-wallet) the
parties and entities involved in the authorization and transaction process (like payer and
payee) are not physically close to each other. Usually, the sensitive data is stored remotely
on cloud servers (thus the term cloud wallet). Many remote wallets are also equipped with a
central stored-value account (SVA) that allows users to make or receive payments using the
enabled payment methods.
Remote wallets can be connected to loyalty programs and other value-added services.
Many remote wallets are designed and used as a distinct payment method that can be
embedded in merchant websites or apps – masking the payment data details of the
underlying payment method and sensitive customer information from payees like retailers
and financial intermediaries. For example, PayPal or Visa Checkout
Proximity Wallet
A proximity wallet (also called mobile wallet or NFC wallet) is used for authorization and
transactions involving entities that are physically close to each other.
Proximity interaction between the mobile wallet and the control or acceptance entity is based
on card emulation and provides a container where the card data and other information are
digitised.
The digitised valuables contained in the proximity mobile wallet can be exposed to
acceptance terminals or authorities for the control or exchange of secure information
Proximity Wallets further have two sub-types
Light proximity wallets that allow the storage of visual valuables (QR codes, textual codes,
images of documents such as identity cards and so on)
Full NFC proximity wallets that enable card emulation using secure elements and NFC
interfaces.
Source: IBM Blog, Desktop Research

Technology
NFC-based card emulation
Near field communication (NFC) is a means of
communicating data over a wireless connection
across a very short distance.
NFC-based card emulation is the basic concept of
proximity wallets - the emulation of a contactless
smart card within smartphones.
Smartphones therefore must be NFC enabled to
facilitate communication with card readers, and
they need to have a so-called secure element - a
chip based on smart card functions that allows
the secure storage of smart card applications
Note: NFC can also be used as transmission
technology without a secure element, but then features
like card emulation or the reutilization of card-based
infrastructure are no longer applicable
Source: IBM Blog, Desktop Research

Mobile wallet services
5 major types of mobile wallet services and functions are Payments, Coupons,
Ticketing, Access and Identity
1. Payments and cards: Card emulation for contactless cards (credit, debit, prepaid),
e-payments-based services (remote payments) or peer-to-peer payments with or
without a stored value account
2. Coupons and loyalty: Coupons, gift cards, loyalty programs or any other
commerce-based service for discounts or rewards
3. Tickets and transport: Any form of tickets, boarding passes or check-ins for means
of transport or for venues or events like cinemas, concerts and so forth
4. Access and keys: Any type of access or usage allowance, like keys for cars,
buildings, private homes, hotel rooms and so on
5. Identity: Any type of personal identification, like passports, driving licenses,
employee IDs and so forth
Mobile Wallets can hold two types of data – payments data and non-payments data (tickets,
coupons, identity cards)

Payment Channels
At 6.12%, UK has the highest eGDP
in Europe
81% of UK Population shops online
On average, the British online
shopper spent 3,652 euros
Research by Visa found an increase
of 8.4% year-on-year for online
transactions; number of face-to-face
transactions only saw a 0.2% rise
Combined market share of Visa and
MasterCard for web-based payments
is projected around 60%, followed by
eWallets and bank transfers
Visa has the largest share in online
card payments as 3 out of every 4
card payments are done with a Visa-
branded card
Source: Desktop Research

But is E-Commerce always conducted using desktops or laptops?
E-commerce conducted using mobile devices and social media is on the rise. In 2016, 51%
of UK online retail sales took place using smartphones and tablets, significant increase
on the 45% share recorded in the third quarter of last year.
UK E-Commerce Sales by Device
What is M-Commerce then?
M-Commerce stands for mobile commerce, and it’s the browsing, buying and selling of
products and services on mobile devices. In other words, it’s a complete online shopping
experience, but with all the convenience of being on a cell phone or tablet.
Over the past year smartphones have really
started to become a major component of the
checkout process - sales via smartphones
grew 95.6% year-on-year, over 7x the rate of
those via tablets.
Another key difference between E-
Commerce and M-Commerce is that
internet is mandatory for E-Commerce
transactions whereas it’s not mandatory
for all types of M-Commerce transactions
At 55.9%, iOS is the most-used operating system on mobile devices, followed by Android
with 34.8% share of the mobile OS market
iPhones have now leapfrogged iPads as the UK’s primary device for mobile commerce
39 percent UK E-Commerce transactions now involve multiple devices along the path to
purchase
The most advanced UK retail industries in the journey towards mobile commerce are fashion
and luxury (55 percent of all ecommerce transactions took place on mobile), mass merchant (50
percent) and home (46.8 percent)
Apps continue to be the main force driving mobile commerce, constituting 65 percent of
transactions on mobile devices around the world, with 35 percent taking place on the mobile
web.

