nacha 2014 presentation non bank payment systems revolution final 030714

NON-BANK PAYMENTS REVOLUTION

Kevin H. ConnellyExecutive Vice PresidentThe RWC Groupkevin.Connelly@therwcgroup.com

OVERVIEW

• PAYMENTS EVOLUTION

• PAYMENTS REVOLUTION

• DISRUPTIVE TECHNOLOGIES

• MOBILE MERCHANT TECHNOLOGY

• ELECTRONIC WALLET

• NFC• BLE

THE EVOLUTION OF PAYMENTS

100,000 Years 3,000 B.C. 650 B.C. 960 A.D. Dark Ages 1950’s Past 20 Years Now Future.

OVERVIEW

• NEW FRONTIER – CHANGES ALMOST DAILY

• SOFTWARE VERSION “X.X” REPLACED WITH CUPCAKE, JELLYBEANAND KITKAT

• PAYMENTS UNIVERSE CENTER NO LONGER NY, CHICAGO OR LA – SILICON VALLEY

• BANKS NO LONGER LEADING PAYMENTS INNOVATION

• NON-BANKS LEADING – PAYPAL, GOOGLE, APPLE, SQUARE

• TECHNOLOGY IS DRIVER – RAPID CHANGE IS NORM

THE REVOLUTION OF NON-BANK PAYMENTS

tech·nol·o·gytekˈnäləjē/noun1. the application of scientific knowledge for practical purposes, esp. in industry.

•rev·o·lu·tion•ˌrevəˈlo͞oSHən/•noun•1. a forcible overthrow of a government or social order in favor of a new system.

pay·mentˈpāmənt/noun1. the action or process of paying someone or something, or of being paid.

DISRUPTIVE MODELS/TECHNOLOGY

• ITUNES

• AMAZON

• LINKED IN

• PAYPAL

THE EVOLUTION OF NON-BANK PAYMENTSNEW PAYMENT PLAYERS – THE REVOLUTIONARIES

• e-Commerce• E-Bay / Amazon / Apple

• Retailers• Starbucks / Jamba Juice

• Telecommunication• Isis

• Pre-Paid Card Providers• Money Transfer Operators• Disruptors

• PayPal / Google / Apple• Level Up / Square

• Virtual Currency• Bit-Coin / Amazon• Angry Birds?

• “The Cloud”

THE EVOLUTION OF NON-BANK PAYMENTSE-WALLETS

In 2013 120 e-Wallet or

Mobile Wallet

Applications

Gatekeeper Wallets

Bank Wallets

Retailer Wallets

e-Commerce

Wallets

Aggregator Wallets

Single-Feature Wallets

THE EVOLUTION OF NON-BANK PAYMENTSTHE GEORGE COSTANZA WALLET

http://www.youtube.com/watch?feature=player_detailpage&v=yoPf98i8A0g

THE EVOLUTION OF NON-BANK PAYMENTSFACTORS DRIVING THE FUTURE OF MONEY?

THE EVOLUTION OF PAYMENTSE-WALLETS

Hybrid UsesNot Just Payments

THE EVOLUTION OF NON-BANK PAYMENTSTHE FUTURE OF MONEY?

31% CAGR / $1.6 Trillion

THE EVOLUTION OF PAYMENTSMOBILE PAYMENTS

THE EVOLUTION OF PAYMENTSMOBILE PAYMENTS

THE EVOLUTION OF PAYMENTSMOBILE PAYMENTS

THE EVOLUTION OF PAYMENTSMOBILE PAYMENTS

THE EVOLUTION OF PAYMENTSMOBILE PAYMENTS

? ? ?

THE EVOLUTION OF NON-BANK PAYMENTSFACTORS DRIVING THE FUTURE OF MONEY?

THE EVOLUTION OF NON-BANK PAYMENTSE-WALLETS

NFC – EmbeddedIsis, Google

Cloud QR Code

Hybrid

THE EVOLUTION OF PAYMENTSE-WALLETS

THE REVOLUTION OF PAYMENTSMERCHANT SERVICES

https://www.paypal.com/webapps/mpp/credit-card-reader

EMBEDED VIDEO REMOVED – LINK BELOW

Amazon Coins is a new way to purchase Kindle Fire apps, games and in-app items from Amazon. The more coins you buy the more you will save! Purchased coins are immediately deposited into your account and they never expire. You can choose to spend them immediately or save them up for later.

Facebook Credits are a virtual currency you can use to buy virtual goods in any games or apps of the Facebook platform that accept payments. You can buy Facebook Credits directly from within an app using your credit card, PayPal, mobile phone and many other local payment methods. [UPDATE]

Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin typically allows uses that could not be covered by any previous payment system

VIRTUAL CURRENCIESDIGITAL & CRYPTO CURRENCIES

THE EVOLUTION OF PAYMENTSISSUES AND POTENTIAL ROADBLOCKS

• Security• Fraud losses• Identity theft• Privacy concerns

• Technology• Multiple platforms competing• No clear winner yet• Consumer/Business confusion

• Safety• Non-bank accounts• Criminal activity

• Regulation

THE EVOLUTION OF PAYMENTSREGULATION

• Multiple regulators

• Overlapping reviews and conflicting enforcement

• New laws phased in and untested

• Catch up mode

• AML

• CFPB

THE EVOLUTION OF PAYMENTSIMPACTS TO BANKS

• Disintermediation

• Revenue loss

• Still most trusted

• Checking account remains financial hub

• Burdened by regulation and scrutiny

• Innovate and invest?

• Partner and private label?

THE EVOLUTION OF PAYMENTSIMPACTS TO BUSINESS

• Risk model changes

• Investment increases

• Technology disruptors can impact business

• Opportunities for cost savings

• Opportunities for revenue increase

• Opportunities for customer relationship building

THE EVOLUTION OF PAYMENTSIMPACTS TO CONSUMERS

• Enhanced convenience

• Increased security but with new risks

• Opportunities for savings

• Loss of privacy

• App-mania

• Identify theft

• Confusion

THE REVOLUTION OF PAYMENTSWHERE TO FROM HERE?

THE EVOLUTION OF PAYMENTSWHERE TO FROM HERE?

• Will regulation kill the debit/credit card?

• Is NFC DOA?

• QR / Hybrid

• Level Up?

• Google Glass?

• Pocket Change?

• So What is Next?

THE REVOLUTION OF PAYMENTSBLE IS NEXT

https://www.paypal.com/webapps/mpp/beacon

EMBEDED VIDEO REMOVED – LINK BELOW

https://www.paypal.com/webapps/mpp/beacon

EMBEDED VIDEO REMOVED – LINK BELOW

THE EVOLUTION OF PAYMENTSCOMMENTS & QUESTIONS

Next Gen Will Drive What’s Nexthttp://www.youtube.com/watch?feature=player_detailpage&v=yoPf98i8A0g

www.therwcgroup.com