Andrew Griffin Member of Mobile Wallet Taskforce, Mobey Forum

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1 Andrew Griffin Member of Mobile Wallet Taskforce, Mobey Forum Director of Market Intelligence, Monitise Future Payments 2013, May 15-16, London.

Global, bank-led cross-industry expert consortium Influencing the industry from the perspective of financial institutions Filtering and analyzing complex information through its White Papers

2 Global, bank-led cross-industry expert consortium Influencing the industry from the perspective of financial institutions Filtering and analyzing complex information through its White Papers Promoting sustainable, open business models Thought-leader in the field of mobile financial services Meetings 4 times a year in member events with high profile guest speakers and topic-specific roundtables 2

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4 What is a mobile wallet? Technology, adoption trends and user acceptance War of wallets

5 digital wallet Google Wallet iphone 5 mobile wallet Source: Google Trends 5

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7 Functionality on a mobile device that can securely interact with digitized valuables mcommerce Advertising, Infotainment Mobile Device as POS Coupons, Offers, Discounts Loyalty schemes Ticketing mbanking Bill Payments Cash-in, Cash-out Content related information Account Information Investments, Wealth management midentity Signature Authentication Access Control Physical or Digital mpayment Proximity Payment Remote Payment 7

8 Initiation Connection from and to the Mobile Wallet Distribution channels for the Wallet Customer acquisition and enrolment Operation Bearer / Connection Channels to get value into and out of the Mobile Wallet Data Flow / Data Ownership Usability/technology question Which communication technology, NFC, QR/barcode, cloud? Who owns the payment instrument? What if not the wallet service provider? Who sees the transaction and can therefore use/sell the data? Business model question 8

9 There are many compelling mobile financial propositions -Checking your bank balance via a mobile banking app, rather than visiting a branch, calling a call centre, finding an ATM, or going online. But just because it is mobile does not make it a compelling proposition -The consumer will only opt in to a mobile wallet solution when they decide that there is sufficient value on offer to justify a change in their behaviour 9

10 Source: Consult Hyperion 10

11 Source: Tesco PLC, Pricerite Express Hong Kong 11

12 10% of US tender 10m active users 4m transactions /week 1 transaction per 2+ weeks? Source: Starbucks Q results conference call 12

13 NFC radio Standalone Secure Element Chip Trusted Execution Environment Visa PayWave Integration Mobeam 1D IR Scanner Source: Samsung, Mashable 13

14 Four Party Model Merchant sees this as a cost Marketing/Lead generation Merchant sees this as driving revenue Card Issuer (bank) ~1.5% Merchant Acquirer (bank) ~0.2% ONLINE econsumer Online Ad Search ecommerce purchase Consumer Pays 100 Card network owner ~0.2% Processor ~0.1% Merchant Receives 98 Lead generation fee 5-10% of transaction PHYSICAL Consumer Mobile offer Purchase MDR is being squeezed by regulatory and merchant pressure There s not much to go spare. Most non-bank business models either rent space to virtual cards or provide it for free. 14

15 Secure Element Included in the NFC chip (found on Google Wallet phones) No SE! Trusted Execution Environment (TEE) embedded in app processor using existing ARM core TrustZonesecure environment. 2G RF NFC Handset printed circuit board (PCB) 3G RF Baseband processor Application Processor LCD driver SIM card slot Flash memory DRAM On SIM/UICC card MNOs own the UICC so aim to charge card-issuers to use space. But slow, and little space. Even MNO s are looking for alternatives Retrofit SE and NFC on a BT / WiFi SD card slot memory card. The idea has been around for a while but not taken off (no memory card slot on an iphone) Sticker no electronic link to phone. 15

16 Proactive logins per month 25 A bank s busiest branch Branch Mobile 1 6 Online Source: Monitise customer data, RBS mobile banking video clip

