20120903 mo mo mobile payments3 pwc

Mobile Payments in Germany State of the industry and key success factors

www.pwc.de

September, 3rd 2012

1 Market Update 1

2 Challenges, risks & key success factors 9

Seite Kapitel Überblick

Agenda

PwC

September, 3rd 2012

Market Update Kapitel 1

Mobile Payments in Germany • State of the industry and key success factors 1

PwC

September, 3rd 2012

Mobile payment in the media The number of co-operations, roll-outs and press releases concerning mobile payment is exploding.

Mobile Payments in Germany • State of the industry and key success factors

Kapitel 1 – Market Update

2

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September, 3rd 2012

Current payment products Chosen payment methods depend on the items purchased



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Virtual Currencies

Carrier based billing E-Wallet

Pre-Paid Cards

Mobile-based NFC

Card-based NFC

Mobile Money transfer

Account based services

Carrier based billing

Micro Payments

Bank Transfers QR-code based

payment

Mobile-based POS

Multichannel intl. remittance

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September, 3rd 2012

What is NFC? !  Short for Near Field Communication !  Uses interacting electromagnetic radio fields !  Short-range communication between electronic devices !  A vehicle for data transmission to make transactions,

exchange digital content, and connect electronic devices with a touch

Examples for mobile payment solutions (1/3) NFC gets an Olympic discipline in 2012.



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!  London is model city for NFC payments !  Athletes and other VIPs during the London 2012 Games will try out Samsung's Galaxy S III with

Visa's Paywave NFC payments !  NFC terminals on taxis, retail outlets, and the Olympic Park itself !  Visa expects there to be more than 140,000 contactless terminals in the UK !  How to use: Select the Visa icon on their device's screen and then hold the phone to a contactless

payment terminal to pay for a purchase !  Payments above £20 require entry of a PIN as an additional security layer !  app will also allow customers to check their transaction history and see their account balance.

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September, 3rd 2012

The goal is a more efficient payment process

Examples for mobile payment solutions (2/3) The Real Future Store uses the Mobile Shopping Assistant “MEA”.



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!  The MEA is a mobile phone with special software

!  customer scan products with their cell phone camera

!  MEA will show, for example, the current pricing information

!  MEA also helps to find products in the market and to create shopping lists

!  When the purchase is complete, the customer pushes a button on the MEA

!  the mobile phone displays a bar code

!  This barcode will be scanned at the pay points to the self-service fast cash.

!  the customer can pay cash, by card or fingerprint

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September, 3rd 2012

Examples for mobile payment solutions (3/3) Deutsche Bahn launches Touch & Travel.



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How to use it: !  register and install the Touch & Travel app on the phone !  Before each ride register with the phone. This can be done by:

!  Positioning !  Scan of the bar code printed on the terminal !  Entry of the printed number of the terminal !  Use of the NFC at the terminal

!  After signing up, customers have a valid ticket !  During an inspection the customer just has to show the cell phone to the security staff :

!  barcode on the control side of the app is read with the conductor´s control device and checks your ticket

!  With a NFC phone the ticket can be read directly without contact !  At the end of the trip the customer logs out with the mentioned variants again. !  The price of the trip is displayed on the phone !  Once a month the customer gets a Touch&Travel invoice !  The billed amount will be deducted from the customer´s account via direct debit

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September, 3rd 2012

The Mobile Payment Matrix An illustrative selection – not exhaustive

7 Mobile Payments in Germany • State of the industry and key success factors


Mobile Device

Paym

ent

Classic Use-Case: Any non-payment and non-mobile based use-case

generic Mobile Use-Case: A mobile device based non-payment use case

Classic & online Payment: A non mobile device applied payment method:

Mobile Payment: A mobile device based

payment method

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September, 3rd 2012

The Mobile Payment Matrix An illustrative selection – not exhaustive



Mobile Device

Paym

ent

Classic Use-Case generic Mobile Use-Case

Classic & online Payment Mobile Payment

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September, 3rd 2012

Challenges, risks & key success factors Kapitel 2

Mobile Payments in Germany • State of the industry and key success factors 9

PwC

September, 3rd 2012

Mobile payment in the media With the rise of the transaction volumes, mobile devices are becoming an increasingly lucrative target for hackers.


