Increase Payment Platform Adoption by Adding Categories, Braintree

Bhaskar Jayaraman: jay.bhaskar@gmail.com

Agenda

• Glimpse of Braintree Partners & Clients• Current Partner/Client categories• Potential categories• Adding a new category, Mass Transit (CUBIC)

Upstream Partners

Partners (Downstream)

Current PartnersGlimpse of Current Partners & Clients

Clients (Downstream)

Downstream – Platform integratorsUpstream – Platform enhancers

‒ e-commerce platforms (Shopify, Drupal, Goodsie)‒ Hospitality (airbnb, HotelTonight)‒ Online marketplaces (taskrabbit, livingsocial, Belly)‒ Entertainment (AngryBirds)‒ Niche verticals (GitHub, stackoverflow)‒ Payment solutions (innerfence, levelup)‒ Retail (Trunk Club, Fab, Poshmark)‒ CRM (Belly)‒ F&B (OpenTable)‒ Social network platforms (FB)‒ Blogging platforms (Wordpress)‒ CDN (CloudFlare)‒ CSP/ISP (serverdensity)‒ SaaS (Animoto, Basecamp)

Current Downstream Categories (Clients & Partners)

Potential Downstream Categories (e.g. in Appendix I)

Clients (Direct categories)

Those who integrate Braintree on their solutions

- Entertainment- TV/Music/Gaming

- Lead aggregators

- Device/App SDKs- Smartphone/Tablet- Wearable platforms- Automobile dashboard

- Mass Transit Vendors

- Employee benefit providers

- Mobile providers

- Micro/Crowd Finance

- Niche technology (QR Code, NFC, SMS etc.)

- Retail Energy (Gas, Electric)

- Wallet (Not fully thought through)

- Accounting software

Partners (Indirect Categories)

Those who integrate Braintree on their platforms

(e.g. Catering niche verticals in eCommerce, CRM)

- Food

- Finance

- Video

- Education

- Pharma

- Hotels

- Airlines

- Utilities

- Wireless hotspots

Downstream – Next steps

‒ Grow each category‒ Add more categories‒ Fill gaps in platform

Current‒ Processing partners (Wells Fargo)‒ Underwriters/Financiers (Appleseed)‒ Checkout Partners (Taxcloud)

Upstream Categories

Potential‒ QR Code partners (Scan)‒ NFC (Sequent)‒ Augmented Reality (Layar)‒ IVR‒ SMS‒ VoIP (Twilio)

Upstream – Next steps

‒ Document customer wish list to platform enhancement

‒ Add complementary categories

Adding a New Downstream Category, Mass Transit – CUBIC

CUBIC, quick look

Business divisions‒ Defense

‒ Transportation (Mass transit tech

solutions)

Financials‒ Market Cap, $1.4 B

‒ Run rate Mar ’14, Approx $1.5B

‒ YoY Rev. Growth, Approx. $100M

CUBIC Transportation Division

‒ Revenue share 37% (Y 2012)

‒ Operations in – USA (HQ), Canada,

Germany, Aus, Sweden, U.K., India

‒ Over $14 billion in revenues collected

‒ Vendor for SFMATA (BART, Caltrain,

VTA, etc.)

Case – CUBIC Clipper, San Francisco

New balance updated

on Clipper

6. User scans

Clipper with NFC

on machine

5. When successful machine requests another Clipper

scan

4. User swipes

credit card to load amount required

3. User scans

Clipper card with

NFC on machine

2. User locates

machine1. User signs up

Clipper Card Loading Process at Kiosk Machines –

Reduced ridership when,1. Trouble locating ticketing machine (only in big stations)

2. Waiting in queue (possibly missing connection)

3. Ticketing machine out of order

4. Fraud possibility (Card skimming etc.)

5. Choosing alternative transport (Uber etc.)

Proposal – Increase Ridership & Clipper adoption via Mobile

Braintree Proposal (e.g. using NFC)

New balance updated

on Clipper

5. User loads

Clipper with NFC

app on phone

4. When successful

App directs Clipper

scan

3. Employee uses App to load clipper

2. MUNI+ App saves info with Braintree

1. User loads visa card info

on MUNI+ App

Currently not in place possibly because of,‒ CUBIC’s reluctance for PCI Compliance

‒ CUBIC’s concerns on smartphone Security and Malware

Recommended business structure

‒ CUBIC to own‒ Decision On Technology (NFC, SMS, TCP/IP etc.)

‒ Integrating payment platform

‒ Development/testing of App on various phone platforms

‒ Production Release, & Maintenance of App

‒ Braintree to own‒ PCI Compliance & Security (2 factor auth. etc.)

‒ API availability on various smartphone platforms

‒ Testing of APIs & Change Requests

‒ Braintree API compatibility & integration with CUBIC system

‒ Support Demonstration & Production Release of App

‒ Could potentially also include,‒ Participation in Marketing and Awareness Campaigns

‒ Bringing more upstream partners on board (telecom, device, security, QR Code etc.)

Sustaining Categories via Product Enhancement

‒ Handle CUBIC’s‒ Support enhancement requests

‒ Platform/API requests

‒ Platform enhancement requests (upstream partner tie-up needs)

‒ Propose ways of engaging product‒ Via upstream partners (checkout, billing, accounting etc.)

‒ New ticketing mechanism (QR code)

Strategic and financial assessment

Clipper Usage & Braintree Opportunity

Assumption based on

SF Bay area ridership 5,149,230 Wikipedia

Total number of active Clipper users 1,300,000 www.mtc.ca.gov

Smartphone users 845,000 Smartphone user penetration 65% (Businessweek)

Braintree revenue per smartphone user per transaction $0.30

Braintree revenue potential per month (assuming every user loads once per month) $0.30 x 845,000 = $253,500 Only smartphone users & if Clipper user loaded

via NFC, SMS, etc.

Braintree revenue potential per year for SF Bay Area $3 M $253,500 x 12

Total CUBIC Revenue Potential for Braintree

Assumption based on

CUBIC ridership worldwide 38 M per day www.cubic.com

Number of smartphone + clipper riders 6.5 M Clipper usage 25% of total & smartphone penetration 65%

Annual revenue potential $23.5 M $0.30 x 6.5 M x 12 (User loads once a month)

Annual revenue potential for Braintree, when smartphone penetration approaches 100% $36 M 10 M x $0.30 x 12

Annual revenue potential for Braintree, when all CUBIC ridership approaches 100% on smart card use $136.8 M 38 M x $0.30 x 12

Total ridership in 2024 38 M + 6.33 M = 44.33 M 1.6% per year of base year 2014, WHO

Annual revenue potential for Braintree in 2024 $160 M 44.33 M x $0.30 x 12

Questions?

Appendix I – Assessment of Braintree Proposal

Advantages‒ Clipper + Smartphone = Cool, Convenient

‒ Steps 1. and 2. are one time (slide 14)

‒ Six steps to three (3, 4, 5)

‒ Requires only one clipper NFC scan

‒ Less cost to install, maintain, upgrade

machines

Drawbacks‒ Not all phones have NFC

‒ Not all users have smartphones

‒ NFC option open to abuse by

hackers

Workarounds‒ Other NFC devices (wearables?)

‒ 2 factor authentication for NFC

‒ SMS

‒ TCP/IP (Web interface, Chat app)

‒ Over the phone

Drawbacks of Workarounds‒ SMS costs $$

‒ Updates to Clipper card take 3-5

days‒ via TCP/IP & Phone

‒ Possibly also via SMS, OOB

Appendix II – Potential Downstream Categories

Partners (Indirect Categories)

- Food (e.g. Mowingo, LAI)

- Finance (e.g. Pareto)

- Video (e.g. Zumobi)

- Education (e.g. Serco)

- Pharma (e.g. Sales Vision)

- Hotels (e.g. Guestware)

- Airlines (e.g. Mobiata)

- Utilities (e.g. TIO Networks)

- Wireless hotspots (e.g. ZyXEL)

Clients (Direct categories)

- Entertainment- TV/Music/Gaming (In app purchases on Roku,

Xbox, Beatport)

- Lead aggregators (e.g. Reply, Stik)

- Device/App SDKs (Smartphone/Tablet, Wearables,

Dashboard displays)

- Employee benefit providers (e.g. Wagewokrs)

- Mass Transit (e.g. CUBIC)

- Mobile providers

- Micro/Crowd Finance (e.g. m.Paani)

- Niche technology firms (QR Code, NFC, SMS etc.)

- Retail Energy (Gas, Electric)

- Wallet (Not fully thought through)

- Accounting software (e.g. Xero)

Appendix III – SF Bay Area Public Transport Ridership

Agency Name Daily Ridership (www.wikipedia.org) Clipper?

ACE 3,700 No

BART 421,800 Yes

Caltrain 47,060 Yes

SMART — —

Muni Metro 160,100 Yes

VTA Light Rail 33,600 Yes

AC Transit 236,000 Yes

SamTrans 46,070 Yes

MUNI 297,700 Yes

VTA 107,900 Yes

Golden Gate Ferry 5300 Yes

Total Ridership 5,149,230

Total active clipper cards in circulation 1.3 M (www.mtc.ca.gov) or 25% of ridership

Appendix IV – Clipper Usage & Braintree Opportunity

Assumption based on

SF Bay area ridership 5,149,230 Wikipedia

Total number of active Clipper users 1,300,000 www.mtc.ca.gov

Smartphone users 845,000Smartphone user penetration 65% (http://www.businessinsider.com.au/us-smartphone-penetration-ticks-up-in-the-fourth-quarter-2014-2)

Average times balance is loaded per month Once Assuming they commute daily

Average annual transport expense of household in SF $10,466 http://www.bls.gov/ro9/cexsanf.htm

Average spent on public transport in SF 12.2% http://www.bls.gov/ro9/cexsanf.htm

Amount spent on public transport per month $106 ($10,466 x 12.2%)/12

Total amount spent on transport by all riders per month $546 M 5,149,230 x $106

Total amount spent on commuter expense per month $273 M Assuming 50% goes to this and rest go to taxi and airplane travel

Total amount spent by Clipper users per month on public transport per month $68.9 M $106 x 1,300,000 x 50%

Amount spent on Clipper as a percentage of total ridership spend 25% = 68.9/273

Regardless of the money spent of clipper Braintree revenue per smartphone user per transaction $0.30

Braintree revenue potential per month $0.30 x 845,000 = $253,500 Only smartphone users & if Clipper user loaded via NFC & SMS & assuming every user loads once per month

Braintree revenue potential per year for SF Bay Area $3 M $253,500 x 12

Appendix V – Total CUBIC Revenue Potential for Braintree

Assumption based on

CUBIC ridership worldwide 38 M per day http://cts.cubic.com/en-us/aboutus/companyfacts.aspx

Active Clipper or similar smart card users worldwide 10 M per day Assuming 25% of all

Number of smartphone riders 6.5 M Assuming average penetration of 65%

Total number of times they load clipper card Once every month

Revenue potential for Braintree via NFC/SMS solution per month $1.95 M $0.30 x 6.5 M

Annual revenue potential $23.5 M $1.95 M x 12

Annual revenue potential for Braintree, when smartphone penetration approaches 100% $36 M 10 M x $0.30 x 12

Annual revenue potential for Braintree, when all CUBIC ridership approaches 100% Clipper or similar smart card use $136.8 M 38 M x $0.30 x 12

Ridership growth annually (2010, 50% people lived urban areas & by 2030 this will be 60%) by 1.6% per year of base year (2014)

Extrapolated using data from -http://www.who.int/gho/urban_health/situation_trends/urban_population_growth_text/en/

Total ridership in 2024 38 M + 6.33 M = 44.33 M 1.6% per year of base year (2014)

Annual revenue potential for Braintree in 2024 $160 M 44.33 M x $0.30 x 12