mobile payment opportunities in apac
TRANSCRIPT
Mobile Payment Opportunities in APAC
Jayesh Easwaramony
VP - ICT Practice, Frost & Sullivan
Key Issues
APAC Snapshot
Agenda
ContentsContents
Overview 1
2
3
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Mobile internet revolution is underway
Rise of the smartphone and mobile internet
1.38 Billion New Handsets Sold in 2010
1.06 Billion were camera phones
490 million had premium input method (Qwerty/Touch Screen/Hybrid)
298 million were smart phones
2 Billion Internet Users
31%
20%
49%
1.6 bn Mobile internet users2.2 Billion with a Banking account
=
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.. Is impacting all aspects of m-finance
M-Banking apps
• Mbanking involves typical banking interactions over mobile medium like account Balance, previous transaction, payment of mobile bills,
mPayments
Mpayments can be further broken up into the following categories
• Account/ Wallet linked payments
• M-commerce:• Bill payments
• Proximity payment : very small amount involving contactless solution ( like NFC ) for transactions like Parking, retail.
• May involve stored value or may be linked to a bank.
M-money + transfers
• Unbanked transactions : Transactions involving users who do not have a bank account.
• Micropayment enablement • Money transfers
Implementation complexity
Linkage to bank account
M-payments is one part of the m-finance landscape
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Greater collaboration is driving the m-payment market
Key drivers of m-payments
Mobile usage behaviour
M-payments gets ‘platformized’
Banks move beyond wait and watch – experience vs
enablement
Credit cards – capture of smaller ticket size
Increased commitment to NFC – phones,
Wafer based and SD card based NFC
Various surveys show > 40% of users want to try phone as a payment
mechanism
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Evolution of mobile payment
Phases of evolution
Business Models/Ecosystem
Technology
Pre 2007 2008 - 2012 2012 -2015
Triggers
• Business models driven largely by operators with specific standards
• Japan and South Korea
• Less than 10% 3G penetration
• Early exploration of the technology
• Business models evolving – strong establishment of alliances and consortiums
• Large number of NFC based trials
• Relative maturity of mobile wallet based approaches
• > 30%
• Standardized business models with clear revenue share with ecosystem players
• Expansion and integration with traditional payment processing methods
Embryonic Active Experimentation Maturing
>50%
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M-payment Business Model
Operator driven models
FI driven models
3rd party driven models
Collaboration Model
Mobile operator independently deploys mobile payment applications
Apps may support a prepaid stored value model or the charges may be integrated into the customer’s monthly bill
A bank deploys mobile payment applications or devices to customers, ensures merchants have the required point-of-sale (POS)
Payments are processed over the existing financial networks
An independent peer-to-peer service provider provides secure mobile payments between customers or between customers and merchants
Involves collaboration among banks, mobile operators and other stakeholders in the mobile payments value chain
Consortium Led
Alliance Led
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Operator-Centric Model: Early ventures
SMART Padala (Philippines)
World’s first International cash remittance service through text; offered since 2004;
Remittances are charged a 1% commission; considerably less expensive
Available in more than 19 countries through its SMART Remittance Partners
Also offers a domestic money transfer, To en-cash, the receiver needs to go to the nearest Smart Padala Center
SMART Remittance Partners
Japan
Proprietary technology Felica – owned jointly by Sony, NTT and Japan Railways
• Combination of payments with loyalty discounts - with the Osaifu-Keitai service
• Extended to application platforms in 2008
• Over 50% of subscribers have access to Felica handsets - > 10 mn active users
Korea
Moneta services launched by SKT in 2005 as mobile wallet ~ 6 mn users
Launch of T-cash – as proximity payment in 2009
Unique case of telecom operators either acquiring credit card cos (SKT)
HanaSK ( Hana Bank with SKT Telecom) and BC Card with Korea Telecom
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Non-operator Model
Mobile Money (Malaysia)
Allows registered users to pay for goods and services with a 6-digit security PIN via SMS.
