Mobile Payments Summary Types of Mobile Payments The

Mobile Payments

Summary • • • Types of Mobile Payments The players Ecosystem Technologies Applications of mobile payments Are we there yet?

Types of Mobile Payments • Mobile Payments: Type of transaction where the payment is effected from a mobile phone to another mobile phone, a POS or a website, or the phone is used as a card acquiring device (card transaction, stored-value or carrier billing • Mobile Banking: The ability to access your bank account functionality from a mobile phone including the ability to make transfers and deposit checks. • Mobile Supported: The order is made from the mobile phone (food delivery), or the goods are delivered to the mobile phone (coupon, ticket), or the phone is used for location service, or to deliver an offer / ad, but payment is not done via the mobile phone. • Mobile authentication: The mobile phone is used to confirm a transaction made off-mobile, usually through an SMS code. • Mobile top-ups: Have nothing to do with payments, but allow you to load minutes to your mobile phone, or others’ mobile phone

Bill to phone / Mobile • • Aka premium SMS Bill directly to phone bill, no credit card Integration to each phone company Use of aggregators Difficult refund process High commissions Reach more customers

Mobile Payments Players • • Banks Telecom operators / MNO’s Financial Institutions (Visa, MC, WU, Fiserve, …) Handset Manufacturers (Nokia, Sony, …) Technology providers Regulators (DFI’s, FTC? ) Retailers (for purchases) Cash-in/cash-out points (to load/unload funds)

Mobile Payments Players TELCO Handset Manufacture Technology Providers Regulator Financial Service Provider Merchant

Ecosystem Technologies • • App-driven (Android, i. Phone, Blackberry) SMS USSD Web-browser / WAP IVR / VRU Barcode NFC

Applications of Mobile Payments • By Transaction type – Stored-value: POS/remote load and/or payroll deposit – P 2 P: bump-phones, or send/receive remittance – Purchases: on-line/in-store – Ancillary services: billpay, mobile top-up • By Location – Proximity (POS, NFC, bluetooth, RF) – Remote (remittance, m. Commerce, ancillary services) • By customer: – Individual: make purchases, send/receive money, access financial services – Businesses: present bills, offers, ads, accept payments

Are mobile payments here yet? • High mobile phone penetration: – 5 bn phones worldwide, vs. 2 bn bank accounts. – Smartphone sales 450 mm units in 2011 (up 50% YOY), and 22% of total phones sold. Expecting sales of 650 mm in 2015. 80% of phones sold have some browser capability. • Volumes on the rise – Gartner predicts 140 MM users in 2011 (+40%) – IE Market Research forecasts $1. 1 Trln in volume by 2014, up from $150 Bn. Today. Juniper forecasts $670 bn by 2015. • Generational shift – Milenium have grown used to buying apps, in-app/game purchases, digital goods and general e-commerce – Generation is on-the-go, not willing to be bound by desktop / laptops or wi-fi for ecommerce

Notable Initiatives • DEVELOPED MARKETS – Banking on NFC • Google wallet • Isis • Card companies – Emerging payments • i. Tunes • Paypal • Starbucks

A closer look

Notable Initiatives • DEVELOPING MARKETS (Evolved P 2 P based systems) • M-Pesa • Fundamo • Globe / Smart • Haiti • GLOBAL • Payment Infrastructure – BICS – WU + MG

Challenges • Consumer adoption • Regulatory environment: Supervision, Complexity, additional players, KYC, compliance, velocity, security, privacy • Profitability: More players to share the pie and disruptive pricing • Disintermediation of current payment systems? • Others?

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