K connelly presentation texpo non bank payment systems revolution 2015 f

NON-BANK PAYMENTS REVOLUTION
2015 UPDATE (APRIL)
Kevin H. Connelly
Executive Vice President
The RWC Group
Kevin.Connelly@therwcgroup.com

• LAST YEAR’S PRESENTATION FOCUSED ON:
– PAYMENTS EVOLUTION
– PAYMENTS REVOLUTION
– DISRUPTIVE TECHNOLOGIES
– MOBILE MERCHANT TECHNOLOGY
– ELECTRONIC WALLET
– NFC
– BLE
• THIS YEAR FOCUS IS ON WHAT’S NEW
THE EVOLUTION OF PAYMENTS
OVERVIEW

tech·nol·o·gy
tekˈnäləjē/
noun
1. the application of scientific knowledge for
practical purposes, esp. in industry.
•rev·o·lu·tion
•ˌrevəˈlo͞oSHən/
•noun
•1. a forcible overthrow of a government or
social order in favor of a new system.
pay·ment
ˈpāmənt/
noun
1. the action or process of paying someone or
something, or of being paid.
THE REVOLUTION OF PAYMENTS
CONFIRM DEFINITION

• ITUNES
• AMAZON
• LINKED IN
• PAYPAL
DISRUPTIVE TECHNOLOGIES / DISRUPTORS

THE EVOLUTION OF NON-BANK PAYMENTS
E-WALLETS
In 2014 200
e-Wallet or
Mobile
Wallet
Applications
Gatekeeper
Wallets
Bank
Wallets
Retailer
Wallets
e-
Commerce
Wallets
Aggregator
Wallets
Single-
Feature
Wallets

THE GEORGE COSTANZA WALLET
http://www.youtube.com/watch?feature=pla
yer_detailpage&v=yoPf98i8A0g

• REVOLUTION IN FULL SWING –
WEEKLY CHANGE
• HACKING OF PAYMENT DATA -
TARGET
• EMV ROLLOUT
• APPLE PAY
• MERCHANT CONSUMER
EXCHANGE (MCX)
WHAT’S NEW
• ISIS IS NOW SOFTCARD IS
NO LONGER IS NOW
GOOGLE WALLET
• AMAZON LOCAL REGISTER
• NFC REVIVAL? NFC
TAKES LEAD
• IBEACON BLE TRACTION –
OR NOT
• BITCOIN – DOWN AND UP

• NEW FRONTIER – CHANGES ALMOST DAILY
• PAYMENTS SOFTWARE VERSION “X.X” REPLACED WITH IOS8,
ANDROID 1 AND KITKAT
• PAYMENTS UNIVERSE CENTER NO LONGER NY, CHICAGO OR LA
– IT IS SILICON VALLEY
• BANKS NO LONGER LEADING PAYMENTS INNOVATION
• NON-BANKS LEADING – PAYPAL, GOOGLE, APPLE, RETAILERS
• TECHNOLOGY IS DRIVER – RAPID CHANGE IS NORM
• EXPLOSION OF PAYMENT ALTERNATIVES IN 2015
WHAT’S NEW

ANNOUNCEMENTS IN 2015

• SAMSUNG PAY
– SAMSUNG ACQUIRES LOOPAY
• MCX
– CURRENT C REMAINS ON BENCH
• GOOGLE WALLET
– ACQUIRES SOFTCARD (THAT WAS ISIS)
• PAYPAL
– PAYPAL BUY PAYDIANT
WHAT’S NEW IN Q1-2015

• MICROSOFT PAYMENTS
– APPLIED FOR MONEY TRANSFER LICENSE (MONEY SERVICE
BUSINESS)
• APPLE PAY IS DRIVING FORCE
– LEADING NEW FEATURE A MUST HAVE
– APPLE WATCH – TIME IS MONEY
• REGULATORS CATCHING UP
– BSA/AML, KYC, FRAUD, SECURITY

• SAMSUNG PAY
– SAMSUNG ACQUIRES LOOPAY

• GOOGLE WALLET
– ACQUIRES SOFTCARD (THAT WAS ISIS)
– NEW OPERATING SYSTEM

• PAYPAL
– PAYPAL BUY PAYDIANT
– SPUN OFF FROM EBAY

• MCX
– CURRENT C REMAINS ON BENCH – AND IN PILOT

• MICROSOFT PAYMENTS
– APPLIED FOR MONEY TRANSFER LICENSE

• APPLE PAY IS DRIVING FORCE
– PAYMENT FEATURE A MUST HAVE
– APPLE WATCH – TIME IS MONEY
•1 Billion | The Number Of iOS Devices Sold
•200 K | The Number Of Vending Machines, Laundromats and
Parking Kiosks Now Accepting Apple Pay
•400 | The Percentage Increase In Apple Pay Use Since Whole
Foods Launched It
APPLE PAY
Your wallet. Without the wallet.