PA YMENT TRENDS
2015 VS 2025
Debit cards will remain most preferred payment option, while cash
will decline in usage
By 2025, contactless payment mode will grow by 600% , coming
third after debit card and cash
Over a third of credit card holders were aged 55 and over in 2014,
reflecting stronger preference for debit cards among younger
generations
CA SH VS OTHER PA YMENT MODES
Debit cards popularity as a payment method will be aided by the
continued rollout and adoption of contactless payments
Payment choices when making regular bill payments may not change
greatly but spending habits when making day-to-day purchases will
continue to evolve
BILL PA YMENT VS OTHER PURCHA SES
Source: UK Card Payments 2015, UK Payment Markets 2016

BEING CONTA CTLESS
Contactless terminals in 2015
Growth in contactless payments
Growth in debit card payments

Mobile Wallet Adoption
Awareness, Perception, and Adoption
Strong correlation observed between awareness and usage. Sustained usage however, still
depends on perceived convenience and other benefits to customers
Consumers are most willing to use a mobile wallet to store
 loyalty cards,
 value added services (reminders, notifications, alerts), and
 paper based documents such as coupons, boarding pass, event tickets, which are
otherwise easy to misplace
Source: Data from an independent research carried out by CMB in USA in 2015

Mobile Wallet in UK
Mobile Wallet Adoption High Among Millennials
• In the last three months, 60% of millennials have used mobile wallets compared to
40% of respondents who are between 35 to 54
• The top three mobile wallet items U.K. consumers have used the most are loyalty
cards, boarding passes and coupons
• 68% of U.K. respondents and 82% of millennials, are more likely to use mobile
payments if loyalty rewards and discounts are automatically applied
Socio-Demographics’ Influence on Adoption
Number of mobile wallet POS payment users by age group
The number of mobile wallet POS payment users between the age of 25 to 34 in the UK is
expected to grow from roughly 1.5 million in 2015 to roughly 4.5 million in 2020
Younger customers are
likely to be early adopters
but once tipping point is
reached, older customers
are likely to become avid
users due to spend and
tracking capabilities
combined with usage
convenience
Source: Statista.com

Number of mobile wallet POS payment users by gender
Few likely inferences from the above graph -
 Female users in the age group of 16-44 are far more inclined than male users to
adopt mobile wallet
 The trend appears reversed in the 45+ age group where male users appear less
averse than female users when it comes to using mobile wallets at physical stores.
Number of mobile wallet POS payment users by income
 Middle income group are likely to have access to NFC enabled phones and perform
grocery and other essential items shopping themselves
 It appears that middle income group would prefer value added services that help
them save more and spend prudently
Source: Statista.com

Benefits / Features sought in Mobile Wallets in the US*
 Saving money remained the persistent theme from 2012 to 2015 while preference
for storing loyalty cards/coupons declined
 On the other hand, loyalty reward points issued by banks and FIs for mobile wallet
usage linked to payment cards improved, indicating customers saw clear benefit
proposition in using wallets issued by their financial services providers
 Tracking money remained towards receiving transaction and balance alerts. On the
other hand, reluctance to share or receive information based on physical location has
given way to demand for location specific information albeit in non-intrusive
and relevant ways
2012
2015
Source: PwC Research, CMB Research, Desktop Research

