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Mobile payment

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This presentation aggregates slides from many resources on mobile payment and presented to Bank of Thailand on Nov 22.

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Mobile payment

  1. 1. Mobile Payment Assoc.Prof. Dr. Thanachart Numnonda Director Software Park Thailand 22 November 2010
  2. 2. Agenda Mobile Financial Services Banking 2.0 Mobile 2.0 Mobile Banking Mobile Payment M-Payment Technology & Applications Security Examples Suggestion & Conclusion
  3. 3. Mobile Financial Services
  4. 4. The convergence of payments and mobile communications is not just logical – it is inevitable” John Philip Coghlan, Visa USA CEO March 2007
  5. 5. What is Mobile Financial Services ? Source: Mobile Payment series 2009:
  6. 6. Mobile Financial Services Video
  7. 7. Mobile Payment Platforms • Mobile Banking: This will enable users to transfer money from account to account, pay bills, manage/monitor account e.g. spending limits, credit fraud. . e.g. Mobile banking platform providers – Promptnow, mFoundry and Firethron. •Remote Purchase: Using the mobile phone to purchase goods through a secure portal, instead of a computer on the internet. e.g. PayPal’s "Text-to-Buy" enables users to make remote purchases. Person to person mobile payments: Where a mobile device can be used to complete a person-to-person transaction. Point-of-Sale: Using a mobile device at a physical store front, at the cash register to purchase inexpensive products quickly and easily. “
  8. 8. Mobile Money Transfer 1.7 Billion unbanked mobile users (2012)
  9. 9. Business Model Operators’ involvement Banks’ involvement Independent service provider models Low High High Low Collaborative ModelsBank-Centric Models •Point-of-sale NFC payments •Mobile Banking - Multiple BanksCustomer->Bank->Vendors Operators Customer->ISP->Merchants Operators Customer->Mobile Operator->Merchants Banks Operator Centric Models
  10. 10. Mobile Payment Evolution
  11. 11. What does it take to replace cash?
  12. 12. Banking 2.0
  13. 13. Technology & Social Shift  New Business Rules  Communication Shift  Social Networks  Socializing & Sharing
  14. 14. ผลกระทบของ Internet ต่อ Bank  การทำธุรกรรมของลูกค้าธนาคารมีการเปลี่ยนแปลงอย่างมากโดย ระบบอินเตอร์เน็ต  ภาคการเงินจะเป็นกลุ่มอุตสาหกรรมรายแรกๆที่นำระบบ Internet เข้ามาใช้กับลูกค้า  ลูกค้าสามารถที่จะทำธุรกรรมการเงินผ่านระบบอินเตอร์เน็ต
  15. 15. การทำธุรกรรมของลูกค้า  การตรวจสอบบัญชี  การโอนเงิน  การชำระเงิน  การลงทุนในกองทุนรวม  บริการบัตรเครดิต  การลงทุนในตลาดหุ้น
  16. 16. Internet Banking : Example
  17. 17. Farmer Internet Banking Advertise
  18. 18. การชำระเงิน
  19. 19. State Bank of India
  20. 20. Social Finance
  21. 21. Social Lending is already Global
  22. 22. The Bank of Facebook
  23. 23. Did you know Bank 2.0?
  24. 24. Branch of the Future
  25. 25. Mobile 2.0
  26. 26. Next Major Computing Cycle Source: Morgan Stanley 2009
  27. 27. Source: Morgan Stanley 2010
  28. 28. Tablets
  29. 29. SmartPhones
  30. 30. New Trends Web 2.0 Web as a Platform OS/Device independence Large scale computing Software as a Service Cloud Computing
  31. 31. 4 Billion Mobile Phones
  32. 32. Mobile 2.0 Smartphone v.s. PC
  33. 33. Mobile .0
  34. 34. 3G Network
  35. 35. PricewaterhouseCoopers 24 August 2010 Slide 40 IT Trends and Social Impact Mobile 2.0
  36. 36. 4G Advertise
  37. 37. WiMax • เป็นโปรโตคอลสำหรับ fixed and fully mobile internet access. • ความเร็วสูงถึง 40 Mbps และถ้าเป็นมาตรฐาน IEEE802.16m มี ความเร็วถึง 1Gbps สำหรับ fixed speed • สำหรับมาตรฐานของ Wi-Fi คือ IEEE802.11 • WiMax เป็นระบบแบบระยไกล สามารถครอบคลุมได้หลาย ก.ม.
