Mobile Commerce Payments

European Market

Ben Donnelly, Wireless Telecoms Analyst

Frost & Sullivan

www.wireless.frost.com

Agenda

• Introduction to Frost & Sullivan’s Wireless Research

• Overview and Definition of Mobile Payments• Market Drivers and Restraints

• User Perspective and Forecasts

• Leading Mobile Payment Case Studies

• Conclusions

• Question & answer

Introduction to Frost & Sullivan Wireless

Research

Frost & Sullivan Wireless Research

• Short range research topics in 2002Wireless LAN, Bluetooth market service.

• Cellular research topics in 2002Mobile Commerce Payments.Enterprise End-User Study.SMS & MMS Messaging.Entertainment and Multimedia Services.Financial Services.Portals.

www.wireless.frost.com

Mobile Payment Overview and Definition

Overview and Definition• Mobile Commerce Payments are...

“...monetary transactions that involve the use of a mobile device at some stage in their execution.”

• They can be used in a variety of situations:Shop, taxi, pizza delivery or other retail outlet.Vending or ticketing machine, parking meters etc.Fixed internet sites.Mobile internet (WAPsites).Between individual people.

Overview and Definition

• Variety of procedures...Require both merchant & customer to be pre-registered.Can use mobile phone bill; existing bank or credit card account or special deposit account.

• Example procedure:Automated account

transfer from existingbank or credit card. Merchant Customer

Payment

provider

1

2

3

4

7

7

Bank / CC

server

5

6

7

Mobile Payment Drivers and Restraints

Consumers’ perspective

• DriversLifestyle convenience.

Alternative payment option.Increased security.Spontaneous and impulse purchasing.Merchant incentives.

• RestraintsAccessibility and ease of use of payment method.

Associated cost.

Low awareness & security concerns.

Merchants’ perspective

• DriversNew channels to existing customers.

Larger addressable market.Increased sales.Improved brand image.Cost reductions.

• RestraintsApprehension of technology.

Related costs.

Low awareness & security concerns.

Operators’ perspective

• DriversNew revenue sources.

Competitive advantage.Reduction in customer churn.Can easily extend existing billing systems.

• RestraintsFocus on shorter-term initiatives.

Traditional unwillingness to partner with banks.Counterparty roaming risks.

Banks & credit cards’ perspective • Drivers

New service channel.

Value added service.Cost reductions.Improved brand image.Fear of losing control of payments industry.

• RestraintsRegulation.

Slow to move & cautious of new retail technology.Other shorter-term priorities.

Mobile PaymentUser Perspective and Forecasts

User Perspective and Forecasts • Mobile Commerce segmentation

MOBILE COMMERCE

Mobile content &

services

Real-world goods & services

Mobile channelled

(eg: news, games, city guides etc)

Mobile specific

(eg: ringtones,

logos)

Internet Peer to peer POS

Mobile accessed internet

(eg: WAPsite)

Mobile assisted internet

(eg: call-back, email bill payment)

Attended POS

(eg: shop, taxi, restaurant)

Automated POS

(eg: vending, parking meters)

• Methodology summary:Each user payment scenario considered independently.

Influencing factors & how they change over 5 years.Payment provider activity and expected strategies.Comparison with uptake of online retail commerce.Socio & demographics of consumers & spending patterns.

User Perspective and Forecasts • Mobile Commerce Payment Expenditure

EUROPEAN MOBILE PAYMENT EXPENDITURE (2001 - 2006)SEGMENTATION BY USER SCENARIO

0

5

10

15

20

25

30

2001 2002 2003 2004 2005 2006

$US BILLION

AUTOMATED POS

ATTENDED POS

PEER TO PEER

MOBILE-ASSISTED INTERNET

MOBILE-ACCESSED INTERNET

User Perspective and Forecasts • Mobile Commerce Payment Expenditure

Comparison with expected online retail expenditure.

MOBILE COMPARED TO ONLINE PAYMENT EXPENDITUREEUROPE (1999 - 2006)

0

20

40

60

80

100

120

140

160

1999 2000 2001 2002 2003 2004 2005 2006

0

2

4

6

8

10

12

14

16

18

MOBILE AS PERCENTOF TOTAL ONLINEEXPENDITURE

$US BILLION

ONLINE PAYMENTS

MOBILE PAYMENTS (excluding mobile content)

Leading Mobile Payment Case Studies

Mobile Payment Case Studies

• Bankpass Mobile

• EMPS

• Mint

• MobilMat

• Mobipay

• Omnipay

• Orange Mobile Payment

• Paiement CB Sur Mobile

• Paybox

• Payline

• Sonera Shopper

• Streetcash

• Telepay

Leading Mobile Payment Case Studies• Mobipay

First inter-operator AND inter-bank alliance.Should do well in Spain, if marketing is properly addressed.Potential to expand into other countries.

• PayboxFirst international commercial mobile payment company.Success in Germany (however unique market because of low credit card use).Needs to offer more customer promotions to encourage usage.

Conclusions

Conclusions • Existing technology is sufficient

Main challenges are attracting consumers and merchants.

• Genuine market demand, long term opportunityMany user and merchant benefits, but also ignorance and apprehension. Think back to introduction of credit cards.Stakeholder marketing is critical to success.

• Many different pilot trials, small startups & forumsIn general operators and banks are involved in proprietary trials. Many industry forums some with very similar objectives.

Conclusions (cont.) • Collaboration is essential

Interoperability between systems is absolutely necessary.Collaboration between operators, banks, forums etc is essential to speed up development and time to market.

• Foundations for success already being established Although many banks and operators are focused on shorter-term priorities, the future success stories are going to be those companies acting now.

Thank you for listening!

Any questions...?

www.wireless.frost.com