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NFC Survey ResultsThe Payment Industry’s Perception of
NFC in the U.S. Card Accepting Market
STRICTLY CONFIDENTIAL.
For discussion purposes only.
This Report, and all information, analysis andconclusions hereunder, is in all respectssubject to and governed by the terms andprovisions of the Engagement Agreementbetween The Strawhecker Group and theClient.© Copyright 2014. The Strawhecker Group.All Rights Reserved.
The information is based upon information we consider reliable, but its accuracy and completeness cannot be guaranteed.
PREVIEW
2Confidential. For discussion purposes only.
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Table of Contents
Introduction [03] – [03]
NFC Snapshot [04] – [04]
Survey Participant Snapshot [05] – [05]
Survey Results [06] – [24]
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• The content in this report provides readers with survey results that convey the perceptions that payments
industry professionals have on NFC technology. Users of this report may form their own interpretation of
these results as the report does not attempt to make claims or list implications
• 105 online surveys were completed in 2013 by participants from companies that included third-party
processors, merchant acquirers, payment technology providers, financial institutions, payment gateways,
and other payments-industry organizations
• The survey consisted of five sections including: demographics, market size, benefits, adoption barriers, and a
technology acceptance model to gauge how respondents felt overall about NFC becoming a mainstream
payment system
Introduction
This report examines the status and perceptions of near field communication (NFC) technology in the United States based on a survey of professionals in the electronic payments industry
NFC (near field communication) is a short-wave radio communications technology that provides a way for two devices to communicate small amounts of data when they are placed about four inches apart. NFC requires an initiator and a target. The initiator generates a radio frequency field with a 4 centimeter range – the target then picks up the frequency and receives the data it contains. Its’ appeal is that it is compatible and interoperable with other current systems, e.g. transit and security. In essence, it is not a new technology and works with existing hardware, secure elements and communication protocols
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NFC Snapshot – Other Findings to Provide Context to this Report
$
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37% Merchant Acquirer
Survey Participant Snapshot
39% C-Level or Executive
26% Senior Manager
22% Middle Manager
10% First Level Manager
3% Other
21% Processor
16% Technology Provider
7% Financial Institution
4% Gateway
15% Other
18% High
33% Medium-High
33% Medium
12% Low-Medium
4% Low
Who took the survey? Shown below are the 105 respondents’ role within their company, their company type, and how much they know about NFC
Company Role
Company Types
Knowledge of NFC
Note: completion of survey questions by respondents vary, each percent is calculated using the total answers provided in each category
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Key Findings: Technology Acceptance Model
Overall Findings – What Does the Payments Industry Think About NFC
Comments
PNVT = Perceived Net Value of Transition - does the effort needed to enable NFC outweigh the drawback of the effort?
PFV = Perceived Frequency of Value - will NFC be frequently useful or needed?
PMNV = Perceived Magnitude of Value - the overall perception of value
Technology Acceptance Model: an information systems theory that models how users come to accept and use a technology.
Methodology: The Technology Acceptance Model was completed using 20 questions across three sections that included a series of confidence checks to ensure that perceptions were accurately captured
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Participant Facts
Question Number of active ‘brick and mortar’ merchant outlets that your company currently has in its merchant portfolio?
105 online surveys were completed in 2013 by participants from companies that included third-party processors, merchant
acquirers, payment technology providers, financial institutions, payment gateways, and other payments-industry organizations
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Participant Facts
QuestionWhat is the average number of payment terminals deployed to each individual active merchant?
1Terminal
2 – 5 Terminals
6 -10 Terminals
11 -15 Terminals
16 -25 Terminals
26 -50 Terminals
51+ Terminals
% % % % % % %
QuestionWhat percentage of your deployed payment terminals are NFC contactless active?
(includes both NFC and conventional terminals)
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NFC Benefits
QuestionTo what extent do you agree that each of the next options will motivate the use of NFC contactless mobile payments?
Ease ofUse
Security
Shopping Deals
Loyalty
% Agree Group
% Neutral
% Disagree Group
% Agree Group
% Neutral
% Disagree Group
% Agree Group
% Neutral
% Disagree Group
% Agree Group
% Neutral
% Disagree Group
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NFC Benefits
QuestionTo what extent do you agree NFC contactless mobile payments will bring each of the benefits listed below to the payments industry?
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NFC Benefits
QuestionTo what extent do you agree that each of the verticals listed below will benefit from NFC Contactless Payments?
TSG’s Merchant Database of 2.1 million merchants
has hundreds of performance metrics on each of these merchant
verticals & more
click here to learn more
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NFC Benefits
Statement PresentedBased on your professional experience and knowledge of NFC Contactless Payments, to what extent do you agree this technology will be effective in terms of:
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Paymentterminal
Transaction Deployment Consumerconvenience
Faster POStransaction
times
Loyaltyprograms
Consumercontrolled
process
Speed oftransaction
NFC Benefits
Statement PresentedTo what extent do you agree that the following are significant promoters to the adoption of NFC contactless mobile payments?
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Costs Consumeracceptance
Merchantacceptance
Security & Fraud Common mobilepayment platform
Infrastructure
Entry Barriers
QuestionTo what extent do you agree that each of the next options represent a significant barrier to the adoption of NFC contactless mobile payments?
