Disruption in Payments - PSE Consultingpseconsulting.com/wp-content/uploads/2017/08/7-Boku-Jon...2017/08/07 · Many iPhones do not have bank cards linked, limiting millions to free

© 2015, Boku Inc. All rights reserved • PROPRIETARY AND CONFIDENTIAL. ‘Boku,’ and ‘Pay by Mobile’ are registered trademarks of Boku, Inc.

Disruption in PaymentsNovember 2016

© 2016, Boku Inc. All rights reserved • PROPRIETARY AND CONFIDENTIAL. ‘Boku,’ and ‘Pay by Mobile’ are registered trademarks of Boku, Inc. 1

Visa, Visa Uber Alles• For 50 years cards have

been the dominantinternational form ofpayment

• Ever greater share ofconsumption

• Innovating to remainahead

– Embossed– Mag stripe– Chip– Contactless– Card on file– Tokenised



The Marketslove Visa andMasterCardHigh GrowthHigh MarginGlobal Scale


Film was ahigh marginbusinessKodak usedto dominate


By doing what theymust do to keeptheir marginsstrong and theirstock price healthy,every companypaves the way forits own disruption.

- Clayton M.Christensen


The Canaries




Strong in Anglosphere, US, Europe, Japan

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… China, India, Africa?


Everyone’s Taking a Piece of My Pie

• Consumer– Mobile: Apple Pay, Android Pay et al– Co branding

• Issuer– Transaction Processing: TSYS

• Scheme• Acquirer

– Transaction Processing: First Data• Merchant

– E-commerce: PSPs: Adyen, Ingenico– SMEs: ISOs: Paymentsense, Stripe– Micro-Merchants: Square, iZettle

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Innovators’ Dilemma

• Disruptive Technology oftendeveloped by incumbents

• Existing Customers don’t value it• Incumbents focus on sustaining

innovation• New entrants enter small fringe

markets• Changing the value proposition• Disruptive technology moves

upmarket• Established firms too late and too

slow to catch up.11


- Linda Evangelista

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I wouldn’t get outof bed for less than$10,000 per day


Payments Niches

• PayPal• …• PaymentSense, CardSave• Square, iZettle• Klarna• …• Boku

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Mobile Network Operators – Compete with Banks?

• 5bn phones – more than bank accounts

• All have a built-in payment function

• All have a built in authentication function

• Never leave the house without it

• Looked at c. 100 times a day

• Increasingly a medium for commerce

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Mobile Network Operator Infrastructure – Some Challenges

• No standards– Every carrier has a different system

• High fees:– In some countries 40%

• Slow payment– As slow as 200 days

• No reconciliation:– As high as 3% mismatch

• No rules– Chargeback and bad debts liability might

vary carrier by carriers

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Is This Some Kind Of Joke?

They laughed at us because we were differentWe looked at them and saw that they were all the same.

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Let’s Play Games

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• Worldwide customer base• 100% gross margin• $109bn market size• Need monetisation

• Learned that real value wasacquiring new paying users…

• … not moving money


Boku in Action: More Premium Subscribers for SpotifyBoku Account’s 1-tap Activation out-performs credit card usage

by up to 20% as a method of customer acquisition.


Boku in Action: More Paying Users for AppleMany iPhones do not have bank cards linked, limiting millions to free apps or forcing them to use

gift cards. The integration of Boku option allows more payments from more consumers.

“Maestri said there has been a big increase in the number ofpaid accounts on the App Store… [Maestri] explained thatthe growth is not just driven by more devices being sold andused, though that certainly plays a role. [Maestri] pointed toApple’s efforts to use alternative methods of payment on theApp Store–such as via users’ phone bills … –as enabling awhole new class of customers.”

-Luca Maestri*, CFO Apple

“In fact, the quarterly increase in the number of payingaccounts was the largest we ever experienced.”

-Tim Cook, CEO Apple

*as quoted in VentureBeat’s coverage of Apple Q3 2017 Earnings Call

Source: Apple Q2 2017 Earnings Call

neverpaid


Merchants and Carriers

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Illustrative list of carriers. No claim made about specific networks

The world’s largest digital companies connected to up to 3.2bn users in 50 countries


Average User Lifetime

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Momentum: Starting to Get Real TractionStrong User GrowthTPV run rate >$2bn

Transaction Growth Solid


EBITDA Positive

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Profit / (Loss) / transaction


So what does this mean for Visa?

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Taken alone, clearly not very much…

…but as one of a thousand such attacks?

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Mainframes:IBM

PC:Microsoft /

Intel

Mobile:Apple and

Google


Whither Visa?

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Documents

Disruption in Payments - PSE Consultingpseconsulting.com/wp-content/uploads/2017/08/7-Boku-Jon...2017/08/07 · Many iPhones do not have bank cards linked, limiting millions to free