  38. 38. WiMax
  39. 39. Speed Comparison
  40. 40. WiMax Advertise
  41. 41. Mobile Banking
  42. 42. Mobile Banking : Example
  43. 43. Bank of America Advertise
  44. 44. Mobile Payment
  45. 45. Some Key Concepts Mobile Remote Payment It covers payments that take place online, in which the mobile phone is used as a device to authenticate personal information stored remotely Mobile Proximity Payment It refers generally to contactless payments in which the payment credential is stored in the mobile and is exchanged over the air, based on NFC technology, with a dedicated and compatible payment terminal. Near Field Communication It is a short-range radio frequency communication technology that enables NFC devices located no more than a few centimeters from each other to exchange data. NFC devices are totally compatible with existing contactless technologies like smart cards and contactless stickers. Source : Binary Mantra Systems
  46. 46. Mobile Payments 1.0 in Europe 2000-2005 Many early European mobile payment initiatives have failed – Main reasons for failure are lack of usability and lack of availability Mobile payments 1.0 in Europe is dominated by Premium SMS – 20%-40% revenue share for telecom operators – In 2006 1 Billion Euro purchased through Premium SMS – Used by 60% of young consumers Increasing consumer acceptance in niche areas such as m- parking – In Croatia more than 50% of all parking fees are paid by mobile phone . Europe is far behind Japan and South-Korea Source : Status of Mobile Payments RFID : Europe 2007
  47. 47. Contactless M-Payment in some countries Source: Contactless Mobile Payment: ITIF Report 2009
  48. 48. Growth of M-Payment acceptance in Japan
  49. 49. Mobile Payment Japan Video
  50. 50. Mobile Payment Taiwan Video
  51. 51. Mobile Payment 2.0 : 2006- 2010 Physical payments NFC based Remote payments Mobile banking Person To Person Public Transport Access Control Ticketing NFC Applications Mobile Payment Applications Bank’s Perspective Mobile Network Operator’s Perspective Physical payments SMS based Identification Authentication Transport Cards Contactless payments Contactless cards Mobile devices Digital payments
  52. 52. Mobile Payment Value Chain End Customers – More convenience Operators - They have fared well in becoming part of mobile commerce transactions where the items being sold are delivered on the mobile devices (Ring tones, wall papers, etc..). Most of the discussed payment systems do not benefit an operator beyond driving increased usage of SMS and data services. Revenue share model from Near field communication (RFID) payment would be a challenge. Merchants and Vendors - If already registered on eBay, merchants may provide remote purchase or text-to-pay but brick-and-mortar merchants will need to see reduced transaction and implementation cost, and access to precious customer data to track spending habits. Source: Mobile Payment Value Chain
  53. 53. Mobile Payment value Chain Technology Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution. Independent service providers will have to establish trusted brands before they will ever get any money. Device Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution. Financial institution- Financial transaction fees Source: Mobile Payment Value Chain
  54. 54. Mobile Payment Market
  55. 55. 1 Billion Unbanked Users
  56. 56. M-Payment Technologies & Applications
  57. 57. Mobile Payment Technologies Near Field Communication (NFC) : is an evolution of contact-less and short range RFID technologies. FeliCa : Sony developed the FeliCa integrated circuit chip for contactless payments made via smart cards SMS: Text based transaction Over the air data connectivity: Https, SSL, web browser, XML. Security is comparable to the internet model.
