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Mobile payments overview

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by

Tim Green

on 24 June 2013

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Transcript of Mobile payments overview

What the hell it is – and how it all fits together
Mobile
payment

Mobile wallets
What problem is the
mobile wallet solving?
Good question: some say it there isn't one...
Convenient for consumer, slimmer pockets, less clutter, better payment trail
Lets merchant develop better relationships/build profiles/push offers
Closes loops between online and offline shopping
What the hell are they?
Technologies and examples
NFC: Google, Isis, Quick Tap

Barcode: PayPal, Starbucks, MCX, LevelUp, SwipePay

Email: Droplet, Simply Tap

Audio: Naratte/Zoosh
Mobile commerce
Which means...?
Mobile POS readers
In a nutshell
Barriers to progress?
Merchant acceptance
NFC: ecosystem not worked out – rev shares, location of secure element
NFC: handset support
Offer fatigue
Security fears:
Identity verification: face? fingerprint?
What's the problem it's solving?
Who are the main players?
Europe: iZettle, payleven, SumUp, Intuit, PayPal, mPowa

US: Square, Groupon, PayPal
Where's the mPOS
market going?
transaction fees sustainable?
£40 reader
need to add value
general business management, invoicing etc
evolution to card-free solutions like Pay by Square
Sticking points...
Operator revenue shares - up to 40%
EU regulation restricts addressable market
No iOS micropayments (except for HTML5)
Unclear support from Google Play
Lack of Payforit awareness
Need for better on-bill information
Who's involved?
Payment aggregators that connect to operator systems: Bango, OpenMarket, Netsize, Txtnation, ImpulsePay, Velti

In-app and web-based providers: Boku, Zong, OneBip, Denal/BilltoMobile

Operator APIs: O2 BlueVia

The Payforit scheme
Key issues
How to ensure sites and checkouts are optimised for the mobile experience
Integrating payments gateways quickly and easily
security and 'phishing'
Key benefits
reaches users without credit cards - 4 billion phone users vs 1.5 billion payment card owners
speeds up transactions
allows for spontaneous purchases
can be more secure thanks to 'two factor' authentication
Some intriguing developments
Pay by Twitter - Chirpify and Soldsie

Social commerce apps – Wrapp

Paying straight from the bank account - MyBank

Embedding cards into the chipset itself - Trustonic
Security options:
Multi-factor authentication
'Two factor' using a one-time password sent by text to the user – a blend of what you know (the password) and what you have (the phone).

'Three factor' authentication – adds 'something you are'. Face recognition, fingerprint, iris, device fingerprinting.

Prevents industrial level harvesting of card data.

User can vary the level of friction based on their own preferences.
Initiative by ARM - in 90 per cent of all smartphones

Embeds passwords inside the chipset rather than OS, SD card or cloud.

Inaccessible by hackers

Turns 'cardholder not present' into 'cardholder present'

Could be used on desktop sites with barcode
Optimising for mobile online payment
Building sites that optimise for mobile and display mobile-friendly checkouts - Mobicart, Mopowered

Integrating card payment with a line of code - Braintree, Zooz, Stripe

Using a single universal payment wallet - PayPal, V.me, PayPass

Using barcodes to replace form filling - Reply, mPayme, Paddle

Photographing cards to speed up payments - Picturepay, Jumio, Card.io, ScanPay
In emerging markets
Safaricom's m-Pesa in Kenya - Users register in minutes, top up and withdraw via appointed agents

They can send money to other users, to non Safaricom customers, spend in shops, withdraw from ATMs

15 million customers, more than 165 million transactions per month.

Now launched savings and loans - $11.6m in two months

GSMA says 104 mobile money transfer schemes live
Money transfer in mature telco markets
PingIt by Barclays in UK - 500k users in 6 months

Visa has 17 committed issuers across Europe. RBS and NatWest first in the UK to launch its P2P service: downloaded 1.7million times in two weeks.

UK Payments Council - building database of all UK numbers and accounts for 2014 launch

Possible deployment by merchants?

Google Wallet by email: payment by attachment
P2P Mobile transfers
Security and Identity
Pay by Mobile (operator billing)
turn your phone into a credit card reader
merchant downloads free app and buys dongle, pays 2.75%, no monthly fees
In Europe need chip and PIN reader - Visa issue and security
3.6m sole traders in the UK alone, and 2m with secondary employment
Quick to set up: hours vs 22 days to get traditional reader
changes retail dynamic
frees up store space for more profit per sq ft
The zero trillion
dollar business?



66 per cent will come from mobile commerce
Proximity payments by NFC or other technology will be 25 per cent
Person-to-person (P2P) transfers = 7 per cent.
Barcode-based payments will contribute 2 per cent

The total spent in cash, cheque and cards is closer to $50 trillion
IDC: mobile payments will top $1 trillion inside five years.


Paying for digital items from the mobile bill
Two main options: Premium SMS or Direct Operator Billing
Used to make donations or buy items from mobile or fixed web or in-app
Generally regulation forbids purchase of physical items
Mobile apps that store one or many payment and loyalty cards – and lets the user make a payment in a physical or online store.
Wallets can use a variety of transmission media – NFC, email, barcodes, sound
Most successful at the moment are single-use – like Starbucks
Online shopping from a phone/tablet
Using (mostly) existing payment methods like credit cards

Smartphone and tablet adoption make this a huge growth area: CapGemini says Brits spent £7.5bn via mobile in 2012 - now 15.4 per cent of all e-commerce
In a nutshell
Popularised by m-Pesa in Kenya, but adapted for developed markets

Use text to transfer money to other users or businesses

Users assign bank details to their phone number

Payment made with either user know each other's bank account codes
Huge public concern - YouGov survey found half UK users distrust mobile wallets

Danger of breaches increased by payment capability

Identity theft more dangerous than account detail theft
Embedding card details
in the chipset: Trustonic
Using the phone to
pay other people
Using the phone to
buy stuff in-store
Using the phone to
buy stuff online
Thanks for listening!

Tim Green
editor: Mobile Money Revolution

email: timgreen35@googlemail.com mob: 0780 373 0343
The mobile wallet:
coupons first?
As payment is complex, some providers prefer coupons and vouchers
Cross-operator JV Weve is focusing on SMS offers first, payments later
Other providers include 2ergo 'podifi' and Eagle Eye (using chip and PIN codes)
...Then there's Apple. Will Passbook evolve to process payments?
Full transcript