State of Mobile Paymets Tom Zalewski Aiko Cosultig Dallas, TX
Ageda Mobile Paymets, The ad Now Itroductio of NFC for Mobile Paymets Some Key Fidigs Requiremets ad Resultig Ecosystem Provisioig ad Life Cycle Maagemet Implicatios ad Value for Public Trasit
Rewid a Decade Before jumpig ito the state of Mobile Paymets ad the curret Ecosystem, it is valuable to uderstad: Pre-Near Field Commuicatio (NFC) cotactless paymets The model(s) ad requiremets The stakeholders What did ad what did ot work This will help to explai: Why we are where we are today New capabilities, models ad the requiremets that will help NFC succeed for public trasit Why the ew stakeholders exist i the ecosystem The all importat ed-user acceptace viewpoit
TIME Magazie, November 200
Trials, Trials ad More Trials Call Waitig: A Cell Phoe ATM by Lisa Nadile 2:00 a.m. Ja. 6, 200 PST Grabbig a burger is gettig easier. Soo you will just have to wave your cell phoe as you pass McDoald's drive-through. Immediate gratificatio is always the best marketig tool. Nokia (NOK) is testig a ew SmartCover for its 500 Series Nokia i U.S. m- commerce trials Jørge Sudgot, ifosyc, 05.0.0 Nokia, Texas Istrumets ad 2Scoot are joiig phoes that will act just like a debit up to coduct trials of cashless m-commerce card. paymets with two atioal quick-serve restaurat chais i the U.S., usig a Nokia 500 with a SmartCover. M-commerce has log bee promised both by phoe maufacturers, applicatio providers, retail chais ad umerous others, but util ow there has bee little or othig to show for all the promises made. Lately though, thigs have begu speedig up, ad ow Nokia has aouced mobile Nokia ad 2Scoot to Test New Wireless E-paymet Techology What will attract cosumers ad busiesses, alike, to m-commerce services is proof that they offer coveiece ad high-level security. Kowig this, Nokia ad 2Scoot have joied forces to trasform Nokia s 500 Series Smartphoes ito trusted paymet devices. CELL PHONES TAKING PCS, E-COMMERCE, TO NEXT LEVEL...Nokia's m-commerce effort might be eve more tatalizig, ad closer to becomig reality. By Jo Fortt Sa Jose Mercury News Jauary 29, 200
Key Cotactless Trials i NA 200 Embedded RFID traspoders usig a closed paymet system 2003 MasterCard PayPass with SMS merchat messagig platform 2005 First NFC trial (o OTA) with Service Discovery 2006 First NFC trial with both OTA provisioig & prepaid cellular service 2007 Larger scale NFC OTA trial icludig PayPass compatible Trasit -Traspoders i covers -Stickers / tags -SMS merchat messagig 3 200 2003 2005 2007 -Iitial NFC i phoe shells -No OTA NFC -Service Discovery -Fully itegrated NFC -OTA, prepaid optios -Mobile software & Apps
Pre-NFC Cotactless Paymets Cotactless tags or chips were used as a toke to lik to paymet accouts o closed loop systems, as well as store card holder data via products such as MasterCard PayPass Leverages phoe s ability as a Coected Toke allowig merchats to sed coupos & advertisemets to the cosumer usig a custom messagig platform No ability to have multiple paymet or loyalty / membership services o the phoe (multiple applicatios) due to a sigle- applicatio tag No ability to lock the tag (phoe) No active OTA updates ca be doe oce provisioed tag is issued Key Fidigs Alterate mobile paymet solutios must be easier tha existig paymet methods to have widespread adoptio by cosumers This still holds true today with NFC Simple, Reliable ad Secure are madatory features for adoptio
2003: Desired Cotactless Paymets Improvemets ATM use Multiple cards o oe chip Access accout activity/balaces o cell phoe Ideal Mobile Paymets Cell Phoe Sed accout iformatio wirelessly whe purchasig o phoe Frequet purchase programs Notificatio whe ear store Coupos GPS Itegrate mobile paymets features with other features
Eter NFC Card Emulatio capability Also allows the paymet applicatio ad paymet data to be updated OTA as eed Supports multiple paymet ad coupoig / loyalty applicatios, membership services, access cotrol, etc Adds additioal security Plus Reader mode capability Plus Peer-to-Peer bi-directioal data trasfer capability Local Mobile Paymet Readig NFC Tags to Access Iformatio Peer-to-Peer Commuicatio
Early NFC Key Trial Fidigs Maual provisioig of NFC mobile phoes is ot scalable Numerous distributio logistics issues, as there are may phoe models (with several operatig systems) to support, all with very short life cycles OTA provisioig is ecessary but must be streamlied Leveragig cellular coectivity is ecessary to update paymet applicatios, top-up prepaid, Lock/Ulock/Delete cards ad applicatios, etc Lack of OTA capabilities limits busiess model ad reveue geeratio opportuities for all stakeholders OTA does itroduce more stakeholders ito the ecosystem Streamliig OTA process is critical for cosumer adoptio Cosumers like the ability to obtai cotet by simply wavig their phoe over a smart poster or couter card
