EXPAND & MAINTAIN VISA’S LEADERSHIP
IN eCOMMERCE
AGENDA
• eCOMMERCE & PAYMENT INTRODUCTION
• VISA: STATE OF THE ART
• eCOMMERCE: SCOPE & STAKES
• ePAYMENT: GROWTH DRIVER & ECOSYSTEM
• VISA CENTRIC: RISK & MITIGATION
• RECOMMENDATION & CONCLUSION
INTRODUCTION: eCOMMERCE SCOPE
• e-Commerce’s definition by the US department of Commerce:
" e-commerce is the online transaction of business, featuring linked computer systems of the vendor, host, and buyer. Electronic transactions involve the transfer of ownership or rights to use a good or service."
• e-Commerce market & evolution:
- Global e-commerce sales are growing at
more than 19% a year
- Worldwide retail web sales will reach
nearly one trillion by 2013
Source : Goldman Sachs, Sales in billion of dollars
INTRODUCTION: ePAYMENT SCOPE• e-Payments are online payments dedicated for eCommerce activities
• e-Payment is divided into two main categories: - Bank payment
- Alternative payment : 10% in transaction volume of Bank market Share (Capgemini analysis 2011)
• But e-Payment has to be approached ‘locally’ (by country) to understand specificities: FINLAND Vs FRANCE
ONLINE PAYMENT REFERENCE
Source : CyberSource Global Payment options 2011
AGENDA
• eCOMMERCE & PAYMENT INTRODUCTION
• VISA: STATE OF THE ART
• eCOMMERCE: SCOPE & STAKES
• ePAYMENT: GROWTH DRIVER & ECOSYSTEM
• VISA CENTRIC: RISK & MITIGATION
• RECOMMENDATION & CONCLUSION
VISA EUROPE: STATE OF THE ART
• 11.4 Bn processing transactions: issued, cleared & settled
• 99,999% service quality and 100% availability
•Target: increase brand and consumer awareness as the safest payment system
‘THE’ TRUSTED PAYMENT SYSTEM INNOVATION
• 26 millions of contactless cards issued
• 100 millions invested in R&D in 2011 accelerate the contribution of electronic payment in Europe
• Target: develop and simplify : mobile, online & contacless payment
LEADER
• Everyday €1 of every €5 is expended on a Visa Card
• 438 millions of debit & credit cards in circulation in 2011 for 1.14 trillions expended in PoS
• Target: increase eCommerce, Card
& PoS market share
VISA INNOVATION: ONLINE & MOBILE
• Online: V.me - Make online payment with VISA expertise with or without a Visa card
- Multi-platform solution: available on computer, mobile and tablet
- Competing now with Paypal (soon in France)
• Contactless: - Visa payWave is the easiest way to pay for low-value
- Nice city experimentation
- Currently building an ecosystem with local actors of transport, ticketing, etc...
• Mobile & partnership: - Google Wallet involvement
- Visa Wallet integrated in the V.me solution
- Expansion of V.me to mobile an in-store payment using near field communication
VISA’S POSITION IN eCOMMERCE
Client SearchSupport eMerchant
PSP
Alternative
eWallet
Flow Bank Delivery
Partnership
Consumer workflow:
presence:
SMS, alert
direct or indirect solutions:
PartnershipOlympic games
AGENDA
• eCOMMERCE & PAYMENT INTRODUCTION
• VISA: STATE OF THE ART
• eCOMMERCE: SCOPE & STAKES
• ePAYMENT: GROWTH DRIVER & ECOSYSTEM
• VISA CENTRIC: RISK & MITIGATION
• RECOMMENDATION & CONCLUSION
eCOMMERCE: FOCUS ON EUROPE MARKET
• 40% of the European population buy on-line, but already 70% in some countries (France, Germany,...)
