6mon

Legacy Model

Issuer

Issuer

Issuer

Bank TSM

Bank TSM

Bank TSM

Root TSM

Root TSM

Root TSM

$5M

$5M

$5M

Digital Wallet

6mon$5M

6mon$5M

Digital Wallet

Digital Wallet

Today’s Model

Issuer

Issuer

Issuer

Payment Network – Token Service Provider

3mon

3mon

3monDigital Wallet

Digital Wallet

Digital Wallet

#appandpay vs. #tapandpay

Dave Birch

Global Ambassador,

Consult Hyperion

Mobile World Congress

Barcelona, March 2015

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Why in-app payments will be an industry focus in the coming year

Consult Hyperion

Practical and independent expertise

Mobile payments are old news

So what’s new?

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But the environment has changed

ApplePay legitimised the entire sector

■ Mindshare not marketshare

US EMV migration began

■ Now contactless makes sense

Proximity and vicinity interfaces

• HCE and BLE are friends

Tokenisation

Google, Samsung…

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So our “live five” trends for 2015

Consult Hyperion’s “hot five”

■ In-app payments

• “App and pay” not “tap and pay”

■ The three-party party

• Think global, act local

■ Privacy

• Part of the proposition

■ Blockchain

• The real revolution

■ IDIoT

• Identity for the Internet of Things

The next big battle

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Wait, we already have in-app, don’t we?

The payments are vanishing inside the apps (as I’ve said at MWC before)

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In-app payments

Right now, in-app payments are card-not-present in a silo

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Amazonisation (APIs and integration)

But now it’s about chip-and-PIN security baked in to apps

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Mobile + Anything = Mobile ( © Tomi!)

The real impact of Apple Pay will be in “app and pay” not “tap and pay”

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Retailers want in-app

It’s not just about payments, it’s about integration

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Tomorrow’s Transactions:

thought leadership from Consult Hyperion

Read www.chyp.com/media/blog

Listen www.chyp.com/media/podcasts

Visit www.chyp.com

Contact info@chyp.com

Follow @chyppings

Thank You

Consult Hyperion has helped some of the world’s leading organisations to make the right

technical and commercial choices within and around smart, mobile, contactless

transactions, including retail payments, identity management and transit ticketing. We are a

trusted advisor adding product strategy, technical, regulatory, compliance and information

security expertise into project teams within organisations considering deploying innovative

new payment or identity services.

Wired listed David Birch of Consult Hyperion one of their global top 15 favourite sources

of finance and business information. He was ranked Europe’s most influential

commentator on emerging payments by Total Payments magazine. He is a NextBank

FinTech Titan and one of the European “Power 50” in digital financial services.

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GSMA SEMINARCase study: Cash by Optus

Gilles NovelDirector, Digital Payments, OPTUS

OUR JOURNEY STARTED 2 YEARS AGO AFTER EXTENSIVE RESEARCH INDICATED A ROLE TO PLAY FOR OPTUS

Consumer surveys and focus group indicated a strong appetite from Optus customers for mobile payments and a clear role to play for Optus

Mature Australian environment: smartphone penetration + strong adoption of contactless

Key business drivers: physical to online displacement, recharge, marketing differentiator, churn & acquisition

Consumer centric approach: Optus brand relaunch, focus on NPS and consumer experience

Combining lifestyle, innovation and peace of mind “Safe, Simple and Smart”

Most importantly – the first step towers a new range

of services… associating our brand with TRUST

WE EVALUATED MULTIPLE SCENARIOS TO INNOVATE, ENABLE AND COLLABORATE TO STRUCTURE THIS NEW ECOSYSTEM

Creating digital payment apps where asmartphone can be used to pay.

Partnering with banks rather than becoming anissuer under their own Financial Service License(distributing / hosting)

“Feature rich” wallet app at launch combiningmultiple payments instruments, offers, loyaltyschemes, advertising and proprietary services(P2P)

ENA

BLE

R M

OD

EL

“Lean product” at launch leveraging NFCcapabilities amongst user community to facilitateearly adoption

Business models – profitable or marketing tool?Proprietary or Open Loop?

One wallet vs multiple wallets and how toguarantee consumer experience under multipleband guidelines

CO

LLBO

RATIV

E MO

DEL

Our project went though multiple strategic reviews. Two scenarios were explored in parallel and our business model was redesigned multiple times to focus on adoption and consumer experience.