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Entry Barriers
QuestionTo what extent do you consider that the next options are perceived as significant security risks associated to the adoption of NFC contactless mobile payments?
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NFC Acceptance Views
Statement PresentedOverall, the payments industry is better off using contactless NFC technology
Comments
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NFC Acceptance Views
Statement PresentedOn the whole, contactless NFC technology is a valuable technology tool for payments industry participants
Comments
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NFC Acceptance Views
Statement PresentedThe effort required for deploying contactless NFC technology is/will be acceptable
Comments
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NFC Acceptance Views
Statement PresentedOverall, the benefits of contactless NFC technology outweigh its deployment efforts
Comments
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NFC Acceptance Views
Statement PresentedAs a payments industry participant we are willing to invest the amount of effort required towards the use contactless NFC technology
Comments
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NFC Acceptance Views
Statement PresentedContactless NFC technology will be my first choice for contactless payments
Comments
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NFC Acceptance Views
Statement PresentedI do not foresee abandoning contactless NFC technology in the near future
Comments
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NFC Acceptance Views
Statement PresentedAs a payments industry participant we are willing to invest the amount of effort required towards the use contactless NFC technology
Comments
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NFC Acceptance Views
Statement PresentedBased on my exposure to NFC contactless mobile payments tool, I am confident about my above answers
Comments
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Research Analyst,` Nancy Jimenez
Nancy Jimenez has completed two masters programs during her time at the University of Nebraska,
including a Master of Science in Economics and a Master of Science in Management Information
Systems. Nancy partnered with TSG on NFC research while completing her thesis as a Graduate
Research Assistant. Content inside this report is derived from her project, Jimenez, Nancy M. “U.S.
Merchant Adoption of Contactless Mobile Payment Technology: Near Field Communication.” The
abstract of this thesis and the names of the individuals involved is available via ProQuest at this link:
ProQuest Citation/Abstract
Research Analyst Bio
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Chuck Fillinger
Chuck Fillinger, a Senior Associate of The Strawhecker Group, has substantial experience in the Electronic Payments Industry with over 25 years of experience, most recently with First Data Corporation. He has proven results working with merchants within all vertical retail and internet markets, vendor’s, gateway providers and acquirers, providing enhanced payment processing solutions on a national and global scale. More about Chuck Fillinger
Cliff Gray
Cliff Gray, a Senior Associate of The Strawhecker Group, is an expert in electronic payment systems, transaction processing, and the acquiring space. He is a leading authority on large-scale, high-performance payment system design, including network infrastructure, platform and software architecture, system security, and industry compliance. Throughout his 20-year career, Gray has spearheaded the evolution of third-party integration methods, particularly the introduction of internet transport into the electronic payment space. He has long been a proponent of modernizing integration, and most recently is focused on payment data security. More about Cliff Gray
John Kirkpatrick
John Kirkpatrick, Senior Associate of The Strawhecker Group, brings more than 29 years of leadership experience developing and implementing complex global business strategies for companies of all sizes using his extensive knowledge of technology valuations, gateways, and back-ends. Before joining TSG, Kirkpatrick was the Chief Information officer for six years at TransFirst where he oversaw the company's information and technology, including payment gateways and all aspects of transaction processing such as security, financials, data center operations, software engineering, quality assurance and complex data analytics. More about John Kirkpatrick
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Comparable Company AnalysisAbout TSGThe Strawhecker Group (TSG) is a management consulting company focused on the electronic payments industry.
TSG’s Service GroupsPayments Strategy - Payments Strategy encompasses the full spectrum of advisory services within the Payments Industry. The depth of these services is built on deep industry knowledge - the Partners and Associates of the firm have an average of over 20 years of industry experience. With clients from card issuers to merchant acquirers, TSG has the experience and expertise to provide real-time strategies.Transaction Advisory - Whether buying or selling, seeking investment funding, or planning your company’s exit strategy, TSG’s experience can be critical to achieving success. TSG has performed more than 100 Payments Company Valuation and/or Business Assessments in the past three years - ranging in value from $1 million to $1 billion.TSG Metrics - TSG Metrics, the strategic research and analysis division of TSG, provides the Payments Industry with highly focused research and industry-wide studies. TSG Metrics takes data, boils it down to information, transforms it to knowledge and presents it to provide wisdom to its client partners.
TSG’s Unparalleled ExperienceTSG consists of Industry leaders with extensive experience leading teams through explosive growth periods, mergers and acquisitions, and international and domestic expansion within the Payments Industry. Both Partners and Associates of the firm have held key senior management positions at leading industry companies including First Data / First Data International, Visa Inc., MasterCard, TSYS, Humboldt Merchant Services, WorldPay, Heartland Payment Systems, Cardservice International, iPayment, Alliance Data, RapidAdvance, Accenture Consulting, Redwood Merchant Services, Chase Paymentech, as well as other leading financial institutions and Payments companies.
TSG’s Influence Shapes the Payments IndustryOver the last three years, TSG has completed over 400 projects for more than 200 different clients including financial institutions, merchant acquirers, card issuers, card associations, technology providers, ISOs, processing companies and the investment community. Additionally, the firm and its Associates sit on several industry committees whose focuses range from emerging product development to governmental regulation advisement.
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