Users can place online orders without the need to disclose their credit card information
Users must have either a savings, current or credit card account with participating banks
It functions like a credit card if a shopper applies for a "Pay by Mobile Phone" credit card account (eg Hong Leong Mobile Credit Card). The user will be billed by the bank accordingly at month's end
In addition, it can also function as a debit card if it is tied to the user’s savings or current account. The amount will be deducted from the user’s account upon successful transaction
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Collaboration Model
mChek (India)
Links users mobile phones to their Visa/MasterCard credit or debit card
Users can pay for their mobile bills, flight tickets, insurance premiums, movie tickets, utility bill payments, and so on
More than 250,000 users with 60,000 transacting customers
Processed over $2.1 million (100 Million Rupees) of mobile payments since its launch in September 2007
Service now live in India with Bharti Airtel, Tata Indicom and Tata Docomo, and in Sri Lanka with Dialog Telekom
Achieved the Payment Card Industry's Data Security Standards 1.2 - a standard to curb debit and credit card fraud
Certified by Western Union as a Mobile Money Transfer Vendor
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Collaboration Models
Barclays with Orange
Shoppers will be able to make small payments using mobile phones if they have Barclays, Orange and Samsung Tocco Lite phone
Initially, Mobile payments upto 15 pounds at 50,000 retail outlets
Quick Tap payments – let users debit 100 pounds from Barclays and payments will be processed by Mastercard
Quick Tap payments can be done by SIM Card and amounts above 15 pounds will have PIN numbers for additional security
UK
USA ISIS JV
Created by the 3 operators AT&T , Verizon Wireless ; Sprint being wooed
NFC based solution
ISIS wants to create a mobile wallet by 2012 and wants Google and Apple to partner with them
Key Issues
APAC Snapshot
Agenda
ContentsContents
Overview 1
2
3
13
Asia Pacific Revenue Forecasts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
M-p
aym
ents
Rev
enu
e (M
illi
on
)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Gro
wth
Rat
e (%
)
Source: Frost & Sullivan
Mobile Payment Market: Revenue Forecasts (Asia Pacific), 2006-2015
Note: These revenues denote revenues accrued to operators only
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Asia Pacific Revenue Snapshot
Hong Kong
South Korea
China India
Japan
Taiwan
Indonesia
Singapore
PhilippinesMalaysiaThailand Australia
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
M-Payments Revenue CAGR (%), 2010-2015
M-p
aym
ents
as
% o
f M
ob
ile
Rev
enu
e
*Size of bubbles compare revenue size
Source: Frost & Sullivan
Mobile Payment Market: Revenue Market Snapshot (Asia Pacific), 2010
Note: These revenues denote revenues accrued to operators only
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Percent of M-payments Revenue by Mobile Payment Channels, 2010
NFC, 14%
SMS/USSD, 78%
WAP, 6%DMB, 2%
Percent of M-payments Revenue by Mobile Payment Channels, 2015
WAP, 7%DMB, 3%
NFC, 23%
SMS/USSD, 67%
Mobile Payment Channels
NFC to exhibit most growth
SMS will continue to remain as the dominant mobile payment channel
WAP/Browser-based payments will remain to be a small contributor
Source: Frost & Sullivan
Key Issues
APAC Snapshot
Agenda
ContentsContents
Overview 1
2
3
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Complex value chain
Operators Operators Purchase
Media
Purchase Media
Technology Provider
Technology Provider
Payment Gateway
Payment Gateway Fulfillment
Fulfillment
Direct Debit / Credit
Direct Debit / Credit
Stored Value Card (Prepaid)
Stored Value Card (Prepaid)
Direct Mobile Deduction
Direct Mobile Deduction
Specific M-Commerce Sites
Specific M-Commerce Sites
ApplicationsApplications
Website access on Mobile
Website access on Mobile
Gateway providersGateway providers
• MChek
• Obopay
• PayTM
• MChek
• Obopay
• PayTM
Mobile Payment Platform Providers
Mobile Payment Platform Providers
• VISA
• MASTERCARD
• AMERICAN EXPRESS
•
• VISA
• MASTERCARD
• AMERICAN EXPRESS
•
IVR Service Providers
IVR Service Providers
Mobile Payment Fulfillers
Mobile Payment Fulfillers
• Mchek
• Obopay
• Mchek
• Obopay
Financial institutions
Financial institutions
Others Others
Complexity of value chain needs a co-opetitive models• Customer ownership – operator clinging on • Payment infrastructure – remote vs proximity• End to end SLA, liability, risk, security and privacy management – TSM?• Co- branding vs revenue sharing – banks see marginal gains • Merchants still unsure• P2P models interesting for mobile wallet but not for proximity
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Replication is tough – the case of m-pesa
Kenya Tanzania
Adoption
Market share of MNO
Agent network
Platform
Others
Run-away success ~ 7 mn users
Limited success < 1 mn users
Safaricom – 79% Vodacom– 79%
Re-use of existing airtime dealers
Different- single shop agents
SIM Toolkit USSD
Higher GDP Presence of national ID Higher pop density
Lower GDP Absence of national ID Lower pop density
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Integrated security and risk management
Customer Education
Mobile Security
Compliance
Forensics and Event ManagementEnd to end management
Application-centric Security
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Conclusion
M-payment delivers value to all players in the ecosystem
However consumers will be slow to adopt ; cash and stored value card have strong value propositions
Technology is not the answer , understanding the customer is
Strong co-operation between cross-industry players is essential
Contactless payment a reality; NFC to drive the next wave of growth
Location assisted + loyalty – to assist m-payments
Proactive government for standardization and enablement
Innovation in business models for unbanked and emerging markets
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Contact Details
Jayesh Easwaramony
Jayesh has over 10 years of strategy consulting and business planning expertise with large conglomerates and MNCs within the APAC region. He has a wealth of experience in the TMT sector (Telecom, Traditional Media, New Media, IT Services and BPO). He is a thought leader in the above sectors and regularly presents at various forums and events. He is also sought by print and news media for his opinions on industry developments.
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