  58. 58. Technologies Behind NFC Contactless payment readers Network connecting them to transaction processors NFC-equipped phones Network for providing mobiles with personal account information Software for mobile device UI and back end server application. Source : Binary Mantra Systems
  59. 59. RFID RFID : Radio Frequency Identification RFID Tags: Store and retrieve data (with a distant reader) History : radar technology, cow identification (year 1970). Use case examples: road taxes, trace books in libraires, access card, shops (Wall-Mart). RFID tags types – Active – Passive (without battery) Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  60. 60. From RFID to NFC Can communicate with objects Magnetic field induction Contactless technology based on RFID 13,56MHz NFC is standardized ECMA-340 and ISO/IEC 18092 Backward compatibility with ISO14443 and SmartCard Millions of readers Easy to use Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  61. 61. Contactless Cards FELICA (sony) encryption key – generated dynamicaly at each auth. Topaz Tag Innovision MIFARE Standard: – 512bits UL (no security) used for tickets MIFARE DESFire – preprogrammed card – Example: Oyster Card in London Gemalto: Mifare 4 Mobile Contactless Java Card Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  62. 62. Visa Paywave Video
  63. 63. MasterCard Paywave Video
  64. 64. NFC NFC allows a device to read and write a contactless card, act like a contactless card and even connects to another NFC device to exchange data. 3 modes : – Card reading (MIFARE …) – Peer to peer (initiator & target) – Card emulating Distance : 0 - 20 centimeters Bandwidth to 424 kbits/s NFC Forum : NDEF specs N-Mark: Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  65. 65. Near field communication (NFC) NFC is a type of radio frequency identification (RFID) technology NFC standard is an extension of the ISO 14443 RFID proximity-card standard. NFC communicates via magnetic field induction Japan and South Korea use RFID standards that are not currently interoperable with NFC standards. Japan uses FeliCa, a proprietary standard. South Korea uses a passive
  66. 66. Service provider Trusted Service Manager (MNO or TTP) Application owner SIM Card Manufacturer (Smart Card provider) Card Issuer MNO (SIM Card management system) Contactless service management platform OTA NFC Service Management POS SIM NFC Mobile station holder
  67. 67. NFC on a Mobile Phone Contactless Screen with a user interface Security GPS Loudspeaker and Microphone Keyboard Camera Network TV Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  68. 68. Contactless Payment Applications Payment Transaction Payment and Information-Based Transaction Authentication / ID Source: Contactless Mobile Payment: ITIF Report 2009
  69. 69. Payment Transaction Mobile payments replace cash/ credit cards No information component required beyond exchanging payment details Includes contactless payments for goods and services purchased from: – Big Box Retailers – Quick Service Restaurants – Convenience Stores – Taxis – Automated Devices Source: Contactless Mobile Payment: ITIF Report 2009
  70. 70. Payment & information-based transactions Transactions involving exchange of both payment details and information pertain- ing to the transaction. Data component is stored on mobile phone’s electronic walllet. Enables mobile phones to replace cards, tickets, passes, etc. Enables personalized merchandising and advertising Uses mobile phone’s electronic wallet to manage, update, pay for, or check into: – Public Transit (Tickets) – Airport Check-in (Tickets) – Parking Garages (Tickets) – Movie Theatres (Tickets) Source: Contactless Mobile Payment: ITIF Report 2009
  71. 71. Authentication/ID Authentication/identification credentials are stored in the mobile phone’s electronic wallet Electronic wallet can be used as ID to check into: – Schools – Hotels – Health Clubs – Office Complexes – Apartment Source: Contactless Mobile Payment: ITIF Report 2009
  72. 72. Paypal M-Payment Library Make it easier for developers – Library design to be integrated less than 5 mins Make it better for customers – More convenience than entering credit card – Don't need to share financial information A growing feature set – Payment settled immediately to PayPal account
  73. 73. Paypal M-Payment Video
  74. 74. Security
  75. 75. SMS Security The initial idea for SMS usage was intended for the subscribers to send non-sensitive messages across the open GSM network. Mutual authentication, text encryption, end-to-end security, non-repudiation were omitted during the design of GSM architecture. – SMS Spoofing – SMS Encryption Source: Contactless Mobile Payment: ITIF Report 2009
  76. 76. GPRS Security GPRS security functionality is equivalent to the existing GSM security. GPRS solutions are already in use for mobile payments across the globe. Application level security should be used to provide end to end transaction security. Even though most of the mobile phones support GPRS, not all the phone user activates the GPRS connection Source: Contactless Mobile Payment: ITIF Report 2009
  77. 77. Security &memory for RFID tags vs cost Source: Contactless Mobile Payment: ITIF Report 2009 National ID card Aircraft part tag Passport label / page Secure access or credit card Transit cardTransit ticket Library book labelItem drug label Retail pallet / case label Specification typically ISO 14443 or 15693 (read distance to 50 cm) 7cents Chip cost 3dollars Security and/or memory size
  78. 78. Industry Groups http://www.mobilepaymentforum.org
  79. 79. Use cases Examples