Security concerns, Loss of privacy and Ability to use
 Identity theft tops the list of concerns across four years though
it has been progressively diminishing over the years
 Retailers gaining access to personal information and exploiting
the data to send invasive or irrelevant marketing offers is a
growing concern
 Ubiquity of contactless payments – support for the technology
by relevant entities such as retailers, insurance, utility
companies will speed up adoption
 Connectivity, mobile battery, and other technology failures are
viewed as other major hindrances to mobile wallet usage
UK banks were slow to
take mobile banking
seriously. The iPhone
launched in 2007.
But it wasn’t until 2010
that UK had the first
mobile banking app from
NatWest.
Barclays and HSBC, two
of the biggest banks in
Europe, let alone the UK,
didn’t release apps until
2012.
In 2011, 10% of
customers used mobile
banking.
By 2012, 21% of
customers were using the
mobile channel.
The number continued to
rise, growing to 27% in
2014.
Among user behaviours,
about 14% of users used
mobile banking on weekly
basis in 2014, increasing
from 4% in 2011
MOBILE BANKING
REACHES TIPPING
POINT
2012
2015

Interoperability issues due to silos created by various mobile wallet providers
Users start experiencing problems when they have to start choosing which wallet to use at a
certain POS. Then the loop takes them to the initial problem - several plastic cards and the
necessity to choose the right one. In case, there are more than one or two wallets that are
relatively exclusive to a POS, mobile wallets stop solving any problems
Even though some of the merchants are overlapping for different wallets, each wallet creates
a proprietary island, out of which the wallet would be irrelevant.
The mobile wallets ecosystem has two major problems—it’s fragmented and it’s
incomplete. Mobile wallets have torn payments apart with their islands instead of
streamlining payments.
Incompletion is coming from an islands of merchants. Each wallet has a certain part of the
user base depending on the merchants that accept the wallet.
Disconnected islands of merchants create disjoint purchasing experiences. Each store
could be accepting different payment options, which create an inconvenience of storing a
variety of wallets and the necessity to put some thought and effort in choosing the right one
for each merchant.
Source: LetstalkPayments.com

Addressing the concerns
The ability to prevent fraud remains the most important way to mitigate concerns followed
by remote wiping of mobile wallet data if phone is lost or stolen
In 2012, high-end technology security mechanisms figured high on customers’ preference
list. However, by 2015, demand for other measures such as alert notifications and security
pin along with finger print authentication has gained precedence over sophisticated bio- or
behaviour- metrics (retina, voice, facial and so on)
2012
2015

Managing the Wallet
In 2012, credit card companies were perceived as most capable and banks were considered
most trustworthy by consumers. Other institutions or entities such as telecom players were
not broadly viewed as trusted or capable.
By 2015, many of today’s mobile wallets are linked to debit or checking accounts
rather than credit cards.
2012
2013
2015
Wearables set to pave the way for mobile wallet adoption
Nearly 40% of those highly likely to buy wearables in the coming year want it to come with
mobile wallet functionality. And the majority of likely wearable buyers claim that the
presence/absence of a mobile wallet has a major impact on their purchase decision.
Source: CMB Research

Snapshot of Mobile Wallet Providers and Payment Channels
Supported
Wallet Name Wallet Type Payment Channels
POS In-App E-
Commerce
M-
Commerce
Apple Pay Proximity
Wallet
NFC Yes No No
Android Pay Proximity
Wallet
NFC Yes No No
Samsung Pay Proximity
Wallet
NFC/MST Yes No No
Microsoft
Wallet
Proximity
Wallet
NFC Yes No No
MasterPass Remote Wallet - Yes Yes Yes
Visa Digital
Commerce
App
Platform NFC No No No
Visa Checkout Digital
Payments
Service
No Yes Yes Yes
Zapp Pay by
Bank
Digital
Payments
Service
No Yes Yes Yes
Chase Pay Light Proximity
Wallet and
Remote Wallet
QR Codes Yes Yes Yes
Capital One Proximity
Wallet
NFC Yes No No
Tesco
PayQwiq
Light Proximity
Wallet
QR Codes Yes No No
YoYo Light Proximity
Wallet
QR Codes Yes No No
Vodafone
Wallet
Proximity
Wallet
Yes Yes No No