2007 Trasit NYC Trial Trail ra Jauary to Jue with 300 participats i NYC area Icluded Trasit, service discovery ad retail purchasig Stakeholders icluded Citi, MasterCard, Cigular (AT&T), Nokia, MTA, ad Veyo Best user experiece to date with the Nokia 63 itegrated NFC phoe Key Fidigs Close collaboratio betwee stakeholders made trial success possible Drug Stores by far the most popular locatio to use the NFC Phoe with Commuter Subway Nearly all respodets said they took the NFC Phoe with them everywhere they wet Nearly all respodets would use a NFC phoe whe commercially available
Early Cosideratios / Challeges Predictability, usage treds ad expectatio settig Peetratio Forecast of Global Hadset Sales Coservatively estimated 0% NFC mobile device peetratio by 2009 20% by 200, Strategy Aalytics 50%, ABI Research
Curret NFC Ecosystem Mobile Network Operator Mobile Phoe Maufacturers Card Associatios Ed User Trasit Agecies Fiacial Istitutios Retailers 3 rd Party Services Trusted Service Maager Customer Service* *TSM, MNO or FI may hadle CS fuctio Applicatio Issuers
Applicatio Providers Need to Quickly, Seamlessly & Cost Effectively Provisio Their NFC Applicatios APPLICATION PROVIDERS CONSUMER DEVICES TRANSIT SYSTEMS CARD ISSUERS RETAIL 2 2 2 MANY TYPES OF MOBILE DEVICES USING DIFFERENT OPERATING SYSTEMS OPERATING ON MULTIPLE CARRIER NETWORKS HOTEL, B2B, STADIUMS 2 X 00 s MILLIONS
A Cetrally Positioed Trusted Third Party Ca Esure Cosistecy ad Reliability APPLICATION PROVIDERS CONSUMER DEVICES TRANSIT SYSTEMS 2 CARD ISSUERS 2 TRUSTED SERVICE MANAGER RETAIL 2 HOTEL B2B STADIUMS 2 CONCEPTUAL ARCHITECTURE X 00 s MILLIONS
I Reality There Will Be Multiple TSMs APPLICATION PROVIDERS CONSUMER DEVICES TRANSIT SYSTEMS 2 S P OEM ISSUED CARD ISSUERS 2 S2 P2 P3 MNO ISSUED WEB SERVICES ISSUED RETAIL HOTEL B2B STADIUMS 2 S SECONDARY TSMs P PRIMARY TSMs 3 RD PARTY ISSUED 2 X 00 s MILLIONS PRACTICAL ARCHITECTURE
Movig Forward with Mobile Paymets i Trasit NFC phoes will come from various wireless operators (or OEMs) with varyig levels of cotrol over the NFC fuctioality, either directly or idirectly through TSMs Uderstadig the parties ivolved i the NFC ecosystem ad busiess models optios available for icorporatig support of NFC phoes ito existig fare collectio systems is critical The busiess models or techology does ot matter if ed users do ot adopt services ad solutios preseted to them Alterate form factors by themselves are ot icetive eough to chage cosumer behavior, there must be clear beefits to the ed user while providig cost reductio for trasit agecies
Curret Cosideratios / Challeges Busiess models How will icorporatio of NFC mobile paymets ito fare collectio geerate additioal reveue? Will mobile paymet eablemet simply provide cost reductio Parter Cooperatio Multiple parties ad their uique cocers Secure remote maagemet of paymet credetials o a Mobile Computer Always coected, ogoig risk of malware, hackig, etc Coordiatio with multiple stakeholders over life cycle of device Requiremet for a Trusted Third Party resposible for overall maagemet of the mobile devices NFC operatio Stadardizatio ad Iteroperability Acceptace requiremets ad certificatio
Key Cosideratios ad Decisio Poits First ad foremost is offerig the best Mobile experiece o the mobile phoe, be it fully itegrated NFC or a iterim bridge solutio Defie Use Cases you wat to support Decide o User Base maagemet ad optios for each segmet For example, issuig of tags may help leverage the ubaked market who may ot have NFC phoes or the data services required to maage them How best to support multiple Prepaid optios Top-up platform optios ad cross-compatibility with similar services Other cosideratios Compatibility with other trasit systems, etertaimet veues, etc Stad-Aloe mobile applicatios that ca augmet trasit service ad/or fare collectio regardless of the level of mobile device itegratio
Additioal Decisio Poits Itegratio of support for NFC devices ad related services:. I-house developmet Purchase off-the-shelf platforms ad Maage i-house, or Operate usig a existig trusted ad capable parter 2. Services hosted by a Trusted Third Party (TSM) who may or may ot already have existig busiess relatioships with NFC phoe issuers (i.e. wireless carriers/mnos or OEMs) It is key to have the ability to both offer additioal services ad easily replicate trasit applicatios for lost or stole phoe searios Sufficiet data collectio ad remote applicatio maagemet are a few areas to be evaluated
Questios & Aswers
Thak You Tom Zalewski Aiko Cosultig, LLC www. AikoCosultig.com tom@aikocosultig.com