CASH BY OPTUS™ WAS LAUNCHED IN 2014 AS THE FIRST TELCO MOBILE PAYMENT SOLUTION IN AUSTRALIA SIM based solution – anonymous VISA prepaid card in NFC SIMs

Positioning – CASH IN YOUR PHONE / wingman approach

Available to Optus customers on selected Android mobiles

VISA PayWave – can be used with most merchant's POS

Targeting SVP space – limited transactions

• $500 balance limit

• $99.99 contactless for Face to Face transactions

• $250 online with all e-merchants accepting VISA

Fast and easy to use - Wave to Pay

Don’t get caught out of cash - Forget ATMs and need for small change

Shop online with confidence – limited exposure online. Great for kids

Recharge anytime anywhere - automatic recharge, push-pull, real-time

Know your balance - Real time balance (app & widget) and transaction history on app

Download and use - 3mn online enrolment and activation - no credit /ID check

Simple value proposition

PAYMENTCash replacement

THE PRODUCT WILL SOON INCLUDE WEARABLE TO REDUCE FRAGMENTATION CREATED BY PLATFORM DEPENDANCIES

TRANSPORTOPAL/MYKI/GOCARD

ONLINE PURCHASEOne click VISA checkout

LIFESTYLEHealth & fitness

LOYALTY & OFFERSOffers & redemptions

ACCESS CONTROLCorporate

Hospitality

HEALTH & ID E-gov services

ID cards

CASH BY OPTUS™ KEY EXPERIENCE, LIFESTYLE, UBIQUITY AND SIMPLICITYPRINCIPLES FOCUS ON CONSUMER

UBIQUITOUS - VISA PayWave + multi HW brand support

ULTIMATE UX: speed, convenience, simplicity - “the best UI is no UI”

Better PERCEPTION for better ADOPTION - Co-branding with VISA

CLEAR VALUE PROPOSITION – cash displacement in the SVP space

FAST ENROLMENT - no PIN, no KYC, no FEES / simple app download

LARGE AUDIENCE including youth market & millennials

MINIMAL RISK of the payment instrument

LIMITED CONSTRAINTS on HW platform, certification and connectivity

SIMPLE PROVISIONING model - no OTA/TSM

MULTIPLE APPLICATIONS SUPPORT: payment, transport, ID

OPEN PLATFORM to loyalty and LBS

COMPLIANT to our Care model

WE HAVE COMPARED MULTIPLE TECHNOLOGIES AND THE SIM IS THE MOST ADAPTED TO OUR NEEDS TODAY

COST

• Technology: licensing and complexity

• Integration into Optus environment

CONTROL – managing the data and ecosystem (issuance, PKI…)

ISSUANCE model /simple on boarding and distribution

Simple integration into our procurement platform

Pre-provisioning model / real time

PERFORMANCE

• Transaction speed, reliability

• User case: no service, no Internet connection, flat battery

• Proven technology / adoption/ robustness / used in telco environment

CloudHCE / TSP

ESE Tags and stickers

SIM

WE INTEND TO LEVERAGE OUR KEY ASSETS TO BUILD THE NEXT GENERATION OF SERVICES BUT TIMING IS CRITICAL

Payment

Ticketing

Transit

Identity

Loyalty

Advertising

Offers

JUDICIAL

SOCIAL

FINANCIAL

MEDICAL

BEHAVIORAL

Digital Identities

DEVICES

IMSIMSISDNIMEICertificates

CARE

Servicing millions of customers by phone and online

NETWORK

IPGeo-locationHistoryAnalytics

KYC / USAGE

Personal detailsCredit scoringTransactionsPayment details

PRIVACY = giving CHOICE and FULL CONTROL to customers

INDUSTRIES

WHAT WE HAVE LEARNED – THE CORE CHALLENGES WITH THE NFC ECOSYSTEM ARE NOT THE MOST OBVIOUS ONES

TECHNOLOGYValue propositionServicesBusiness modelMarket awareness

Collaboration modelsCommercial structuresCertification & testing Legal and regulatoryIntegration costCustomer careRoles & responsibilitiesUser case scenariosAnd more…

AS A CONSUMER CENTRIC COMPANY, WE BELIEVE IN CROSS-INDUSTRY COLLABORATION TO GUARANTEE CONSUMER ADOPTION

Are we confusing consumers?

Mag stripe > chip & insert > contactless cards > contactless phones

Signatures > PIN > biometrics (Apple) UICC SE /Embedded SE /Cloud solution (HCE & TSP) Android vs Apple world F2F vs online Cloud wallets and OTT solutions P2P and future overlay services

- Customer service at the heart of our business (Optus : serving 2M calls per year - 3500 / 12% calls non Optus related)

- Do we still “own” our customers?- This new ecosystem is VERY

fragmented

1. Establish TRUST in the ecosystem2. ALIGN all processes to streamline

customer experience3. ENABLE and STRUCTURE with a

uniform voice to secure adoption