Wallet Name – Apple Pay
Available in UK – Yes (Since 2015)
Technology
 Operating System – iOS
 Compatibility – Newer versions of iPhone, iPad, and Apple Watch
 Security – Tokenisation and Fingerprint authentication
 Communication technology – NFC
Value Added Services – Stores boarding passes, tickets, rewards, and payment cards
Customers - Apple Pay supported by major UK banks
Positives
 Apple Pay’s in-app feature has simplified the online purchase experience
 Apple is planning to roll out support for E-Commerce and M-Commerce channels by
late 2016
 Customers can use the feature through the Safari browser on iPhones, iPads and
Macs
 Every payment transaction has to be authenticated using Touch ID or passcode
 Fingerprint sensors planned to be added to newer versions of certain Macs
Negatives
 Apple Pay available only to Safari browser users means users who use browsers
such as Chrome, Firefox, IE will be excluded
 Apple Pay in-app only works on iPhone and iPad

Wallet Name – Android Pay
Available in UK – Yes (Launched in 2016)
Technology
 Operating System – Android
 Compatible with – Android KitKat 4.4 or higher versions
 Security – Tokenisation
Value Added Services
 Built-in loyalty card support
Customers - Android Pay supported by major UK banks
Positives
 Built-in loyalty card support means when customers want to pay for something,
Android Pay will know which store they are at and automatically process their loyalty
points without the need to separately scan the rewards cards
 Performs limited number of transactions even in absence of internet – the app will tap
into a limited number of stored tokens on the device
 Supports fingerprint authentication
 Available on any NFC enabled phone
Negatives
 Android Pay does not require biometric ID and can be used just by unlocking a
phone. In case, mobile PIN is compromised or the phone doesn’t need a PIN to be
unlocked, chances of unauthorized use increases

Wallet Name – Samsung Pay
Available in UK – No (Planned in 2016)
Technology
 Operating System – Android
 Compatibility - Requires Samsung phone - compatible with Samsung Galaxy S6
smartphone and later models
 Security – Fingerprint authentication, tokenisation, and Samsung KNOX - defence-
grade mobile security platform (containerisation technology -securely separate your
personal and professional data)
 Communication technology – NFC and MST (Magnetic Secure Transmission)
 Gift cards, integrated loyalty programme
Customers - NA
Positives
 Utilises both NFC and MST technologies, allowing acceptance at locations that have
contactless payment terminals or traditional magnetic stripe terminals
 With terminals that aren’t capable of accepting contactless payments, Samsung Pay
emits a magnetic signal that allow a phone to be used like a traditional magnetic
stripe card by sliding it above the magnetic stripe reader
 Requires fingerprint authentication
Negatives
 Samsung Pay does not work at payment terminals that require a push/pull card
swipe — like in ATMs, metro station ticket machines and gas stations

Wallet Name – Microsoft Wallet
Available in UK – No
Technology
 Operating System – Windows 10
 Compatibility - Lumia 950, 950 XL and 650
 Security –Tokenisation
 Stores reward and membership numbers so all customers have to do is reference or
scan them right from their phone
Negatives
 Windows Phone has captured only 0.7 percent of global smartphone market share
last quarter. Only available in US

Name – MasterPass
Product Type – Digital Payments Service
Description –
MasterPass Checkout Services – Provides merchants a consistent way of accepting
electronic payments, regardless of the consumer’s location.
 For the online payments, MasterPass provides the users a simple checkout process
which eliminates the need of entering the card and shipping details with every
purchase
Available in UK – Yes
 Real-time alerts, account balance, loyalty programs and offers
Channels Supported –
 Web browser-based channels (desktop, mobile web)
 Android and iOS apps
Positives
 Aside from their MasterCard cards, consumers can also use other credit, debit and
prepaid card brands because the wallet is open
 Consumers have the ability to use the connected device of their choice to make
payments online or in-app via MasterPass, not being restricted to specific operating
systems, device manufacturers or device models
Additional Notes
MasterCard plans to roll out an enhanced version of its MasterPass digital payment platform,
adding in-store NFC mobile payment capability. The service will be available in Europe by
end of 2016.

