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Cash/Plastic is Trash: Mobile Payments is Future April 22
What’s happening…
Banks using Host Card Emulation to launch mobile payments solutions
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Examples of banks that are using or have announced plans of using HCE for mobile payments
Host Card Emulation (HCE) is the term describing on-device technology that permits a phone to perform card emulation on an Near Field Communication (NFC)-enabled device without relying on access to a secure element. This new technology gained celebrity status when Google announced support for HCE in the KitKat OS.
Biometrics Set to play a bigger role in the Future of Payments authentication
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Chinese e-commerce giant Alibaba is developing facial recognition technology that enables mobile shoppers to replace their passwords with selfies. (March 2015)
Royal Bank of Canada is working with Toronto-based technology developer Bionym to test a wristband called Nymi. The Nymi band uses the wearer’s unique heartbeat to verify that he or she is the real card holder. (November 2014)
Apple Watch announced & Apple Pay’s Acceptance continues to Grow in US
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Apple Pay: In just three months since launch, the contactless payment application, which uses near field communications (NFC) technology, is available in more than 700,000 locations in the US. The company has also expanded the number of banks it is working with to more than 2,500
Apple Watch: Tim Cook (CEO, Apple) announced that Apple Watch would be available for purchase from April 2015. Apple Pay can be used via Apple Watch, which will allow Apple users with older iPhones (5, 5C and 5S) to also use the payment service. (March 2015)
Google, Samsung Pursued Acquisitions to counter Apple Pay threat
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Samsung agreed a deal to buy mobile wallet outfit LoopPay, giving it a new weapon in its ongoing battle with Apple for the mobile payments market. (Feb 2015). LoopPay's patented technology turns existing magnetic stripe readers into contactless receivers.
Google also announced acquisition of technology from mobile payments solution Softcard (a joint venture between 3 leading US telecom operators). (Feb 2015). This is Google’s attempt to revive its flagging mobile wallet service by getting its app pre-installed on handsets sold by America's biggest telcos.
Microsoft Preparing its own mobile payments service
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Microsoft is working on a tap-to-pay system with Host Emulation support, allowing the mobile to work without a “Secure Element” provided by carriers. This means Microsoft can work directly with VISA, Mastercard and American Express to bring its own NFC payments service into the market. It will work with all contactless card readers, similar to Apple Pay and Google Wallet. (March 2015)
Facebook Embeds Money Transfer functionality in Messenger
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Facebook announced a new feature for Messenger that lets users send and receive money to one another. The feature will roll out to Facebook users in the U.S. across desktop, Android and iOS over the next few months. (March 2015)
Telecom operators Continue to strive for relevance in this space
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Vodafone customers will soon be able to add bank cards to their Vodafone Wallet and use smartphones to pay for goods and services at contactless terminals. Following new agreements with Visa and Carta Worldwide, bank card payments via Vodafone Wallet will be enabled in European markets from Q2 2015 onwards. (March 2015)
Some of New Zealand's biggest banks and telcos have joined forces to launch Semble, a SIM-based NFC mobile payments service. (April 2015) Telcos Vodafone, 2degrees, Telecom had teamed up with bank-owned payments network Paymark on the joint venture nearly three years ago
Wearables & Payments Likely to go hand-in-Hand → Apple Watch, LG, Xiaomi
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
LG’s Urbane LTE is one of the first smartwatches beyond the Apple Watch to include NFC-based mobile payments (Feb 2015)
Huami, the manufacturer of Xiaomi's smart fitness tracker Mi Band, has entered into a partnership with Alibaba's payment affiliate Alipay to develop smart wristbands that incorporate mobile payment (April 2015)
Why so much of rush…
Massive increase in smartphone use in recent years
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
56%Annual Growth (CAGR)for in-person mobile payment over next 5 years
US Mobile Payments Will Reach $142 Billion By
2019
80% of all transactions will flow through the retailers directly within 10 years
Users say…
More than half in the US have tried mobile payments
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Cash
Check
Credit Card
Debit Card
Some form of mobile payment
91%
58%
75%
83%
54%
What types of payment do you use?
Convenience will be the defining factor in the near term
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Other
Security
Rewards, discounts, or promotions
Convenience
7%
37%
41%
76%
What motivates you to use mobile payment instead of other forms
PayPal most used in US, 7% have already tried Apple Pay
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Square Cash
Other
Venmo
Softcard
Dwolla
Apple Pay
Starbucks
Google Wallet
PayPal
3%
3%
3%
4%
5%
7%
21%
28%
94%
Which of the following mobile payments apps do you currently use?
Opinions divided around the ideal future experience
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
App for each retailer that pushes offers, inte-grates rewards and coupons and allows me to
pay
App that is integrated with by banking app
Independent app that can be used at any retailer and integrates rewards and coupons
30%
32%
38%
Thinking about the future of mobile payment, which of these options would you prefer?
Demystifying the hype…
Flavors of Mobile Payment
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Highly fragmented ecosystem
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Burning questions about mobile payments strategies
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
• Security• Convenience• Value added benefits to replace existing payment methods
What do my customers want?
• Protection of existing brand equity along with transactional and interchange revenue• Additional revenue from loyalty and consumer intelligence
What is at stake for banks?
• Reduce the existing transaction charges• Minimize the cost of upgrading to new POS systems• Protect reputation and build trust - avoid any security mishaps (such as
Home Depot, Target)
What are the retailers’ perspectives?
• Independent applications such as LoopPay, LevelUp (QR codes)• MNO backed solutions like Softcard (NFC)• OEMs’ offerings – Apple Pay, Google Wallet (NFC)• Independent retailer offerings (e.g. Starbucks) and collaborative retailer solutions (MCX/
Current C) (QR codes)
What are the current offerings in the market?
• Banks in the US are currently offering support to Apple Pay – a couple of the leading banks are also supporting Softcard
What are banks currently doing?
• QR code based technologies are easier to integrate into existing POS systems but are perceived less secure
• Less than 3% of merchants that accept credit cards are equipped to handle NFC based systems. However they will soon be forced to upgrade to EMV (by 2015) and they could choose to add NFC . And with trend setters such as Apple supporting NFC, it has a greater chance to succeed
What offerings are likely to succeed?
Core Technology
Cloud-based HCE vs Secure elements
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Android Implementation
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Apple Implementation
© COPYRIGHT 2015 SAPIENT CORPORATION | CONFIDENTIAL
Praveen Bohra https://in.linkedin.com/pub/praveen-bohra/1/4a4/350