1. Payments is a large and growing business that is being disrupted by new mobile and non-bank competitors like PayPal, Square, and Google. 2. Mobile payments in particular are growing rapidly and will likely surpass online payments. Mobile platforms like NFC will be important to winning in this new environment. 3. Silicon Valley has become the center of innovation in mobile payments, with startups as well as tech giants developing new payment solutions and technologies.

1. Developing the next
generation of payments
Dion Lisle
Mobile Payments Advisor
dion.lisle@gmail.com
NeuPai Confidential

2. 3 Simple Ideas
1. Payments is a business worth
defending
2. Mobile is the platform that will
decide the winners but the
competitors come from all fields
3. Silicon Valley is the HQ of the
future of mobile payments

3. Payments Business Pressure
Technology
Advances
Basel III
AML
Payments Growth of
ATF Increased Non-Bank
Processors
Regulatory Payments
Unbanked Oversight Banks 29% CAGR
Growth Networks
Mobile
Regulations
Customer
Demands
New
Companies

4. PayPal Owns Payments ?
 Are Banks Ready to
accept that PayPal is the
center of the mobile and
internet payment universe
 Note: Banks are now a
footnote in the PayPal
view
 Paypal plans to own:
 Payments - Platform
 Payments - Innovation
 Payments – X-Border
 Payments - THE DIGITAL
WALLET

5. PayPal Mobile
 PayPal mobile transactions show dramatic growth, increasing
nearly six-fold, from $25 million in 2008 to $141 million in 2009.
 Paypal closed out 2010 with over $750 million in mobile payment
volume, and more than 5 million members regularly using PayPal
from mobile devices.
 Paypal predicts over $3 billion in mobile payments for 2012
$3,000 200% CAGR
$2,500
Millions of $
$2,000
$1,500
$1,000
$500
$0
2008 2009 2010 2011 2012

6. Payments is Big Business
What How Much
RETAIL IN PERSON
Annual Retail Credit Card Charges $ 3.2 trillion
Annual Cash and Check Spend $ 1.2 trillion
Total # of US Cards – Debit and Credit 1 billion
ON-LINE RETAIL
On-Line Retail - 2009 $348 billion
On-Line Retail – 2014 $778 billion
MOBILE RETAIL
Mobile Payments Actual in 2009 $ 68 billion
Mobile Payments Projected in 2014 $ 633 billion
Source: CapGemini
• Mobile is more Important than On-Line
• Mobile can replace In Person - On-Line Can’t.

7. Non Bank Players Grow
 PayPal facilitated $92 billion in total payments volume in 2010
 PayPal had revenue of $4.2 billion in 2010
 Amazon’s payments business is now growing strong with a set
of 10 different payment products and an entire team
dedicated to dominating payments
 Apple is recruiting a SV based payments team frequently sites
their 100 million plus credit cards in iTunes as a differential
advantage.
 Apple has filed a bevy of patents on NFC
 Google has hired Osama Biedier from PayPal to lead their
fledgling payment efforts focused on mobile.
 Google is working with a major US bank to dominate
payments.
 Facebook announces the only payment method on FB will be
FB.
Non-bank Payments are growing at 30% per year

8. Mobile Money Market
Mobile Commerce Mobile Banking
Mobile Mobile Bank Account BillPay By
M-Coupons
Advertising Payments Services Phone
Proximity Remote
Payments Payments
NFC or
Barcode
Transit P2M P2P P2M
Most likely to disrupt retail payments
Money
Transfers

9. Google Gets It
• On-Line commerce • Location • Lessons applied
• Swing and a miss • Places matter • The right partners
• Good design • NFC based • User experience effort
• No consumer uptake • No charge to consumers
Google’s Goals Outcomes

10. Groupon Doesn’t
12
Months
11

11. VISA
 VISA is acquiring innovation
in the areas of payments Just Added
 VISA is in a weak position
as they go to consumers
through intermediaries – the
issuing banks
 VISA like all players in
payments needs to figure
out a new model
 VISA have great assets:
 Real-time payment network
 Global brand