Name – Visa Checkout
Product Type – Digital Payments Service
Description –
Visa Checkout service speeds up online payments on both phone and PC by eliminating the
need of entering the card and shipping details with every purchase
 Real-time alerts, account balance, loyalty programs and offers
Positives
 Aside from their Visa cards, consumers can also use other credit, debit and prepaid
card brands
 Consumers have the ability to use the connected device of their choice to make
payments online or in-app via Visa Checkout, not being restricted to specific
operating systems, device manufacturers or device models
 For users who have Visa Checkout account, when they are on a website that
supports Visa Checkout, they can simply tap or click the Visa Checkout logo in order
to pay for products instantly
 Supports tokenisation - requires only username and password to authenticate
Negatives
 Visa Checkout is only used for making purchases; it cannot transfer money between
accounts
Additional Notes
Visa has launched a new ‘Digital Swipe’ feature for its online payment service, where users
can authenticate a transaction by swiping an image of the card on the system. Customers
need to swipe an image of their cards and feed the password or the pin code in the button to
authenticate the transaction.

Name – Visa Digital Commerce App
Type – Issuer branded digital commerce platform
Description –
Visa Digital Commerce App enables financial institutions to offer their own mobile apps to
customers with card management services
Technology
 Operating System – iOS and Android
 Security – Tokenisation, Fingerprint authentication
 Contactless POS terminals
 Account and balance information, card controls (on/off), transaction alerts, and
advanced fraud services like mobile location confirmation
Positives
 With the app, issuers provide their branding and select the specific features to
deploy, including tokenized contactless payments, fingerprint authentication, card
controls, alerts, account balance, transaction history and more
 Once the app is customized with features that issuers know are most important to
their cardholders, the issuer then simply launches the app to the appropriate app
stores for cardholders to download
 Enables banks/ FIs to maintain control over their relationships with customers,
especially helpful in capturing the “top of the wallet” position
Additional Notes –
More than 40 financial institutions in the US have already signed up and are implementing
the Visa Digital Commerce App to expand their mobile capabilities. Many of the financial
institutions will enable app-to-app linking with their current home banking app as part of a
multi-app strategy.
Keeping up with Visa’s strong emphasis on innovation, the roadmap for the Visa Digital
Commerce App includes person-to-person payments, digital card issuance as well as offers,
rewards, and loyalty.

Name – Zapp’s Pay by Bank app
Type – Mobile payment service
Description –
Pay by Bank enables real-time online payments on customers’ mobile phones through their
existing mobile banking app or Pingit, allowing secure payments to happen between
consumers and merchants.
 Consumers will be able to see their account balances before they pay and choose
different accounts to pay from, thereby staying more in control of their finances
Positives
 Pay by Bank app transactions are protected by a consumer’s existing bank app
security and because the payments use secure digital tokens, customers don’t need
to reveal any of their financial details to merchants when they are shopping
 Transactions fees for merchants will be reduced because Zapp involves Faster
Payments Network and therefore, does not need to rely on the traditional card
networks such as Visa or MasterCard like Apple Pay does
Pay by Bank app will be initially launching with E-Commerce and M-Commerce payments.
In-store payments will be rolled out early next year

Wallet Name – Chase App
Type – J.P. Morgan Chase’ Digital Wallet
Description -
Visa Digital Commerce App enables financial institutions to offer their own mobile apps to
customers with card management services
Technology
 Communication technology – QR codes
Positives
 Chase incentivises merchants to accept Chase Pay. Merchants have to pay lower
transaction fees on Chase Pay purchases than they do on purchases made with
other payment methods
 Use of QR codes on phones means it should work with most Android and Apple
phones
 Supports tokenisation - requires only username and password to authenticate
Negatives
 Customers’ experience when paying using a QR code is often not quite as easy as
tap-to-pay methods
J.P. Morgan Chase supports Apple Pay, Android Pay and Samsung Pay in addition to
providing its own branded wallet Chase Pay.
Chase Pay allows only Chase Visa consumer credit cards, debit cards and Chase Liquid,
and has plans to add additional cards in the future. Business credit cards, business debit
cards and MasterCard cards can’t be used with Chase Pay at this point.

Wallet Name – Capital One Wallet
Type – Capital One’s Mobile Wallet
Description -
Capital One Wallet is a free mobile wallet app that can be downloaded on Apple or Android
phones and used with credit and debit cards from Capital One Bank and Capital One 360
Technology
 Instant purchase notifications
 Receipt capture
 Digitise gift cards
 Purchase transaction details
Positives
 Capital One wallet shows for each transaction, the merchant's name, contact
information and address with a corresponding map
 It has a useful budgeting and expensing feature which allows photo receipts and
tagging of the receipts to the appropriate transactions
Negatives
 Only works with credit and debit cards issued by Capital One Bank and Capital One
360.
Capital One wallet has been developed using MasterCard Digital Enablement Service
(MDES) and Visa Token Service (VTS) platforms for secure tokenisation when used for
transactions at in store or in app.