• eCommerce in 2012: 16% growth expected in Europe, 22% in France
• eCommerce in Europe is worth over €307 billions
Source : Nielsen Online, December 2011
eCOMMERCE: EUROPEAN GROWTH PERSPECTIVES
• eCommerce in Europe currently limited to 3.4% of retail sales
• Only 57% of Europe’s internet users buy on-line vs 66% in the US and 94% in South Korea
• Only 14% of European companies sell their goods or services online
• eCommerce is still a local industry: only 6% of European businesses sell cross-borders
Source : European Commission January 2012
eCommerce in Europe has still a great potential of growthEurope is currently the largest eCommerce market in the world
eCOMMERCE: SWOT ANALYSIS
• Companies expand their customer base to a global level
• The target consumer has huge possibilities
• Direct consumer communication
• Customer & eCommerce need to trust each other• Web retailers live and die by organic search engine placement• The closer consumer is of payment, the acquisition cost increases
• Take orders around the clock on every day• Retail sales have seen double digit growth each of the past 8 years• Sell products to a global market
• Hard competition due to a relative easy entry into the market• Some consumers are leery of doing business online out of concerns of fraud• Some consumers prefer not to give any personal information
AGENDA
• eCOMMERCE & PAYMENT INTRODUCTION
• VISA: STATE OF THE ART
• eCOMMERCE: SCOPE & STAKES
• ePAYMENT: GROWTH DRIVER & ECOSYSTEM
• VISA CENTRIC: RISK & MITIGATION
• RECOMMENDATION & CONCLUSION
ePAYMENT: ALTERNATIVE PAYMENT& LOYALTY PLAN
• The entry of prepaid (non-bank) specialists into the payment ecosystem will improve and satisfy the overall quality of service for the customer experience
• Main alternative means of payment are: - Pre paid & loyalty cards- eWallet- P2P transfer
• Alternative payment market will reach 70 Billions€ in Europe in 2015
• Mastercard Europe & Accor have created a specific company to target this market: PrePay Solutions
Source: Limonetik 2011
ALTERNATIVE PAYMENT PERSPECTIVES
LIMONETIK SOLUTION FOR EMERCHANTS
ePAYMENT: SOCIAL PAYMENT• 901 millions members
• Facebook credit have been launched in 2009 and recently Facebook gave up this credit system
• Simplify the consumer experience is the leitmotiv of this change, Facebook will accept local currency
• A new solution of subscription will be soon be settled
• Is it a first step to anticipate lower value payment & NFC/eWallet ?
ePAYMENT: NFC MARKET
PROS
• Benefit from an ecosystem and its branding (e.g., Cityzi logo)
- High level of security on payment
• Similar to traditional smart cards
CONS
• Very limited audience
‒ phone, sim card, and subscription are all specific
• Cannot be done rapidly
‒ dependence upon consortiums/partnerships
• Risk of confusing users (tap to pay vs tap to get info)
• Technology cost quite elevated
GLOBAL NFC HANDSET SALES: % OF TOTAL
Source: Strategy Analytics 12 2011
ePAYMENT: NFC PERSPECTIVES
• Operators (Orange / SFR / Bouygues)
• Provides specific NFC phones
• A preinstalled Cityzi app allow access to services
• Provides specific SIM card
• Charges small expenses on telephone bill
• ST2N: buy tickets and validate Payments above 10 euros need a subscription too
• Banks: payment applications similar to traditional debit card
CIC m-carte Visa
BNPP « KIX »
• Couponing / Loyalty programs Collective scheme (e.g. Carte Magique) Chains (e.g. La Croissanterie)
USER SUBSCRIBESTO INDIVIDUAL SERVICES
USER SUBSCRIBES TO CITYZITHROUGH HIS OPERATOR1 - 2 -
ePAYMENT ECOSYSTEM
CONSUMERS
MERCHANTS
Source : Payfirma Payment ecosystem 2011
AGENDA
• eCOMMERCE & PAYMENT INTRODUCTION
• VISA: STATE OF THE ART
• eCOMMERCE: SCOPE & STAKES
• ePAYMENT: GROWTH DRIVER & ECOSYSTEM
• VISA CENTRIC: RISK & MITIGATION
• RECOMMENDATION & CONCLUSION
VISA: GEO/DEMOGRAPHIC RISK• A major risk is to underestimate the
growth of eCommerce in emergent markets
• This increase is strongly correlated to the penetration of PC/mobile
• Example :
