NON-BANK PAYMENTS REVOLUTION2015 UPDATE (APRIL)
Kevin H. ConnellyExecutive Vice PresidentThe RWC [email protected]
• LAST YEAR’S PRESENTATION FOCUSED ON:– PAYMENTS EVOLUTION
– PAYMENTS REVOLUTION
– DISRUPTIVE TECHNOLOGIES
– MOBILE MERCHANT TECHNOLOGY
– ELECTRONIC WALLET
– NFC– BLE
• THIS YEAR FOCUS IS ON WHAT’S NEW
THE EVOLUTION OF PAYMENTSOVERVIEW
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.
THE REVOLUTION OF PAYMENTSCONFIRM DEFINITION
• ITUNES
• AMAZON
• LINKED IN
• PAYPAL
THE REVOLUTION OF PAYMENTSDISRUPTIVE TECHNOLOGIES / DISRUPTORS
THE EVOLUTION OF NON-BANK PAYMENTSE-WALLETS
In 2014 200 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
• REVOLUTION IN FULL SWING –WEEKLY CHANGE
• HACKING OF PAYMENT DATA -TARGET
• EMV ROLLOUT
• APPLE PAY
• MERCHANT CONSUMEREXCHANGE (MCX)
THE EVOLUTION OF PAYMENTSWHAT’S NEW
• ISIS IS NOW SOFTCARD ISNO LONGER IS NOWGOOGLE WALLET
• AMAZON LOCAL REGISTER
• NFC REVIVAL? NFC TAKES LEAD
• IBEACON BLE TRACTION –OR NOT
• BITCOIN – DOWN AND UP
• NEW FRONTIER – CHANGES ALMOST DAILY
• PAYMENTS SOFTWARE VERSION “X.X” REPLACED WITH IOS8, ANDROID 1 AND KITKAT
• PAYMENTS UNIVERSE CENTER NO LONGER NY, CHICAGO OR LA – IT IS SILICON VALLEY
• BANKS NO LONGER LEADING PAYMENTS INNOVATION
• NON-BANKS LEADING – PAYPAL, GOOGLE, APPLE, RETAILERS
• TECHNOLOGY IS DRIVER – RAPID CHANGE IS NORM• EXPLOSION OF PAYMENT ALTERNATIVES IN 2015
THE REVOLUTION OF PAYMENTSWHAT’S NEW
THE REVOLUTION OF PAYMENTSANNOUNCEMENTS IN 2015
• SAMSUNG PAY
– SAMSUNG ACQUIRES LOOPAY
• MCX– CURRENT C REMAINS ON BENCH
• GOOGLE WALLET
– ACQUIRES SOFTCARD (THAT WAS ISIS)
• PAYPAL
– PAYPAL BUY PAYDIANT
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
• MICROSOFT PAYMENTS
– APPLIED FOR MONEY TRANSFER LICENSE (MONEY SERVICEBUSINESS)
• APPLE PAY IS DRIVING FORCE
– LEADING NEW FEATURE A MUST HAVE
– APPLE WATCH – TIME IS MONEY
• REGULATORS CATCHING UP– BSA/AML, KYC, FRAUD, SECURITY
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
• SAMSUNG PAY
– SAMSUNG ACQUIRES LOOPAY
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
• GOOGLE WALLET
– ACQUIRES SOFTCARD (THAT WAS ISIS)– NEW OPERATING SYSTEM
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
• PAYPAL
– PAYPAL BUY PAYDIANT
– SPUN OFF FROM EBAY
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
• MCX– CURRENT C REMAINS ON BENCH – AND IN PILOT
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
• MICROSOFT PAYMENTS
– APPLIED FOR MONEY TRANSFER LICENSE
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
• APPLE PAY IS DRIVING FORCE
– PAYMENT FEATURE A MUST HAVE
– APPLE WATCH – TIME IS MONEY
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
•1 Billion | The Number Of iOS Devices Sold
•200 K | The Number Of Vending Machines, Laundromats and Parking Kiosks Now Accepting Apple Pay•400 | The Percentage Increase In Apple Pay Use Since Whole Foods Launched It
APPLE PAY
Your wallet. Without the wallet.
