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Status of Mobile Payments 19 September 2007

Status of Mobile Payments 19 September 2007. Eelco de Jong Senior Consultant. RFID Europe 2007. Introducing Thaesis. What we do We are a strategic consulting firm helping senior managers to to grow and innovate their business; and to navigate successfully in dynamic market environments

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Status of Mobile Payments 19 September 2007

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  1. Status of Mobile Payments19 September 2007 Eelco de Jong Senior Consultant RFID Europe 2007

  2. Introducing Thaesis • What we do We are a strategic consulting firm helping senior managers to • to grow and innovate their business; and • to navigate successfully in dynamic market environments • Who we are • Prof.dr. Theo Huibers (Managing Partner) • Dr. Bernd Wondergem (Partner) • Drs. Eelco de Jong MBA (Senior Consultant) • 5 consultants and back offie Source:

  3. “The convergence of payments and mobile communications is notjustlogical – it is inevitable” John Philip Coghlan, Visa USA CEO March 2007 Do you agree?

  4. Mobile payments is the future?

  5. Somequestions • When will NFC reach mass adoption? • Within two years (2009) • Three to five years (2010-2012) • Never • Which application will drive adoption of NFC technologie? • Mobile payments? • Mobile ticketing (e.g. public transport)? • Other (e.g. smart posters, loyalty, vouchering)? • No application

  6. What is…. • Contactless • M-wallet • Physical payment • POS • Remote payment

  7. Agenda • Introduction • Mobile payments 1.0: 2000-2005 • Mobile payments 2.0: 2006-2010 • Conclusion and summary

  8. Defining mobile payments Mobile Payments: • Use of a wireless communication device (such as a mobile phone) to make a purchase or other payment related transaction • Value: Low value (<5 €), Medium (5-25 €), High (>15 €) • Physical: With Point-of-Sale terminal (POS), or remote (no POS available) • Type of settlement: • Through operator (e.g Premium SMS) • Pre-paid wallet • Debit card enabling or credit card enabling Mobile Payments can be divided along multiple dimensions:

  9. Mobile Payments 2000-2005: Hard lessons learned….

  10. Summary Mobile Payments 1.0 in Europe 2000-2005 • Many early European mobile payment initiatives have failed • Main reasons for failure are lack of usability and lack of availability • Mobile payments 1.0 in Europe is dominated by Premium SMS • 20%-40% revenue share for telecom operators • In 2006 1 Billion Euro purchased through Premium SMS • Used by 60% of young consumers • Increasing consumer acceptance in niche areas such as m-parking • In Croatia more than 50% of all parking fees are paid by mobile phone • Europe is currently far behind Asia

  11. 2006-2010 will be the era of Mobile Payments 2.0

  12. Some Mobile Payments 2.0 initiatives in 2007 Belgium: operators launch SMS payment Norway: Telenor and banks launch BankID UK: Vodafone and Citigroup announce remittance venture Netherlands: NFC pilots with payments using credit and debit card UK: Combined Barclays and Oyster contactless card Germany: NFC implementation in public transport in Frankfurt area Austria: operator-owned Paybox grows to 300,000 mobile payment users France: NFC pilots in Caen, Strasbourg, Grenoble, Paris Croatia: 50% of parking fees paid by moble phone Italy: card issuer CartaSi launches ski pass payment service

  13. Mobile Payments 2.0 will be driven by four trends • Consumers who are adopting a mobile lifestyle • Mobile phones are including photo camera’s, MP3 players, etc • Superior usability for new services, enabled by NFC • NFC is easy, simple and convenient • The global mass adoption of contactless cards • Creating an infrastructure for NFC-enabled mobile phones • The evolution of “traditional” mobile payment 1.0 applications

  14. NFC Payments: Fast and Simple – Touch to Pay

  15. Consumers value NFC because it is EASY, FAST and CONVENIENT Consumer feedback:

  16. NFC will be a major driver for mobile payments • NFC will be a payment method for physical payments • Using the growing infrastructure for contactless cards • Leading to micro payments, for example with Mastercard Paypass, or direct debit • NFC will accelerate the growth of mobile ticketing • Including public transport, airline tickets and hotel check-in • Leading to more remote payments, both micro and macro • NFC will make it easier to download digital content on the phone • Leading to more micro-payments, for example with Premium SMS With NFC, payments with a mobile phone can be faster and easier than traditional payments such as cards and cash….