UnionPay (China) is now the largest payment card company in the world, issuing three of every ten cards worldwide
VISA: OPERATORS RISK
• Internet + initiative in France allow all fixed and mobile operators to provide inBill payment for low value amount (under 10€)
Initiatives of the operators are varied but bounded geographically
• Ireland: Vodafone launched in-bill app payment which encourages downloads. Mobile operator lets Nokia,BlackBerry and Android users pay for apps via their invoice
• Push the SIM centric approach for NFC to keep customer value by proposing NFC services of third Service Provider
VISA: SECURITY VS USER FRIENDLINESS RISK
• The process of collecting and processing online payments is confusing. There are many parties involved and the fees can be difficult to decipher
• 3D Secure initiative : create an additional client authentication providing a payment guaranty for authenticated transactions and blocking chargeBack
• Verified by Visa and MasterCard SecureCode cause higher abandon rates
The payment procedure has to remain a compromise between the accepted risk and the user-friendliness
VISA: THE eWALLET-GATE
Client SearchSupport eMerchant
PSP
Alternative
eWallet
Flow Bank Delivery
Consumer workflow:
eWallet example from payment workflow:
75% of ePayment actors are launching their own eWallet
Apple already knows 200 millions iTunes users with Card identification
eWallet wil l be released in 2 0 1 2 i n Europe
Google Wallet is an app that makes your phone your wallet with Citi, MasterCard, Sprint & Visa
Apple has recently announced the futur the creation of an eWallet in iOS6
Because banks know their client, e W a l l e t o r complementar y s e r v i c e s a r e launched
Clear positioning on ePayment with the launch of the kindle
AGENDA
• eCOMMERCE & PAYMENT INTRODUCTION
• VISA: STATE OF THE ART
• eCOMMERCE: SCOPE & STAKES
• ePAYMENT: GROWTH DRIVER & ECOSYSTEM
• VISA CENTRIC: RISK & MITIGATION
• RECOMMENDATION & CONCLUSION
eCOMMERCE RECOMMENDATIONS
STAYCONSUMER
CENTRIC
BRING VALUE TOeMERCHANT
DEVELOPmCOMMERCEECOSYSTEM
DIVERSIFY
MID TERM ECOSYSTEM
To maintain their relationship with customers, global operators are seeking to become trusted enablers
Content&
ServicesAdvertising
Access&
Traffic
TrustedEnablers
LONG TERM
What will be ePayment/mPayment in 5 years ?
What are future authentification means ?
How to handle new Actor / Risk ?
What if the younger generation no longer need bank account ?
STAYCONSUMER
CENTRIC
BRING VALUE TO
eMERCHANT
DEVELOPmCOMMERCE
ECOSYSTEMDIVERSIFY
RECOMMENDATIONS
• Push your easy solution to integrate : V.me to the market with support & communication
• Propose more guarantees/services for eMerchants
• Offer more attractive rates than PayPal
• Create a one click registration
• Propose more services for consumers
• Reward consumers for their adoption and loyalty to use the new V.me solution
• Create partnership or joint venture with a major prepaid European actor (like playSpan acquisition in the US)
• Climb the value chain up to delivery with partnership
• Strength relationships with manufacturers
• Build your ecosystem of services
• Regularly invest into A & B Series fundraise payment solution (Limonetik)
• Launch as soon as possible an operation with successful mCommerce eMerchant: Vente-Privee.com , Groupon
THANK YOU
ANNEXES
MARKET OVERVIEW
• Business to business (B2B)
• Business to consumer (B2C)
• Consumer to business(C2B)
• M-commerce
• l-commerce or location base commerce
• Business to employees (B2E)
• Collaborative commerce(c-commerce)
• Consumer to consumer (C2C)
Classification by the nature of transactions: a wide range of models
ePAYMENT MAPPING
Bank as trusted party Non-Bank as trusted party
Plat
form
Cen
tral
GLOBALISATION TECH
NO
LOG
Y
Peer
-to-
Peer
Dec
entr
al
FRENCH USER’S: DIGITAL PROFILE
Where they used the smartphone
Source : Oct 2011 Google
Uses
Source : Oct 2011 Google
eBay APPROACH VIA ITS PLATFORM PLAY
Source: eBay CEO John Donahoe, Innovate Developer Conference, Oct. 12, 2011
eBay generates now about 50% of its business in Europeits fastest growing region