Wallet Name – PayQwiq
Type – Tesco’s Mobile Wallet
Description -
Tesco’s standalone contactless payment mobile app PayQwiq allows shoppers to connect
debit and credit cards to the PayQwiq app and pay for items on mobile by scanning QR
codes that display on-screen
Technology
 Communication technology – QR Codes
 Integrated loyalty programme
Positives
 Customers can store their debit card and Tesco Clubcard details and pay for baskets
worth up to £400
 Instantly add loyalty points to a customers’ Clubcard accounts when they pay using
the app
Negatives
 Can only be used at Tesco

Wallet Name – YoYo Wallet
Description -
YoYo wallet distinguishes itself with its narrow focus – corporate and university campuses -
and its ability to offer deals to its customers and marketing data to retailers
Technology
 Communication technology – QR Codes
 Offers additional point of sale or loyalty services
Positives
 Retailers can accept mobile payments and automate loyalty and rewards programs,
create their own flash sales and receive data on purchases made through the app

Wallet Name – Vodafone Wallet
Type – Vodafone’s Mobile Wallet
Description -
Contactless card payments using Vodafone Wallet require a Vodafone NFC SIM and are
supported on more than 60 Android smartphones
Technology
 Operating System –Android
 Android apps
 Offers a digital card to make payments less than GBP 30 using tap and pay
 Integrated Vodafone loyalty programme
Positives
 Supports both Visa and MasterCard cards
 Auto top feature to automatically top up accounts
Negatives
 Only supports Android

Case Study

Fighting Fraud
Companies are
experimenting
with various
options like face
recognition, iris
authentication,
thumb print and
so on to address
fraud and theft in
the mobile wallet
payment space.

Bringing it all together
UK’s robust E-Commerce market and the fragmented ecosystem for proximity wallets means
that banks should consider offering a remote wallet in addition to a proximity wallet to its
customers
 Digital payments services offered by Visa and MasterCard would provide
customers the ease and convenience they have come to associate with shopping
at online platforms such as Amazon
Payment related challenges in terms of handling cash, choosing the right payment card,
keeping track of multitude of loyalty cards – at the checkout counters are all major pain
points for customers. Add to this, the ubiquity of mobile devices means there exists
considerable opportunity to offer superior customer experience at the POS terminals by
offering a proximity wallet
 Visa and MasterCard offer issuer branded mobile apps which can in fact double
as both proximity and remote mobile wallets, making it convenient for consumers
to use at both offline and online stores
 Proximity wallet providers such as Apple Pay or Android Pay have announced
plans to roll out online payments which would effectively render them with
capabilities of a ‘hybrid wallet’
 Given the strong presence of Apple and Android devices, banks should definitely
partner with the major wallet providers in addition to having their own mobile
wallets
Both Visa and MasterCard offer white-label solutions to help banks deploy bank-branded
payment solutions across online and offline channels
 Visa has announced a well thought out roadmap of planned innovations
 Most importantly, partnering with Visa or MasterCard will help banks retain their
respective brands and customer wallet share
Socio demographics of UK are important indicators for addressing the diffusion curve for
mobile wallets
 Younger consumers, in the 18-34 age group are helping drive up the usage rates
 Higher proportion of female consumers in the above age group demonstrate
greater willingness to adopt the technology
 Middle income consumers see more value in using mobile wallets especially if
consumers are given timely and relevant information on saving and spending
prudently
It appears that many of the concerns consumers today have about mobile wallets especially
those around security are similar to the ones when mobile or even internet banking was
introduced
 Simple yet effective messaging around security benefits of mobile wallets vis-à-
vis payment cards will help improve awareness levels and inclination to use
Key to success of mobile wallets will be the ability to integrate payment, loyalty, and
contextual engagement
 Providing customer value through personalised offers by combining payments,
loyalty and contextual insight

A case for mobile wallets in UK

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