12. MasterCard
 MasterCard smartly connected with
Google for their NFC Wallet
 MasterCard has a variety of mobile
products on the market
 None of the products have been market
changing
• MasterCard is a clear #2 behind
VISA in Debit and Credit
• MOTAPS - Mobile Over-the-Air
Provisioning Service
- NFC provisioning system for card
payments

13. New Players - Square
 Started as a “Person as Merchant” play with an iPhone
dongle into the audio port on an iPhone
 Added a consumer wallet called Card Case in May of 2011
 Processing $3 million per day in payments at razor thin
margins
 Took in VISA investment when their market cap climbed to
$220 million – now at $1 billion market cap
Square Device
Square Card Case Card Swipe for
Digital Wallet and Micro-Merchants
Receipts
Square Device
sold by Apple in
store or on-line

14. Payments - EMV
 EMV = Europay | Mastercard | Visa
 A standard for a chip+pin smartcard that has shown drastic
reduction in fraud rates
 Widely deployed around the world
 the US being the one glaring exception
Region EMV Cards Adoption Rate EMV Adoption Rate
Terminals
Canada, LatAm + 207,715,356 31.2% 3,900,000 76.5%
Caribe
Asia Pacific 336,602,681 27.9% 3,480,000 43.0%
Africa and Middle East 23,003,747 17.6% 345,000 60.7%
Europe Zone (Western) 645,472,323 73.9% 10,500,000 89.0%
Europe Zone 2 (Eastern) 27,516,286 12.7% 513,600 65.4%
USA 0 0 0 0
Totals 1,240,310,3 40.1% 18,738,600 71.1%
93

15. Digital Wallets
Google Square Isis Visa Serve
NFC Yes No Yes Yes No
Merchants Large Small Large No
Partners Citi/MC Apple ? Carriers + Small Banks American Express
Network Mastercard MC/VISA Discover + VisaNet American Express
Open Yes No Maybe Sort of No
All Smartphones No Yes No Yes Yes
All Phones No No No No Yes
Credit Yes Yes Yes Yes No
Debit TBD Yes Yes Yes Yes
Loyalty Yes Yes Yes Yes No
OTA Provisioning Yes No Yes No No
SIM Control Yes No Yes no No
Strength Partners Easy to use Carrier Reach Bank Channel Prepaid
Small
Weakness Limited phones Merchants Limited phones Bank Channel Reach/Brand
Reality from 1-10 8 9 5 5 7
16

16. Mobile Invests in Mobile Money
 Nokia partners with Obopay to offer Nokia Money
 Including a $35 million investment in Obopay
 Nokia just opened a new Silicon Valley center with 156,000
square feet and a SV based CTO
 Ericsson’s infrastructure team adds a mobile payments
business.
 In flight for the past 12 months
 “To take a driving role in mobile P2P.”
 Ericsson owns over 200,000 square feet in development in
Silicon Valley
 ISIS is officially launched by AT&T and Verizon with Discover
and Barclays.
 ISIS is investing billions in re-inventing payments with a non-VISA
/ MC network.
 Nokia Siemens Networks and MoreMagic Solutions Partner
to Deliver Mobile Commerce and Financial Services

17. Silicon Valley Startups
 Carrier Billing companies such as Boku and Zong have
billed hundreds of millions of dollars in virtual goods
and have plans for real goods.
 Both companies have deals with Verizon
 Zong has a deal with Facebook for Facebook credits
 Square is processing tens of millions in payments for
small merchants with big plans to tap into social
money.
 Shopkick is a startup focused on connecting
merchants to their customers for offers and loyalty.
Company Valuations
2009 2011
Square $20 million $220 million
Shopkick $10 million $80 million 5X increase
Zong $25 million $115 million in 2 years
Boku $25 million $100 million
* Valuations are estimates based on knowledge and rumor

18. Its Commerce Not Payments
On-Line Retail and Identity
Brand
Preference
Transaction Personal
UX Data Data
Brand Preferences
experience
Location
Affinity Data
Consumer
Chooses
Service
Device/OS Providers
Contextual
Relevance
Physical Retail