17 Developed world 10-20% of account owners are mobile bankers World retail banking report (Capgemini/EFMA) mobile emerges as key tool in fight for bank customers $14bn of payment volume on mobile (PayPal 2012) Over $10bn annual payment volume run-rate (Square January 2013) 2017: $1tr mobile payment volume (IDC, Juniper Research, Heavy Reading) By 2020, I predict that 50% of transactions across Visa s network will be from a mobile (Peter Ayliffe, President & CEO, Visa Europe) 45% of deals accessed via mobile (Groupon Q1 2013) Facebookmobile ad revenues zero to $374m in four quarters, 30% of total ad revenue (Q1 2013) Mobile continues to be a game-changer...a staggering surge in mobile shopping and payments on devices that did not exist just a few years ago (ebay CEO Q2 2012) 79% of smartphoneowners see themselves as smartphoneshoppers, and 90% use their phone for pre-shopping (Google Q survey)

18 Financial Institutions Customers already use their mobile apps a lot so extending the banking app to a wallet app seems natural Mobile Less fragmented, many users but apps are very low usage so far. No use case yet. Social Media and online advertising, new entrants Social networking, search, , are the highest use apps, so a major competitor, but both banks and retailers are suspicious, look at Google Wallet. Source: Monitise 18 Retail, Transport, Ticketing Many branded apps, supporting offers, promotions. Even Starbuck probably only has 2-3% penetration of regular users

19 POS Communications Technologies Location of Payment Credentials Payment Account Customer Interface NFC QR Codes Secure Element SIM Micro-SD Embedded Card Schemes Bank Account Mobile Wallet Owner s Brand (Google, MNO Wallet Schemes) Sound based Data SMS Cloud TEE MNO Single-Merchant (Starbucks) Issuer Brand (Bank, Merchant) Cloud / Various tokens 19 Multi-Merchant Scheme (MCX) Multi-Merchant 3rd Party Scheme (Paypal)

20 Samsung (&Visa): embedded secure elements in Android phones * Already in 2/3 of all NFC phones an embedded SE * Visa managed service running the show (Oberthur in the background) * Samsung holds the master keys for SE * MNOs have said they will block some non UICC SE s (like Google Wallet) Bankinter (&Visa): virtual card for mobile contactless payments * Mobile contactless payment & single use debit or credit card * One-time authentication * No need for MNOs or Handset vendor or Google: this is Bank-centric solution * EMV compliant from the POS side MNO-led model: UICC as SE Google Wallet: Combination of SE & Cloud * Google has a virtual card in the phone, while the card information is in the cloud * Embedded SE PayPal Mobile payments: No NFC * Various authentication methods * Targeting for high-street merchants USBank and GoMobile iphone NFC case (NFC micro-sd card in case) 20

21 Mission mpossible: mposrevolution and its consequences for traditional payments industry (April) Security issues in mobile wallets, from payments perspective (11 June 2013) Mobile Wallet Strategies for Banks (21 May 2013) Mobile Financial Terms explained: Cross-industry endorsed paper (11 June 2013) 21

22 Network with MFS experts: Our quarterly member meetings are conferencetype closed (members-only) events that offer an unmatched opportunity for networking with senior executives and hands-on experts from all areas of the MFS industry. For banks, by banks has been one of our often heard slogans. Learn the latest directly from the horse s mouth: Hear about the latest projects in MFS in our interactive sessions. Exchange ideas with specialists and have your questions answered by our speakers and panelists.our speakers regularly share advance information about upcoming projects and rollouts, and other information not usually shared at commercial events. Skip the marketing pitches: Our meetings are non-commercial and follow the Chatham House Rule* so you get to hear all the important information without the sales talks. Next meetings in Barcelona, Mobey Day, open to non members, June 11th. 22

23 2.1 bn transactions pa FIs 300+ FIs & Partners 20m Registered customers World leading partnerships 700+ Mobile Money Experts $31bn Value of payments & transactions pa

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NFC embedded microsd smart Card - Mobile ticketing opportunities in Transit July 2017 By: www.smk-logomotion.com Introduction Presentation is describing NFC enabled microsd smart card (LGM Card) Technical