  17. NFC: A tremendous opportunity for cash displacement Profit decomposition of payments for European Banks: + 30,2 €Billion • Hugebenefits of cash displacement : • A 50% reduction of cash transactions will result in 10 €Billion annual savings for European banks • And potentially billions in new revenue streams -21,2 € Billion Cash payments Non-cash payments (credit/debit/transfer) Source: McKinsey Payment Practice (includes Germany, UK, France, Italy, Spain, Netherlands, Belgium, Sweden, Poland)

  18. 3. Contactless is moving towards global mass adoption • Major cities mass transit operators have migrated to contactless • Japan, South Korea, HongKong, Singapore, London, France • Netherlands will migrate soon to nation-wide system • Over 200 Million contactless transit cards • US and Asian banks are moving toward contactless payments • 50 Million contactless banking cards in circulation • 40,000 stores now accept Paypass, and growing • All new US Visa cards are contactless enabled • Growing acceptance of contactless among identification technologies • Supply chain management, access control, ticketing etc NFC Mobile handsets will utilize this growing global infrastructure

  19. What are the issues for mobile payments adoption? • The complexity of the ecosystem • Banks • Telecom operators • Handset manufacturers • Regulators • Merchants • Card institutions • Consumers • All these stakeholders will need to see the benefits • Standardisation (at national and international level)

  20. Summary and Conclusions • Since 2006 mobile payments are entering a new phase, driven by four trends: • Consumers are adopting a mobile lifestyle • NFC enables new consumer services on the mobile devices • The global mass adoption of contactless cards • Traditional mobile payment application are evolving • As a result, mobile payments are already becoming a reality in Europe

  21. “ The best way to predict the future is to invent it.” Alan Kay Eelco de Jong Senior Consultant E: eelco.de.jong@thaesis.nl M: +31-6- 1590 5506

  22. Appendix: NFC Pilots • C1000 Retail Stores, Netherlands • Caen, France • JCB Credit Card, Netherlands • Transport Ticketing, Grenoble, France • NFC Paypass, Dallas, USA • NFC HSBC Cards, USA • NFC Payments at Philips Stadium, USA • NFC Trial Hagenberg, Germany • NFC Payment trail, Strasbourg, France • NFC Transport Ticketing, Hanau, Germany • NFC Consumer Services in Cinema complex, Bangkok, Thailand

  23. Case Study: C1000 Retail Stores, Netherlands • Description: A number of NFC applications in the retail stores of C100, including payments, loyalty and information services. • Start: 2007 • Users: 100 • Key Words: loyalty, payments, information services • Handsets: Samsung • Operator Rabo Mobiel, KPN • Chip: NXP • Others: LogicaCMG, C1000 (Schuitema) • Source:

  24. Case Study: Payter • Description: Mobile payment pilot in Rotterdam, based on mobile-wallet application (pre-paid). Strong focus on developing additional services for consumer (loyalty, smart posters, vouchers). 30 stores participating in centre of Rotterdam. Planned rollout in 2008 • Start: 2007 • Users: 1000 • Key Words: loyalty, payments, information services • Handsets: Nokia 6131 NFC • Operator operator independent • Chip: NXP • Others: Equens • Source: www.payter.com

  25. Case Study: NFC Pilot Caen, France • Description: A number of NFC applications in the city of Caen, including payments at retailer Monoprix, parking, and tourist information. • Start: 2005 • Users: 200 • Key Words: ticketing, payments, information • Handsets: Samsung • Operator Orange • Chip: NXP • Others: Monoprix • Source:

  26. Case Study: NFC JCB Credit Card, Amsterdam, Netherlands • Description: NFC based credit card payments with JCB credit card at WTC in Amsterdam • Start: 2006 • Users: 100 • Key Words: payments, credit cards • Handsets: Nokia • Operator KPN • Chip: NXP • Others: JCB (credit card), Vivotech (contactless EMV readers), Gemplus (mobie payment application), PaySquare (merchant acquisition), CCV Holland (processing) • Source: http://www.mobiletechnews.com/info/2006/06/12/123126.html

  27. Case Study: NFC transport ticketing, Grenoble, France • Description: NFC based ticketing and information services for public transport in Grenoble. Secure element is stored in the SIM • Start: March 2007 • Users: 200 • Key Words: public transport, ticketing • Handsets: Sagem • OperatorBouygues Telecom • Chip: • Others: Gemalta (SIM card with Single-Wire Protocol), Inside Contactless, Sagem Communication, • Source: http://www.institutionnel.bouyguestelecom.fr/actu/c1_2.aspx?fUrl=/actualite/communiquesdepresse/cpdetail_2800.html

  28. Case Study: NFC Paypass in Dallas, USA • Description: NFC based payment with MasterCard Paypass card at Dallas • Start: 2006, • Users: 500 • Key Words: mobile payments • Handsets: Nokia 3220 • Operator Ztar Mobile • Chip: • Others: G&D (OTA personalisation and Paypass application), 7-Eleven, Bluko Information Group, People’s Bank • Source: Mastercard

  29. Case Study: NFC payments at HSBC Cards, USA • Description: NFC based payment with HSBC Mastercard • Start: 2007, • Users: 200 (HSBC employees) • Key Words: mobile payments • Handsets: Nokia 3220 • Operator • Chip: • Others: HSBC, Mastercard, Vivotech • Source: Mastercard

  30. Case Study: NFC Payments at Philips Stadium, Atlanta, USA • Description: NFC based payment with Visa at Philips Stadium in Atlanta • Start: 2006 • Users: unknown. • Key Words: mobile payments • Handsets: Nokia 3220 • Operator Cingular • Chip: NXP • Others: Chase (bank), Visa • Source: http://www.rfidjournal.com/article/view/2638/ • Video: http://www.youtube.com/watch?v=NpoK2ebF7Js

  31. Description: Various NFC applications at university, including access control, payments, loyalty and peer-to-peer. Start: 2006 Users: 100 Key Words: payments, acces control, loyalty Handsets: Samsung X7000m Operator Chip: NXP Others: University of Applied Sciences Case Study: NFC Trial Hagenberg

  32. Case Study: NFC Payment Pilot in Strasbourg • Description: NFC based payment pilot in Strasbourg, led by Credit Mutuel CIC. With EMV Payment Application in the SIM. Payments upto 200 euro at various locations, including restaurants. • Start: 2006, moving into next phase with SFR in 2007 • Users: Inititially 200, but growing. Initially 50 merchants. • Key Words: payment • Handsets: Sagem • OperatorSFR, NFJ Mobiel (MVNO) • Chip: • Others: Credit Mutuel CIC (bank), Gemalto (SIM with Paypass application), Inside Contactless (NFC Module), Mastercard Paypass, Sagem Monetel (payments terminal) • Source: • http://www.smartinsights.net/smart-card/index.php?2007/02/08/39-sfr-joins-in-credit-mutuel-nfc-trial

  33. Case Study: NFC Transport Ticketing in Hanau and Frankfurt • Description: NFC based ticketing for public transport passengers in Hanau and Frankfurt. Now expanding into broader information, loyalty, payment and ticketing applications, for example with the Erlebnis card • Start: 2005, now commerically available • Users: Inititially 200, but growing. • Key Words: public transport ticketing • Handsets: Nokia 3220 • Operator Vodafone • Chip: NXP • Others: RMV (Rhein-Main-Verkehrsverbund), T-Systems

  34. Case Study: NFC Consumer services in Cinema, Thailand • Description: NFC based consumer applications such as information, ticketing and marketing at cinema complex in Bangkok, Thailand • Start: 2007 • Users: Inititially 200, but growing. • Key Words: marketing, ticketing • Handsets: Nokia 3220 • Operator • Chip: • Others: PayZy

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