contactless payment trends and innovation · pdf filecontactless payment trends and innovation...

Contactless Payment Trends and Innovation Frederic Guillou, Commercial Director Southern Africa, Banking & Retail Johannesburg, 18th September 2014

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Agenda

1.  Gemalto

2.  Overview of Contactless payments

3.  Payment convergence and bridge technologies

4.  NFC Wallet use case in retail

5.  Mobile Financial Service / Inclusion

We are a robust, international company

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" €2.4bn revenues 2013 " Listed on NYSE Euronext

Amsterdam & Paris " Member of French CAC 40 &

Dutch AEX indices " 12,000 employees " 113 nationalities " Customers in 190 countries

#1 Chip payment cards

#1 Machine-to-Machine

#1 SIM/LTE/NFC cards

#1 Online banking

#1 eDocuments

Leadership experience

" Trusted 3rd party between the Banks, MNO’s, Gov

" Gemalto invested 177 million Euro on RnD in 2013

" Filed 110 Patents in 2013 – 1,700 engineers

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Agenda

1.  Gemalto





EMV Contactless is now in mass deployment in all parts of the World

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POLAND " 17 Mu cards " 140 Ku POS

UK " >31 Mu cards " 280 Ku POS

FRANCE

" 19 Mu cards " 170 Ku POS

SPAIN " >8 Mu cards " 266 Ku POS

TURKEY " >10 Mu cards " 69 000 POS

CANADA " >20 Mu cards " >100 Ku POS

AUSTRALIA " >20 Mu cards " >150 Ku POS

NEW ZEALAND " >1 Mu cards " >10 Ku POS

SINGAPORE " 2 Mu cards " >20 Ku POS

TAIWAN " ~6Mu cards " >24 Ku POS

SLOVAKIA " >1.4 Mu cards " >12 Ku POS

Brazil " 1 Mu cards " 1 Mu POS

Infrastructure is here – contactless Payment ready to take off in

2014!

SOUTH AFRICA " >1 Mu cards

EMV contactless: A fast growing market

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At end 2013 1 Billion DI cards issued

(since 2007)

50 Mu in 2010 110 Mu in 2011 200 Mu in 2012

600 Mu DI cards in 2013 (incl. 350Mu for China)

DI cards: Dual Interface

Contactless Payment A World of Opportunities for issuers

•  To increase the number of transactions Cash replacement 1. Revenue

•  To offer new services to end-users Thanks to the contactless interface 2. Services

•  To tap a new big market Pay@Gate concept 3. Transit

•  To develop your brand & innovation New techno & customer experience 4. Brand

•  To pave the way for new payment method Mobile payment, New form factors 5. Future

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Poland Use Case

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June 2013

140 000 contactless POS (50%)

17 million ctless cards (60%)

16 million contactless transactions per month

€57 million spent on VISA contactless cards and phones in March 2013

603,3 619 644,4

697

677,4

550

600

650

700

750

2008 2009 2010 2011 2012

Cash Transactions' Value ( BN PLN )

Source: Euromonitor report 2012

Number of Contactless Transactions ( in ‘000 )

Autralia Use Case

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June 2013

>150 000 contactless POS (20%)

>20 million ctless cards

>50 million contactless transactions per month

25% - 30% of all transactions below the AUS$100 limit are

contactless

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Agenda

1.  Gemalto





Contactless Sticker A simple and natural way to pay

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" Contactless experience Enjoy the speed and convenience of contactless payment

" Your preferred device Turn easily any device (MP3 player, mobile phone) into a contactless payment device

" Always in the pocket Three quarters of mobile phone owners never leave home without mobile phone*

75%

Optelio Contactless Sticker Part of the contactless strategy

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" A driver for contactless adoption

Contactless is a change of habits - Consumers must “think contactless” Sticker boost contactless awareness (no contact interface)

" Higher activation rate for cards and stickers " More contactless transactions

Contactless card

Sticker

NFC " Prepare the future now

Educate people to pay with the mobile phone

Deployment possible without commercial agreement with third parties Compatible with all current mobile phones (no physical link between

sticker and phone)

La Caixa - Spain Toward a real mobile payment experience

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Watch the video www.youtube.com

" Objective: A real mobile payment experience " 200 000 stickers to be issued in Barcelona

" No PIN below 20€ (PIN code is asked above 20€)

" Act as a companion payment mean associated to a contactless credit card

" Companion tools to manage the sticker:

Management of the sticker " Consult the latest transactions " Block the sticker " (and other banking options: money

transfer, balance check, etc.)

SMS recept ion fo r every payment. Mobile application

Gemalto Sticker references

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Australia

Spain

Poland

Russia

Hungary

Greece

Germany

Latvia

Slovakia

Ukraine

Israel

Austria

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Success Story: Barclays, UK British Summer Time festival

Upgrade your experience at British Summer Time

•  Get fast-track access into the event

•  Make fast and secure contactless payments

•  Unlock special experiences on the day

•  Keep on using your bPay band after the event at hundreds of thousands of retailers across the UK Watch the video

www.youtube.com

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Agenda

1.  Gemalto





NFC has become a reality, despite the emergence of competing technologies NFC beginning of 2014

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MNO Cooperate with banks(France, Turkey, Italy, Canada, Japan …) Co-branded Cards (UK, Poland etc..)