  80. 80. The Indian Scenario Currently registered no. of m-payment users is close to 3.5 million users Two types of payment systems are in use at present; – Text/SMS based service – Paymate, mChek, Obopay – GPRS based service – JiGrahak In next 3 years, the number is expected to grow to 9 million users due to increase in quality and adoption of handsets Source : Binary Mantra Systems
  81. 81. NFC on iPhone NFC already on iPhone: Stickers, 30-pin RFID readers, SIM add-on… Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  82. 82. Exchange data, P2P Configuration (bluetooth pairing) Vending machines, service maintenance Loyalty, couponing NFC poster, get information Ticketing Medical, home care Web applications Payment solution Access control Mobile signature Etc. Added value services Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  83. 83. NFC Use cases Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  84. 84. Mobile Ticketing  A customer books two tickets for a concert.  He pays and downloads his tickets on his mobile phone with a simple touch.  He meets with his girlfriend and transfers the ticket on her mobile.  They arrives and unlock security gates thanks to their NFC mobile phone. 14 millions RFID tickets were produced by ASK for Olympic Games in China -  Mobile tcketng will become more popular over the next few years, with 2.6 billion tckets worth $87 billion, delivered by 2011 Juniper Research (April 2008)
  85. 85. NFC in the World (2009) Japan with Sony FeliCa, NTT DoCoMo NTT Docomo reports 10 million mobile credit card customers StoLPaN « Store Logistics and Payment with NFC » is a pan-European consortium supported by the European Commission’s Information Society Technologies program: Akbank and Turkcell test NFC in Istanbul Visa launches NFC trial in Brazil Citi launches NFC trial in India Telefónica launches O2 Money, says it is ready to deploy NFC Nokia Money 41 NFC-related trials and launches in the Asia-Pacific region so far… etc. Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  86. 86. NFC in France (2009)  Disneyland Paris to test NFC and contactless cards from October 2009, with Crédit Mutuel and CIC banks.  Smart-Park with VINCI Park and Monext.  Paris Metro: Paris transport operators to launch NFC ticketing from the end of 2010. STIF will coordinate the Paris transport operators (Optile, RATP and SNCF Transilien) and the participating telecoms operators (Orange, Bouygues Telecom and SFR).  Pegasus workgroup: multi-operator (Orange, Bouygues Telecom, SFR), multi-bank (BNP Paribas, Groupe Crédit Mutuel-CIC, Crédit Agricole, Société Générale) with MasterCard, Visa Europe and Gemalto for mobile payment in two cities: Caen and Strasbourg  Nice NFC city Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  87. 87. Case Study: NFC Transport Ticketing in Hanau and Frankfurt • Description: NFC based ticketing for public transport passengers in Hanau and Frankfurt. Now expanding into broader information, loyalty, payment and ticketing applications, for example with the Erlebnis card • Start: 2005, now commerically available • Users: Inititially 200, but growing. • Key Words: public transport ticketing • Handsets: Nokia 3220 • Operator Vodafone • Chip: NXP • Others: RMV (Rhein-Main- Verkehrsverbund), T-Systems Source : Status of Mobile Payments RFID Europe 20099
  88. 88. Case Study: NFC Consumer services in Cinema, Thailand • Description: NFC based consumer applications such as information, ticketing and marketing at cinema complex in Bangkok, Thailand • Start: 2007 • Users: Inititially 200, but growing. • Key Words: marketing, ticketing • Handsets: Nokia 3220 • Operator • Chip: • Others: PayZy Source : Status of Mobile Payments RFID Europe 20099
  89. 89. NFC Devices NFC Phones using single wire Protocol and UICC (08/2008) The Sagem my700X The LG L600V The Nokia 6131 SWP The Motorola SLVR L7 All devices are more or less concept devices and come with an InsideContactless NFC Chip. In order to develop applications with these devices a Dev Kit (like the Gemalto Developer Suite) and a SWP UICC is required. All four devices are already capable of using SCWS.
  90. 90. 107 Press release: Alcatel-Lucent partners with Clear2Pay for mobile payment framework Gateway Banking Post Pay Systems Voucher BO APIs Application Correlation Server Stored Value Accounts Server Profile server Subscribers Points of sale Telco – Non Banking PingPing SVA Interactive Billboard
  91. 91. Suggestion & Conclusion
  92. 92. Issues Trust Standards Privacy Regulation
  93. 93. NFC keys of success Reach and availability The availability of NFC phones and SIM card Variety of use Ease of use See iphone Security Be able to lock payment card Added value services Advantage for customer ? Infrastructure NFC access points in shops Complex value chain + Mobile OTA B2C battle Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099
  94. 94. Suggestion Governments should assume a leadership role in promoting and adopting mobile payments. – Ensure senior government leaders highlight the benefits of contactless mobile payments. Articulate clear consumer protections for mo-bile payments. Address legitimate security and privacy concerns, but recognize mobile wallets are likely to be more secure than physical wallets Encourage competition and do not favor en- trenched interests. Source: Contactless Mobile Payment: ITIF Report 2009
  95. 95. Thank you

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This presentation aggregates slides from many resources on mobile payment and presented to Bank of Thailand on Nov 22.


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