Mobile Payments & Commerce

September 2012@ogillin

Agenda

• Market overview• Competitive landscape• Region analysis• Value chain

2011 2012 20160

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Western Europe

North America

Asia/Pacific

EMEA*

Latin America

Billi

on U

S$

Mobile Payment Transactions Value by Region

Gartner (May 2012) *EMEA without West EU

42%CAGR

Top countries in M-Payments2011 - 2016

USA Japan France Philippines

China India Germany Norway UK ES NL BE0

5,000

10,000

15,000

20,000

25,000

30,000

0

10

20

30

40

50

60

70

80

90

100

6,404.0

1,012.2 1,767.0424.9 82.9 5.2

% C

AG

R 20

11 -

2016

Euromonitor.com, July 2012, Tablet traffic and Money Transfer transactions not included

Forecast assumptionsWest EU US Africa/SEA

Technology Web/WAP80%

Web/WAP88%

SMS

Main usageE-commerce

(eBay, A9, Apple)In-store purchase

E-commerceIn-store purchase (Starbucks, etc.)

Money Transfer & Airtime Top-Ups

Ticketing Merchandise $53 $43 $10/$20

Money trans. $93 $80 $68/$60

Comment East-EU fastest growth in user but small base

Africa top in ValueAPAC top # users

Still fragmented for the next 2 yearsOpportunities for regional players to meet local requirementsNFC to max 10% of transactions by 2015 and pick up in 2016 NFC requires change in behavior and multiple stakeholders

Source: Gartner (May 2011)

M-Commerce Overview

2011 20160

50,000

100,000

150,000

200,000

250,000

300,000

M-Commerce (Est.)

West EU (+17%)North America (+78%)MEA (+8%)LATAM (+38%)East EU (+12%)APAC (+1%)Bi

llion

US$

CAGR 27%

Euromonitor.com, July 2012, Tablet and Money transfer not included

M-Commerce by Region

2011 20160

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Japan

Philippines

India

China

APAC

2011 20160

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

France

United Kingdom

Germany

NorwaySpain

Denmark

West EU

2011 20160

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

USA

Canada

North America

Euromonitor.com, July 2012, Tablet and Money transfer not included

Factors of market growth

Source: Sapient Nitro (May 2012)

e- / m- retailersF2F retailers ConsumersGovernment

Enterprise

Business

P2POnlineIssuers

Acquirers/ Processors

TransactionServices

POS

Networks

Consumers

Payo

r / A

Par

tyPa

yee/

B p

arty

Serv

ice

/ Pl

ayer

s

Content

US/world Fast moving Competitive landscape

e- / m- retailersF2F retailers ConsumersGovernment

Enterprise

Business

P2POnlineIssuers

Acquirers/ Processors

TransactionServices

POS

Networks

Consumers

Payo

r / A

Par

tyPa

yee/

B p

arty

Serv

ice

/ Pl

ayer

s

Content

EU Fast moving Competitive landscape

Quick Tap

Top 400 EU e-retailer: http://www.internetretailer.com/europe400/list/

Square disruption with Mobile POS

$100Principal

$1.9 Card issuer $0.2 Network $0.5 Acquirer

$97.4Transferred

deltapartnersgroup.com

The value is in the services and customer data

DevicesGoogle Nexus S

smartphone

Advertising & Promotions

Google OffersGoogle Shopper

Card acceptance network

Mastercard Paypass

Payment instruments

Citi MastercardGoogle prepaid

card

Account control (sign on, identity, customer data)

Google

Service/user interface

Google

Trusted Service Manager

First Data

Bearer/ connection tech. Sprint, Google (via NFC enabled Nexus S)

Where Do you want to be?

http://www.deltapartnersgroup.com/blog/archives/490

Appendix

Electronic payment value chainLow margins in Processing / Acceptance areas

Payment Instrument Issuance

Payment Process Settle Merchant

Process Gateway

/ POS Merchant

Acquire

1. Issuance 2. Processing / Acceptance 3. Acquiring

Typical payments value chain and margins

321

Online

F2F 0.5%0.40%1.1%

1.1% 0.9%

Mobile wallet

2.00%

• Third Party Processors (TPP) focus• Processing requires high volumes to be profitable• Acquiring merchant accounts directly builds scale • Gateway / POS an important aspect of building

merchant relationships quickly

• Bank focus – regulation generally stipulates must be a bank

Closed Model like Amex

0.40%

0.8% 0.8%

• Associate focus - own customer relationship

http://8.mshcdn.com/wp-content/uploads/2011/07/GLG_Goodbye_Wallets_FINAL-L_1841.png

Top countries in M-Payments

USA Japan France Philippines

China India Germany Ar-gentina

Norway United Kingdom

Brazil Spain0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

0

10

20

30

40

50

60

70

80

90

100

2016 M-commerce % CAGR 2011-2016

Billi

on U

S$

% C

AG

R 20

11 -

2016

Euromonitor.com, July 2012, Tablet traffic and Money Transfer transactions not included

Initiatives in various countries

Mobile POS: Square, Izettle, Intuit

+ US Verifone SAIL, US TapPay & TapWallet+ DE Rocket Internet payelen+ DE Wirecard w/ Deutsche Telekom+ DE StreetPay w/ E-Plus

+ NL GlobalCollect’s BOKU (Phone # + SMS)+ UK Sage Pay, Mpowa+ IE BoxPay for carrier billing+ … paymentobserver.com