MNO and Banks launch payment services

Payment, loyalty, couponing aggregated I a single wallet (USA-ISIS, Singapore-IDA)

Consortiums aggregate services in a single wallet

Smart posters Shopping walls (Seoul, Tokyo, Moscow) In-shop experience (casino, carrefour)

Retailers focus on in-store interaction and OOH advertising

First commercial launches (Spain, France, Singapore)

Transport

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Mobile payment landscape is in permanent evolution…

… and still more to come (Apple Pay, BLE, Coin, Biometrics, xCoin etc…)

Payment is not an isolated service Its take off and mass adoption is connected to other proximity services

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Retail services spurs the payment

Transport spurs the payment

Payment spurs transport & retail

A new NFC shopping experience

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Isis is an NFC Mobile Wallet application available in the US. It allows end-users to pay, redeem coupons and get loyalty points with their mobile phone.

WHAT ARE THE CONSUMER EXPECTATIONS

Gemalto Confidential 22

2/3 68%: Provides convenience, ease of use for payment

59% 59%: Enables me to carry less cash, fewer cards

1/2 52%: Allows me to receive mobile offers, store discounts

45% 45%: Allows me to redeem points or offers directly from my phone

41% 41%: Improves my loyalty rewards

" These are US statistics

" Willingness to share personal data may vary from country to country

Is ISIS matching Consumer expectations: Loyatly is attractive and boosts usage Retail spurs payment

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2/3 Two-thirds of active users opted in to receive offers and messages

7 The average user is following seven brands, (an American owns an average of 18 loyalty cards, only 2 are active)

X 2 wallet users engaged in loyalty and offers, tap up to two times more frequently than users who only make payments

90% More than one-third of active Isis Mobile Wallets users in Austin have loaded a My Coke Rewards card of which 90 percent of these are new to the My Coke Rewards program

Source: NFC World

two in three Isis users have added a payment card to their Isis Mobile Wallet 2/3

$15 Isis' Toys R Us campaign, which offered US$15 back on purchases over $30 during the holiday period, was one of the toy retailer's most effective digital coupon campaigns that they have ever run

ISIS Adoption


" Exponential rate

" Isis is growing at 50% each month," CEO Michael Abbott told NFC World

Activated ISIS Wallets

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Slovakia

Poland

China

Hungary

Brasil

UK

Australia

Spain

France

Italy

US

Netherlands

Percentage of contactless POS Q2 2013 Q3 2013 Q4 2013 Q1 2014

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Agenda

1.  Gemalto



4.  NFC Wallet use case on retail


What are Mobile Financial Services (MFS)?

26 Gemalto Confidential

Where telecom and

banking converge

Using the mobile device for financial services

Immediate, simple and convenient access to

money-related transactions

Send money

Buy airtime

Receive salary

Pay bills

Save money

Purchase goods

Pay for transportation

Buy tickets

Pay for parking

Pay for education Shop online

Buy insurance

Receive and pay off financing

Check balance

27 Gemalto Confidential Mobile Wallet

Developed Markets Developing Markets

Mobile Banking

Notifications and alerts

Bill payment, transfers and transactions

Account and wealth

management

Financing – credit, loans, insurance

Enabling secure access to banking services on the

mobile device

Mobile Money

Mobile Wallet and Stored Value Accounts

Person-to-Person

Transfer

Bill Payment

Airtime Top-Up

International Money Transfer

Providing secure banking and payment services for

the unbanked

Mobile Payment

Proximity Payment

Remote Payment

Peer-to-Peer

Prepaid Accounts

Mobile Wallet

International Money Transfer

Enabling and bringing value to payments on mobile

Mobile NFC TSM Services

Proximity Payment

Issuance and lifecycle management of NFC services for service

providers

NFC Service Engine administration for MNO

Couponing & loyalty

programs

NFC services deployment and secure provisioning of credential management

Mobile Financial Services solutions allow MNOs and Banks to leverage the mobile device to increase revenue, extend market reach and reduce churn"

DEVELOPED MARKETS •  Mobile remote payments growing fast due to

smartphone penetration •  Carrier billing, payment networks challenged

by new entrants •  Mobile NFC is a nascent payment scheme, to

convert cash transactions, increase marketing-driven revenue, and increase transaction frequency

Mobile Financial Services Market Different Markets, Different Stories

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DEVELOPING MARKETS •  Changing the lives of the Unbanked •  Replacing cash with m-payments •  Telco-led initiatives, banks now embarking •  Challenges reaching critical mass •  Lack of interoperability

€20Bn 2011

€135Bn 2014

€110Bn 2011

€415Bn 2014

Transaction Value

Developing: LATAM, MEA, India and rest of Asia developing; Developed: Noram, Europe, Russia, JaKor, China and rest of Asia developed

Gemalto Confidential

29 Source: Informa, 2011 Developed markets: Noram, Europe, Russia, JaKor, China and rest of Asia developed

Developed Markets

Market Trends

Developing Markets

Market Trends

Remote payments and P2P dominate, Service revenues at 3%

3.4%

2.8% €135B

€20B

2.1%

1.9%

Remote and local payments dominate, Service revenues at 2%

€415B

€110B

Mobile Financial Services Market Forecasts

Gemalto Confidential

MFS Innovation

•  Wallmart launch local money transfer service •  MoneyGram : 31% decline and 33% drop in revenue

•  M-Pesa – Purchase stocks on the Kenya Stock Exchange

•  M-Pesa – Micro loans

•  Kenya: > 7M users, > Sh13 Billion in loans •  Tanzania: >TSh 1.2bn in 3 weeks

•  Equity Bank – thin SIM to sit on top of customers SIM cards. There are security concerns

•  Apple Pay – Secure Element with DPAN


Thanks Contact Gemalto to engage and know more about the NFC opportunities

Follow us on www.gemalto.com