Download - Cracking Ubiquitous Payments
Cracking Ubiquitous Payments
What the heck happened to mobile payments?
My (Rough) Agenda
1. Scope of the discussion2. Credit card industry overview3. Mobile phone industry overview4. Implications for mobile payment businesses5. How those models have played out6. Why it ain’t working7. Why it works elsewhere8. Staggeringly brilliant insights and takeaways
SMS + e-commerce
Technologically feasible since 1995!
• SMS, part of GSM protocol, approved in 1985• First text message in history sent in 1992– The message: “Merry Christmas”– Later messages less cheerful
RFID + cell phone saturation
Real market since 1997
So what happened?
Scope of the discussion
Mobile Payments: Not Really All That Rare
1997!
?
10%
~ 1%
~ 2%
So now we ask: what happened in the US?
And what was different about Asia, and now Europe?
We need to understand the two pertinent markets
Credit Cards vs. Mobile Phones
The US credit card industry
… by which I mean “cards with magnetic stripes you pay for stuff
with”*
*I’m not going to argue with you about actual credit
“Invented” in 1888
Eddy Bellamy: Interesting dude
Used in the 20’s as a gas card
Reached ubiquity by the late ’50s
Many moving parts
Customer Merchant Payment Gateway
Acquiring Bank
Credit Card Network
Issuing Bank
Value chain is split across function
Credit Card
Network
Visa
MasterCard
American Express
Banks
Merchant Bank, e.g. FirstData
Retail Bank, e.g. Chase
Payment Gateways
"Point of Sale" units
Web and mobile commerce
End Users
Merchants
Consumers
Card Networks
The alphas of the group
Retail banks
Split beta duties with merchant banks
Merchant banks
Like retail banks on the merchant side
Payment gateways
The nerds who make it work*
* and consequently are overlooked and undervalued
Merchants
Getting the short end of the stick since the ‘70s
Consumers
Getting the short end of the stick since day 1
The US mobile industry
… by which I mean “phones you can carry around”
Launched in 1983
Analogue network
2G (all digital) in 1991
GSM: set the stage for scalable networks
Telecommunications Act of 1996
13,550% growth once interoperability enabled
Side effect: massive consolidation
Today, only three nationwide networks
Nice simple value chain
Hardware Manufacturers
Tower technology
Handset technology
Carrier Networks
AT&T, Verizon, etc.
Consumers
Software Vendors
Hardware Manufacturers
Tower technology
Handset technology
Carrier Networks
AT&T, Verizon, etc.
Consumers
Right?
Standards Boards
App Stores
3rd Party Services
Content Providers
Software Vendors
Hardware Manufacturers
Tower technology
Handset technology
Carrier Networks
AT&T, Verizon, etc.
Consumers
Right, guys?
Standards Boards
App Stores
3rd Party Services
Content Providers
FCC!
Handset Manufacturers
Increasing power in high-demand markets
Carrier networks
Pretty much run the commodity handset manufacturers and the poor
consumer
App stores
Successfully maneuvered out of carrier control
SMS gateways
More nerds, beholden to carriers
Consumers
*Still* getting the short end of the stick
Technology Solutions
Like technology alone ever solved a problem…
1. SMS powered
Digital wallet or carrier billing
2. Mobile internet powered
Free from direct carrier intervention
3. Hardware powered
Awesome, but require cooperation
Four distinct business models
Bank Centric• Payments
processed directly through bank
Collaborative• Joint venture
between carriers and banks
Independent• Payments
processed independently from bank or carrier
Carrier Centric• Payments
processed through carrier contract
High
Low
High
Low
Carrier’s Involvement
Bank’s Involvement
Banks vs. Telecoms vs. Hardware vs. Software
Telecoms losing the fight
Security vs. Ease of Use
i.e., banks vs. independents
What needs to happen?
Collaboration on a massive scale
The Road to Collaboration
• Leverage mobile standardization
• Leverage bank security
• Leverage independent innovation centers
Will it work?
Theoretically…
La Caixa, Movistar, Visa
• Perfect coordination between the players
• Utilizing NFC!
• Under way now
So what about the US?
Thanks guys!