Kapitel 2 – Challenges, risks & key success factors

10

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September, 3rd 2012

What are hurdles of mobile payments? Despite the high expectations, mobile payments have not reached projected adoption levels. Some possible reasons:



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!  low manageability due to numerous isolated solutions

!  Registration and / or cash funding is required for every solution

!  This lack of cooperation between the main players, including banks, mobile operators, and independent providers, is the significant barrier to mobile payments success

!  Fears of cyber-crime !  Speculations about

security lapses in the NFC technology -> not yet fully developed?

!  All forms base on a full battery

!  Loss of mobile

!  the benefits of mobile payment

!  the different forms of mobile payment

!  what happens if the battery is empty?

!  Customers are afraid to get into a dubious subscription, especially if the charge is applied to their phone bill (e.g. ringtones)

!  Merchants have to invest in new terminals and train staff on this new payment mechanism

Security and

Operability Uncertainty Missing

standards Imple-

mentation

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September, 3rd 2012

How can we overcome this hurdles? Setting the accents and built trust



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•  BaFin „Banking licence“, FSA „E-Money Institute, etc. •  E-Mandats & SEPA •  EMD, EMD 2, PSD •  PCI DSS Compliance •  GWG, KYC, AML, ATF •  Tax Implications

Regulatory & Compliance

•  Payment Service Provider •  Card-Issuance (Debit/Credit/Prepaid-Card) •  Multi-Service Wallet (Payments, Couponing, Loyality,

etc.) •  Technologie (NFC, QR-Codes, etc.) •  POS Services (Mobile POS, etc.) •  Multichannel Integration (Store, Online, Mobile, Apps,

etc.) •  In-App Integration •  B2B, B2C, P2P Business

Innovation & Strategy

•  Platform technology selection •  In-house solution vs. cloud (PaaS/SaaS) •  Multi-Provider Interaction •  Risk-, Fraud- und Scoring Integration •  Merchant und User-Interfacing (APIs, UIs, etc.) •  Technical intgration of G/L and Sub-ledger •  Allocation of Customer Data

IT & Technology

•  Positioning of products and services (internally and to the market)

•  Market positioning, including additional services •  Generating of Synergies

Organization

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September, 3rd 2012

The growth of m-commerce makes mobile payments the next big thing! Worldwide mobile payment market is expected to have 448 million users and $617 billion in transaction value by 2016.



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Key Takeaways !  Many providers are entering the market, but there is currently no standard solution !  There are just a few global players that have the scale and resources to serve large customers and the mass

market !  Merchants have to adopt mobile and online strategies to ensure success in the changing market !  Mobile payments will sooner or later replace payments via credit card or cash !  For the transmission of payments Near Field Communication (NFC) will become increasingly important in the

future !  Bridge technologies like QR-codes and NFC-stickers are key to accelerate a solid market reach and train

customers and merchants

!  Retail spending habits are transforming !  Use of smartphones, e-commerce and m-commerce are growing exponentially !  54% of all purchases will be made in online by 2014 !  212.2 million m-payment users with a total of US $171.5 billion in transaction value in 2012 (Gartner, May

2012) !  SMS is expected to remain the key vehicle for m-payments in developing markets. NFC transactions will

remain relatively low through 2015, but will start to pick up from 2016 (Gartner, May 2012)

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September, 3rd 2012

Thank you for your attention!



Jens Kohnen Moskauer Str. 19 40227 Düsseldorf +49 171 760 4743 [email protected]

Raphael Heiner Moskauer Str. 19 40227 Düsseldorf +49 170 799 5582 [email protected]

20120903 mo mo mobile payments3 pwc

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