Mobile Payments. Moving at the Speed of Innovation. Eric Kuhn, Enterprise Digital Product Development April 2017

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1 Mobile Payments Moving at the Speed of Innovation Eric Kuhn, Enterprise Digital Product Development April 2017

2 Agenda Mobile Payments Landscape Why Your Digital Products are Essential for Growth How to Craft an Effective Strategy for your Client Base 2

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4 Mobile Payment Landscape 4

5 Who cares? 5

6 56% of consumers are now aware that there is technology to use their phone to pay -Accenture 6

7 Mobile Payments are not just at the point of sale In-App Payments & Mobile Web In-App even when inperson/card on File Order Ahead Delivery 7

8 ApplePay is building momentum Transaction volume is up 500% year over year 2 million small businesses and soon Comcast are now accepting invoice payments with the service. (ApplePay on Web) two years Apple has managed to move from four to 35 percent of retailers (or 4 million locations) supporting Apple Pay in the US. 8

9 Financial institutions launching payments apps Capital One Wallet Chase PAY Wells Fargo Wallet FIS Commerce App launched! 9

10 Quick call out to the FIS Commerce App Now Android Contactless Payments HCE Transaction Alerts Balance and Transaction History Card Controls On/Off (Credit) Visa Checkout Provisioning App to App Linking In-App locator for Branches, ATMs and Contactless Payments Retailers Fingerprint Authentication Pending Roadmap MasterCard Card Controls (Debit/Prepaid) P2P Offers/Loyalty ApplePay Provisioning Credit Due Date and Payment Top-of- Wallet Android ios Credit Debit Prepaid 10

11 Easier Checkout Leads to Lock In 11

12 Autofill Wallets Desktop and Mobile Web One Click Autofill of Card Info Drives card usage over 80% for user No Checkout Button Needed 12

13 Retail launching wallets too Probably too many 13

14 Speaking of Starbucks 14

15 Sticking with Starbucks for a second Does anyone want a coffee? 1.2 Billion 15

16 Uber and Card on File Transportation is changing Card on file for frequent in-app purchases is becoming increasingly important Frequent Uber users spend 1.3% of their income on the service. Uber and Lyft use generally goes up with income for the highest income group, people with incomes over $75,000, 27 percent have used Uber and 9 percent have used Lyft. 16

17 What does this all mean? 17

18 The Conversation is Happening The 5 th Annual MasterCard Digital Payments Study Digital Wallets overwhelmingly led the payments discussion with 75% of the conversation and more than 2 million mentions 72% Positive with or without you 18

19 Over one-half (57% of cardholders say they would be likely to use a mobile payment app from their primary bank that would allow them to make purchases with that bank s cards. -The Payments Report 19

20 Consumers want to choose their primary financial institution Consumers are 1.5X more likely to choose an FI wallet than Apple or Android Pay Past two years primary FI has topped the charts 20

21 Important Demographics Millenials + Mass Affluents 52% of both groups consider themselves to be among the first to try new technologies via 21

22 "The customer relationship is the trump card that issuers have to play in the mobile wallet game" "Tapping into existing card functionality that your customers have come to expect quickly sets a higher bar for third-party wallet providers. JAVELIN 22

23 Strategy and execution 23

24 One App vs Multi App Highly debated topic My favorite discussion mbanking is established 24

25 Potential Wallet characteristics: (not just payments) Payments! Contactless P2P Donate to a Cause Light Account Management Balance, Transactions, Alerts, Credit Due Date and Payment Fraud Mitigation Card Controls, Location Awareness, Biometrics Receipt Capture Merchant & Issuer Offers Points/Rewards Loyalty ecommerce Provisioning Order Ahead 25

26 Options No Mobile Wallet Strategy Device-Centric Only ApplePay, AndroidPay, SamsungPay mbanking with Integrated Wallet i.e. Wells Fargo Wallet, FIS API s Separate Mobile Wallet App i.e. Cap One Wallet, ChasePay, FIS Commerce App Not debating NFC, QR, Barcode, Beacons, Blue Tooth strategy 26

27 Can one app do everything well? Maybe? In China, WeChat dominates WeChat is actually more of a portal, a platform, and even a mobile operating system depending on how you look at it. it is worth noting that Chinese apps tend to combine as many features as possible into one application. This is in stark contrast to Western apps, which lean towards app constellations ). 27

28 Case study: Multi-App Approaches Facebook gave Messenger it s own experience and now it s a thriving platform (Except for the whole SnapChat copying, let s not talk about that) Platforms take time to grow By liberating Messenger from the bloated Facebook app, it was able to pack it full of new features Integrating payments with mobile banking limits the opportunity But just before announcing Messenger had hit 200 million users in April 2014, Facebook rattled its community with a heavy-handed announcement: It would remove chat from its main app, forcing people to download Messenger instead. The rhetoric was that you and your friends would respond faster and be less likely to miss messages if you had a dedicated app. 28

29 The Pays are fine for me Don t confuse the Pays with what a Wallet App is Not just about NFC payments It s an entirely different experience for Commerce brought to the cardholder by an Issuer Everyday buying vs managing bills, mortgage, retirement Disenfranchisement is a real possibility Commoditize your value Cardholders miss out on enhanced Issuer features if Pays are the only option Still need to participate in the Pays, especially ApplePay 29

30 App Constellations It s ok to try out new strategies DropBox: Mailbox and Carousel (Shut down) Facebook: Paper (Shut down) Important for App Constellations Single Login Access Deep Linking between the App Constellations If you own a leading constellation, you can use your apps and your relationship with the users of those apps to promote and distribute new apps that you either build or buy. 30

31 Are App Constellations Real? Facebook= 16 Twitter = 3 YouTube = 6 DropBox = 3 Amazon = 20+ Microsoft = 20+ Google = 20+ Financial Institutions may not need 20 apps (I don t recommend it), however more than 1 gives you ultimate flexibility. 31

32 Final thoughts Mobile Payments are becoming essential for cardholders Your users are talking, trying and using these products Issuer s have a strategic advantage Building a new platform takes time Outside of China, App Constellations are the norm 32

33 Thank you! Follow me on Twitter Check out the FIS Commerce App booth Take my survey and get an with this deck and all sources used.