APPLE PAY
Your wallet. Without the wallet.
http://www.pymnts.com/in-depth/2015/major-banks-cashing-in-on-
apple-pay-potential/#.VTEc9yFViko
• FEB-15 CHASE 1MM CUSTOMER
• JAN-15 BOFA 800K CUSTOMERS
• 750 BANKS
• $100MM SPENT ON ADS
http://adage.com/article/cmo-strategy/capital-launches-apple-pay-ad-
orange-bowl/296437/

• APPLE PAY IS DRIVING FORCE - CHASE

FORECAST BEYOND THE TIPPING POINT

E-WALLET COMPARISON

WHAT DOES THE DATA TELL US?
• Rapid and seismic changes – much more to come
• Technology
• Multiple competing platforms and solutions
• Banks, Retailers, Telecom, Tech Industries
vying for foothold
• No clear winner yet
• Retailers are heavily engaged and vested interest
• Banks are following – but now engaged
• Safety & Security are considerations to all

E-WALLETS
NFC – Embedded
Apple, Softcard,
Google
Cloud vs Device QR Code
MCX
Hybrid
MST

APPLE PAY – THE LEADING FRONT
• Apple owned
• NFC tech embedded in iPhone6
• Only works on iOS8 and new phone
• Banks Participating
• Retailers Participating

How does it work?
http://www.bloomberg.com/video/popout/4
S9n3TNbQA6vW_~xMyGaqg/21.13/
http://techcrunch.com/2014/09/09/heres-
apple-pay-in-action/
Quick Market Reaction

• High Level Process Flow

Participating Banks
• .15% Apply Pay Fee
• 1-2% is the norm
• 750+ BANKS NOW

Participating Merchants
• 220,000 Locations
• 9 Million Locations
• <10%
• Cost: $300-500
• Walmart using MCX
• Is Timing Better For NFC?

• Compatible Apps

MERCHANT CUSTOMER EXCHANGE (MCX)
• Merchant owned
• 110,000 locations
• Pilot in 2014, rollout 2015 (WAITING)
• Software download
• Works on iPhone and Android devices
• QR Code Based

MERCHANT CUSTOMER EXCHANGE (MCX)
• Coupons and Offers
• Loyalty
• Easy of Payments
• Security

AMAZON LOCAL REGISTER

AMAZON LOCAL REGISTER
http://localregister.amazon.com/
How does it work?

SOFTCARD
• Telecom Joint Venture
• AT&T, Verizon, T-Mobile
• NFC Based
• Works on iPhone and Android devices
– app comes pre-loaded on 30 devices
• Changed Name from ISIS

SOFTCARD
How does it work?
https://www.youtube.com/watch?v=tH5RWt
6HdKk&feature=player_embedded#t=0
Announced partnership with Subway
this week – 26,000 locations

BEACON TECHNOLOGY

https://www.paypal.com/webapps/mpp/beacon

PAYPAL POSITIONING
• Merchant Solutions
• Consumer Solutions
• Financial Hub
• eBay

PAYPAL POSITIONING
• Safety
• Security

IMPACTS TO BANKS
• Disintermediation
• Revenue loss
• Still most trusted
• Checking account remains financial hub
• Burdened by regulation and scrutiny
• Innovate and invest?
• Partner and private label?

IMPACTS TO BUSINESS
• Risk model changes
• Investment increases
• Technology disruptors can impact business
• Opportunities for cost savings
• Opportunities for revenue increase
• Opportunities for customer relationship building

IMPACTS TO CONSUMERS
• Enhanced convenience
• Increased security but with new risks
• Opportunities for savings
• Loss of privacy
• App-mania
• Identify theft
• Confusion & excitement

REGULATION
• Multiple regulators
• Overlapping reviews and conflicting enforcement
• New laws phased in and untested
• Catch up mode
• AML
• CFPB

ISSUES AND POTENTIAL ROADBLOCKS
• Security
• Fraud losses
• Identity theft
• Privacy concerns
• Technology
• Multiple platforms competing
• No clear winner yet
• Consumer/Business confusion
• Safety
• Non-bank accounts
• Criminal activity
• Regulation

WHERE TO FROM HERE?
• CFPB and Other Regulation of Mobile Wallets, Non-Bank payment
participants WILL INCREASE
• Apple Pay will CONTINUE TO have a major impact payments
• Google will continue to make a variety of significant bets in payments
vertical
• Retailers will implement variety of payment receptors and focus on
security, loyalty and up-sell
• Bank’s will continue to follow, but more aggressively participate to avoid
continued disintermediation

COMMENTS & QUESTIONS

STATISTICAL INSIGHTS
View of Most Current Data on Payments
Revolution and Mobile Wallets

STATISTICAL INSIGHTS

K connelly presentation texpo non bank payment systems revolution 2015 f

Recommended

Recommended

More Related Content

Similar to K connelly presentation texpo non bank payment systems revolution 2015 f

Similar to K connelly presentation texpo non bank payment systems revolution 2015 f (20)

Recently uploaded

Recently uploaded (20)

K connelly presentation texpo non bank payment systems revolution 2015 f