Understanding the Payments Landscape

R Future of Payments Future of PaymentsR Mobile NFC marketplace Understanding the payments landscape Market segmentation Key players NFC smartphone user-base 2012-2017 Rest of world Asia NFC (near field communication) payments techni- cal solution is now judged to be in place based on agreed cross-sector standards, while payment security concemns have been alleviated. Merchants andretailers are rolling out NFC-contactless infrastructure; the Post Office now supports NFC in 11,500 branches. Allequipment manufacturers, except Apple, support NFC and Apple is expected to follow suit with its iPhone 5. CorFire, Gemalto, NXP and Proxama Europe North America 1,200m 800m eCommerce Ones to watch 400m Arapidly expanding payments market is transforming the industry and offers opportunities in a number of key sectors, as data from Juniper Research shows Thinair, Narian and Nokia. Om 2012 2013 2014 2015 2016 2017 Contactless cards Online banking Mobile (mCommerce) Key players UK Contactless cards in circulation 2009-2012 Fixed Key players First introduced into the UK in 2007, there are now more than 23 million contactless cards in circulation. However, usage and awareness levels are low; in. January, a YouGov survey found that just 12 per cent of the population believed they owned a contactless card. Pay- ment caps have increased slowly and rose from £15 to £20 in June. UK online banking fraud 2007-2011 While online banking was initially geared towards transactions, focus is increasingly now on product marketing and use as a communications platform. Several banks areintroducing personal finance management products and seeking to incorporate mobile as a critical means of accessing online portfolios. Improved security has seen online bank- ing fraud levels fall since 2009, despite increased phishing attacks. Gemalto, Giesecke & Devrient and Oberthur Technologies Royal Bank of Scotland, Deutsche Bank, Barclays and BNP Paribas 20m £60m 15m £45m 10m £30m Ones to watch 5m £15m Ones to watch Dot Origin, Smart Technologies Group and sQuid. Om £0m Intuit and Tesco Bank Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 2007 2008 2009 2010 2011 Online Online Mobile Mobile payments banking banking payments Remote mobile payments Mobile banking Key players Key players Mobile banking service user-base 2012-2017 Those buying physical goods in the UK via smart- phones are spending $300 a year each and, via tab- lets, more than $700. Sales of digital goods (apps) have soared as consumer smartphone adoption has increased. Companies, such as eBay and Japan's Rakuten, are leading the way with mobile transaction volumes; more than $5 billion in mobile transactions was recorded via eBay Mobile in 2011 and this is expected to reach $8 bilion this year. Remote mobile purchases digital and physical goods 2012-2017 Banking by mobile has been given further impetus as crisis-hit financial institutions redefine channel Rest of world Asia Rest of world Asia mBlox, Netsize, PayPal and Sybase Accenture, Fundamo, Gemalto and Fiserv Europe North America Europe North America strategies. There isa transition from simple text- based alerts to smartphone apps and the web as primary mobile channels, although SMS (short message service) is increasingly used for product marketing and cross-selling. More than 860 million consumers worldwide are expected to access some form of banking via mobile by 2016. 800m Money transfer Money transfer Point of sale $600,000m Remote 600m payments $350,000m Ones to watch 400m Ones to watch 200m Monitise and Tyfon $0m BOKU and Onebip Om 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 Contactless Online payments Mobile money transfer payments Payment mechanisms Key players Key players Mobile money transfer services launched 2001-2011 Global eRetail sales grew nearly 12-fold between 2001 and 2011. Online payment providers are now offering in-built financing; PayPal's Bill Me Later offers instant credit at the point of purchase. Growth in social media has increased online Almost 200 mobile money transfer services had been launched globally by the end of 2011 and most since early-2009. The trailblazer has been Kenya's Safaricom and its M-PESA service with nearly 15 million users, andmore than $12 billion transferred since 2007. Service providers in developing markets are seeking to augment money transfers with more sophisticated microfinance services and savings accounts. Rest of world Asia eRetail gross transaction volumes Accenture, Comviva, Fundamo, Gemalto and Sybase Amazon Europe North America Payments, ClickandBuy, Google Checkout, Neteller and PayPal SMS/ Premium SMS 45 Direct- to-bill Credit/ debit card NFC credit/ debit cards NFC handsets $800bn $600bn 30 Ones to watch micropayments. And merchants are seeking to integrate online as part of seamless cross-channel sales processes. However, credit and debit card payments predominate. $400bn 15 $200bn Ones to watch Online banking transfer Prepaid cards Boom Financial, DonRiver, mChek and Monitise PayPal Prepaid cards $Obn Braintree Dwolla 2001 2011 and Stripe 2001 2003 2005 2007 2009 2011 Operator billing PSMS billing Prepaid cards Key players Key players Key players PSMS volumes Rest of world Asia UK Prepaid cards 2008-201 This allows consumers to have content purchased on their mobile handsets charged to their phone account and offers operators a way back into content monetisation in the wake of the app store revolution. In mostregions, billing is capped and applicable only to digital purchases. Allequipment manufacturers, except Apple, now support NFC (near field communication), although Apple is expected to include NFC in the iPhone 5. Historically the dominant mobile payment mecha- nism, PSMS (premium short message service) suffered from several high-profile subscription- based scams which led to tighter regulation. Usage fell as the ringtone market declined and consumers migrated to app stores using credit cards. How- ever, PSMS is relatively simple to implement and lack of pre-registration means it remains popular for impulse-buy content outside app stores. These can be disposable or reloadable and are preloaded with funds while expenditure is limited by the preloaded value. They can be closed loop and redeemable by a single merchant, as with a gift card, or openloop and general purpose. Prepaid cards are often used by consumers who do not qualify for credit or debit cards andare increasingly popular in under-banked nations. Downstream Bango, mBlox, Netsize Bango, mBlox, Netsize and Sybase Upstream APl access 2012-2017 Europe North America American Express, Green Dot, MasterCard, NetSpend and Visa unified communications 2.5m and Sybase. $15,000m 2m Advertisers Enterprise clients 1.5m Operator as Paas provider Retailers $10,000m Ones to watch One to watch 1m Developers $5,000m Consumer Onebip 0.5m Ones to watch Aepona, BOKU and boxPAY Other Saas clients $0m Om providers * 2009 Moneycorp and PayPal 2012 2013 2014 2015 2016 2017 2008 2010 2011 12 raconteuronthetimes.co.uk theraconteur.co.uk twitter.com/raconteurmedia raconteuronthetimes.co.uk theraconteur.co.uk twitter.com/raconteurmedia 13