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
APPLE PAY
Your wallet. Without the wallet.
http://www.pymnts.com/in-depth/2015/major-banks-cashing-in-on-apple-pay-potential/#.VTEc9yFViko
• FEB-15 CHASE 1MM CUSTOMER
• JAN-15 BOFA 800K CUSTOMERS
• 750 BANKS
• $100MM SPENT ON ADS
http://adage.com/article/cmo-strategy/capital-launches-apple-pay-ad-orange-bowl/296437/
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
• APPLE PAY IS DRIVING FORCE - CHASE
THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015
THE REVOLUTION OF PAYMENTSFORECAST BEYOND THE TIPPING POINT
THE REVOLUTION OF PAYMENTSE-WALLET COMPARISON
THE REVOLUTION OF PAYMENTSE-WALLET COMPARISON
THE REVOLUTION OF PAYMENTSE-WALLET COMPARISON
THE REVOLUTION OF PAYMENTSE-WALLET COMPARISON
THE REVOLUTION OF PAYMENTSE-WALLET COMPARISON
THE REVOLUTION OF PAYMENTSE-WALLET COMPARISON
THE EVOLUTION OF PAYMENTSWHAT DOES THE DATA TELL US?
• Rapid and seismic changes – much more to come
• Technology• Multiple competing platforms and solutions• Banks, Retailers, Telecom, Tech Industries
vying for foothold• No clear winner yet
• Retailers are heavily engaged and vested interest
• Banks are following – but now engaged
• Safety & Security are considerations to all
THE EVOLUTION OF NON-BANK PAYMENTSE-WALLETS
NFC – EmbeddedApple, Softcard,
Cloud vs Device QR CodeMCX
Hybrid
MST
THE EVOLUTION OF PAYMENTSAPPLE PAY – THE LEADING FRONT
• Apple owned
• NFC tech embedded in iPhone6
• Only works on iOS8 and new phone
• Banks Participating
• Retailers Participating
THE EVOLUTION OF PAYMENTSAPPLE PAY – THE LEADING FRONT
How does it work?
http://www.bloomberg.com/video/popout/4S9n3TNbQA6vW_~xMyGaqg/21.13/
http://techcrunch.com/2014/09/09/heres-apple-pay-in-action/
Quick Market Reaction
THE EVOLUTION OF PAYMENTSAPPLE PAY – THE LEADING FRONT
• High Level Process Flow
THE REVOLUTION OF PAYMENTSAPPLE PAY – THE LEADING FRONT
Participating Banks
• .15% Apply Pay Fee
• 1-2% is the norm
• 750+ BANKS NOW
THE REVOLUTION OF PAYMENTSAPPLE PAY – THE LEADING FRONT
Participating Merchants
• 220,000 Locations
• 9 Million Locations
• <10%
• Cost: $300-500
• Walmart using MCX
• Is Timing Better For NFC?
THE REVOLUTION OF PAYMENTSAPPLE PAY – THE LEADING FRONT
• Compatible Apps
THE REVOLUTION OF PAYMENTSMERCHANT CUSTOMER EXCHANGE (MCX)
• Merchant owned
• 110,000 locations
• Pilot in 2014, rollout 2015 (WAITING)
• Software download
• Works on iPhone and Android devices
• QR Code Based
THE REVOLUTION OF PAYMENTSMERCHANT CUSTOMER EXCHANGE (MCX)
• Coupons and Offers
• Loyalty
• Easy of Payments
• Security
THE REVOLUTION OF PAYMENTSAMAZON LOCAL REGISTER
THE REVOLUTION OF PAYMENTSAMAZON LOCAL REGISTER
http://localregister.amazon.com/
How does it work?
THE REVOLUTION OF PAYMENTSSOFTCARD
• Telecom Joint Venture
• AT&T, Verizon, T-Mobile
• NFC Based
• Works on iPhone and Android devices – app comes pre-loaded on 30 devices
• Changed Name from ISIS
THE EVOLUTION OF PAYMENTSSOFTCARD
How does it work?
https://www.youtube.com/watch?v=tH5RWt6HdKk&feature=player_embedded#t=0
Announced partnership with Subway this week – 26,000 locations
THE REVOLUTION OF PAYMENTSBEACON TECHNOLOGY
https://www.paypal.com/webapps/mpp/beacon
https://www.paypal.com/webapps/mpp/beacon
THE REVOLUTION OF PAYMENTSPAYPAL POSITIONING
• Merchant Solutions
• Consumer Solutions
• Financial Hub
• eBay
THE REVOLUTION OF PAYMENTSPAYPAL POSITIONING
• Safety
• Security
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 & excitement
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 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 PAYMENTSWHERE TO FROM HERE?
• CFPB and Other Regulation of Mobile Wallets, Non-Bank payment participants WILL INCREASE
• Apple Pay will CONTINUE TO have a major impact payments
• Google will continue to make a variety of significant bets in payments vertical
• Retailers will implement variety of payment receptors and focus on security, loyalty and up-sell
• Bank’s will continue to follow, but more aggressively participate to avoid continued disintermediation
THE EVOLUTION OF PAYMENTSCOMMENTS & QUESTIONS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
View of Most Current Data on Payments Revolution and Mobile Wallets
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS
THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS