Developing the next generation of payments NeuPai Confidential Dion Lisle Mobile Payments Advisor [email protected]
Developing the next generation of payments
NeuPai Confidential
Dion LisleMobile Payments Advisor
3 Simple Ideas
1. Payments is a business worth defending
2. Mobile is the platform that will decide the winners but the competitors come from all fields
3. Silicon Valley is the HQ of the future of mobile payments
Payments Business Pressure
New Companies
Growth of Non-Bank Payments29% CAGR
Increased RegulatoryOversight
Basel III
AML
ATF
Unbanked Growth
Mobile Regulations
Technology Advances
Customer Demands
Payments
Banks
Processors
Networks
PayPal Owns Payments ?Are Banks Ready to
accept that PayPal is the center of the mobile and internet payment universeNote: Banks are now a
footnote in the PayPal view
Paypal plans to own:Payments - PlatformPayments - InnovationPayments – X-BorderPayments - THE DIGITAL
WALLET
PayPal MobilePayPal mobile transactions show dramatic growth, increasing
nearly six-fold, from $25 million in 2008 to $141 million in 2009.
Paypal closed out 2010 with over $750 million in mobile payment volume, and more than 5 million members regularly using PayPal from mobile devices.
Paypal predicts over $3 billion in mobile payments for 2012
2008 2009 2010 2011 2012$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Mill
ions
of $
200% CAGR
Payments is Big BusinessWhat How Much
RETAIL IN PERSON
Annual Retail Credit Card Charges $ 3.2 trillion
Annual Cash and Check Spend $ 1.2 trillion
Total # of US Cards – Debit and Credit
1 billion
ON-LINE RETAIL
On-Line Retail - 2009 $348 billion
On-Line Retail – 2014 $778 billion
MOBILE RETAIL
Mobile Payments Actual in 2009 $ 68 billion
Mobile Payments Projected in 2014 $ 633 billion
• Mobile is more Important than On-Line • Mobile can replace In Person - On-Line Can’t.
Source: CapGemini
Non Bank Players Grow PayPal facilitated $92 billion in total payments volume in
2010 PayPal had revenue of $4.2 billion in 2010
Amazon’s payments business is now growing strong with a set of 10 different payment products and an entire team dedicated to dominating payments
Apple is recruiting a SV based payments team frequently sites their 100 million plus credit cards in iTunes as a differential advantage.
Apple has filed a bevy of patents on NFC
Google has hired Osama Biedier from PayPal to lead their fledgling payment efforts focused on mobile.
Google is working with a major US bank to dominate payments.
Facebook announces the only payment method on FB will be FB.Non-bank Payments are growing at 30% per year
Mobile Money Market
Mobile Commerce Mobile Banking
M-CouponsMobile
PaymentsMobile
AdvertisingBank Account
ServicesBillPay By
Phone
ProximityPayments
RemotePayments
P2MP2P
NFC or Barcode
MoneyTransfers
P2MTransit
Most likely to disrupt retail payments
Google Gets It
• On-Line commerce• Swing and a miss• Good design• No consumer uptake
• Location• Places matter• NFC based
• Lessons applied• The right partners• User experience effort• No charge to consumers
• Consumer Data• Connection to merchants• Breaking the payments and
merchant paradigm
Google’s Goals• Contextual dialog with
consumers• Driving Android sales• Beyond e-comm to POS
Outcomes
Groupon Doesn’t 10
Groupon’s recent S-1 filing provides details behind the meteoric rise of the deals space
These details highlight the issues around being deal-centric
Groupon’s CPA – Customer Acquisition Cost
12 Months
Further data shows that merchants do NOT grow their customer base with deals
VISA
VISA is acquiring innovation in the areas of payments
VISA is in a weak position as they go to consumers through intermediaries – the issuing banks
VISA like all players in payments needs to figure out a new model
VISA have great assets:Real-time payment networkGlobal brand
Just Added
MasterCard
MasterCard smartly connected with Google for their NFC Wallet
MasterCard has a variety of mobile products on the marketNone of the products have been market
changing
• MasterCard is a clear #2 behind VISA in Debit and Credit
• MOTAPS - Mobile Over-the-Air Provisioning Service- NFC provisioning system for card
payments
New Players - Square Started as a “Person as Merchant” play with an iPhone dongle
into the audio port on an iPhone
Added a consumer wallet called Card Case in May of 2011
Processing $3 million per day in payments at razor thin margins
Took in VISA investment when their market cap climbed to $220 million – now at $1 billion market cap
Square Card CaseDigital Wallet and
Receipts
Square Device Card Swipe for
Micro-Merchants
Square Device sold by Apple in store or on-line
Payments - EMVEMV = Europay | Mastercard | Visa
A standard for a chip+pin smartcard that has shown drastic reduction in fraud rates
Widely deployed around the world the US being the one glaring exception
Region EMV Cards
Adoption Rate
EMV Terminals
Adoption Rate
Canada, LatAm + Caribe
207,715,356
31.2% 3,900,000 76.5%
Asia Pacific 336,602,681
27.9% 3,480,000 43.0%
Africa and Middle East 23,003,747 17.6% 345,000 60.7%
Europe Zone (Western) 645,472,323
73.9% 10,500,000 89.0%
Europe Zone 2 (Eastern)
27,516,286 12.7% 513,600 65.4%
USA 0 0 0 0
Totals 1,240,310,393
40.1% 18,738,600 71.1%
Digital Wallets 15
Google Square Isis Visa Serve
NFC Yes No Yes Yes No
Merchants Large Small Large No
Partners Citi/MC Apple ? Carriers + Small BanksAmerican Express
Network Mastercard MC/VISA Discover + VisaNetAmerican Express
Open Yes No Maybe Sort of No
All Smartphones No Yes No Yes Yes
All Phones No No No No Yes
Credit Yes Yes Yes Yes No
Debit TBD Yes Yes Yes Yes
Loyalty Yes Yes Yes Yes No
OTA Provisioning Yes No Yes No No
SIM Control Yes No Yes no No
Strength Partners Easy to use Carrier Reach Bank Channel Prepaid
Weakness Limited phonesSmall
Merchants Limited phones Bank Channel Reach/Brand
Reality from 1-10 8 9 5 5 7
Mobile Invests in Mobile Money
Nokia partners with Obopay to offer Nokia Money Including a $35 million investment in Obopay Nokia just opened a new Silicon Valley center with 156,000
square feet and a SV based CTO
Ericsson’s infrastructure team adds a mobile payments business. In flight for the past 12 months “To take a driving role in mobile P2P.” Ericsson owns over 200,000 square feet in development in
Silicon Valley
ISIS is officially launched by AT&T and Verizon with Discover and Barclays. ISIS is investing billions in re-inventing payments with a non-
VISA / MC network.
Nokia Siemens Networks and MoreMagic Solutions Partner to Deliver Mobile Commerce and Financial Services
Silicon Valley StartupsCarrier Billing companies such as Boku and Zong
have billed hundreds of millions of dollars in virtual goods and have plans for real goods. Both companies have deals with Verizon Zong has a deal with Facebook for Facebook credits
Square is processing tens of millions in payments for small merchants with big plans to tap into social money.
Shopkick is a startup focused on connecting merchants to their customers for offers and loyalty.
2009 2011
Square $20 million $220 million
Shopkick $10 million $80 million
Zong $25 million $115 million
Boku $25 million $100 million
5X increase in 2 years
Company Valuations
* Valuations are estimates based on knowledge and rumor
$1 Billion
Its Commerce Not Payments
Physical Retail
On-Line Retail and Identity
Transaction Data
Location Data
Personal Data
Preferences
Affinity
ServiceProviders
Contextual Relevance
Consumer Chooses
Brand Preference
Device/OS
UXBrand
experience