next steps for nfc and mobile wallets - pse consulting … · next steps for nfc and mobile wallets...

November 2013

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Mike Hendry Page 1

PSE Consulting Merchant Acquiring Conference

November 2013

Mike Hendry

Payment Systems Consultant

Next steps for NFC and mobile wallets

November 2013

2

Next steps for NFC and mobile wallets

State of the (dis-) Union

Infrastructure developments

Stakeholders and their activities

NFC applications and services

Next steps

Mike Hendry Page 2

November 2013

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NFC and mobile wallets

Convergence of interests:

• MNOs

• Chip manufacturers

• Handset manufacturers

• OS & software developers

• Data ransackers

• Media

• Retail

• Public transport

• Payment

© Mike Hendry Page 3

??

November 2013

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Mobile

Mobile market

• 2013 has seen new milestones in penetration, data-rates, connectivity and functionality

• UK market is world-leading

Mobile technology

• Nokia -> Microsoft, Windows Phone

• BB deflates

• -> Two Mobile OSs share 85% of market for new devices

• Is this a healthy market?

© Mike Hendry Page 4

November 2013

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M-commerce and m-payments

M-commerce is booming• Tending to focus sales on most

popular sites

Contactless payments not doing badly (in some countries)

• 0.1% of card payments by value

© Mike Hendry Page 5

Source: eMarketer Sept 2013

Source: UK Cards Association

November 2013

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But NFC payments and mobile wallets …

Mike Hendry Page 6

November 2013

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Next steps for NFC and mobile wallets

State of the (dis-) Union

Infrastructure developments

Stakeholders and their activities

NFC applications and services

Next steps

Mike Hendry Page 7

November 2013

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NFC infrastructure

Interoperability demands hub services and TSMs

• Now easy to set up TSM – plenty exist

• Single TSM vs separate Issuer and Service Provider TSMs?

• As services spread across borders, split model is inevitable

• Some sectors have hierarchical organisations,

others (e.g. retail) are highly distributed

• Hub-of-hubs opportunities for integrators

Secure Elements

• UICC, embedded, SmartSD, sleeves

• Now exist in hundreds of different formats

• Multiple SEs becoming the norm

© Mike Hendry Page 8

November 2013

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Mobile wallets

Wallets struggling in most of the world

• Google vs Isis (but both now nationwide)

• French rollout delayed

• (Sixpack abandoned in 2012)

• Weve UDI

• But Asians just keep doing it!

What is impact of Android Host Card Emulation?

• Can you build a secure card environment using HCE?

• Could you get it certified by EMVCo?

• Does that matter?

© Mike Hendry Page 9

November 2013

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Banking technology

How has the infrastructure adapted to technology change?

© Mike Hendry Page 10

ISO 20022 – in

2022?

November 2013

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Next steps for NFC and mobile wallets

State of the (dis-) Union

Infrastructure developments

NFC applications and services

Stakeholders and their activities

Next steps

Mike Hendry Page 11

November 2013

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Marketing and advertising

© Mike Hendry Page 12

November 2013

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Retail

• Store operations

• Customer management

• Loyalty and coupons

• Maximises return on

investment

• Replaces kiosks with

low-cost passive devices

© Mike Hendry Page 13

November 2013

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Transportation

Public transport

• Mostly ticketing rather than payment

• Download ticket to phone

• Tap in / inspect / tap out

Airlines

• Boarding pass

• Baggage handling

• Information

Parking, taxis

© Mike Hendry Page 14

November 2013

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Consumer-ready apps (no SP)

Peer-to-peer

• File- and contact-sharing

• Pairing

Quick commands

• Status changes (home, car, office etc)

• Call emergency numbers

• Assistive apps

© Mike Hendry Page 15

November 2013

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NFC applications and services

Most apps do not involve payment!

© Mike Hendry Page 16

… other than in Japan & Korea …

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Next steps for NFC and mobile wallets

State of the (dis-) Union

Infrastructure developments

NFC applications and services

Stakeholders and their activities

Next steps

Mike Hendry Page 17

November 2013

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NFC & wallet stakeholders: direct & B2B

© Mike Hendry Page 18

November 2013

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What are the stakeholders doing?

MNOs Working flat out on 3/4G

Little bandwidth or investment for wallets or NFC

GSMA New standards, e.g. process flow at POS

Handset mfrs Most just doing it (with or without embedded SE)

Apple See next slide

Google Major changes in each Android release (are they all

improvements?)

Chipset & SE mfrs Universal support

App developers Many more open than secure apps

Service Providers Increasing numbers of single-SP (branded) apps

Terminal & reader

suppliers

Making everything portable and wireless

Banks & PSPs More rules …

© Mike Hendry Page 19

November 2013

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NFC vs BLE

Apple prefers Bluetooth Low-Energy to NFC

• Well, they would, wouldn’t they?

• Broadcast vs one-to-one

• Assange – Snowden vs MI5 – GCHQ models

Horses for courses

• NFC is opt-in, consumer choice

• Need NFC to secure BLE??

© Mike Hendry Page 20

November 2013

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Next steps for NFC and mobile wallets

State of the (dis-) Union

Infrastructure developments

NFC applications and services

Stakeholders and their activities

Next steps

Mike Hendry Page 21

November 2013

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Next steps - global

Need major push on interoperability and certification

• Standards for public transport (e.g. OSPT), retail (currently GSMA but needs to be ARTS or similar)

EMV certification: needs

a) Much more consistency in antenna size & placement

b) Application selection: Android changes needed?

Educate developers and Service Providers

• They can help to educate consumers but must first stop misleading them!

© Mike Hendry Page 22

November 2013

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Next steps – UK

Easy steps first:

Accept that there will be multiple wallets

• Not just focused on payment

Recognise role of integrators & mobile specialists

• They are the people who can get services going

• Interoperability is a precondition for rollout

Consumer education

• Tap when you buy your phone

• Who benefits from promoting the technology?

© Mike Hendry Page 23

November 2013

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Next steps – Payment Service Providers

Develop business model for mobile payment as a service to be integrated into other apps

• Probably actually a set of functions of which payment message exchange and settlement are the last steps

• Likely to need new risk management and risk-sharing models

M-banking is the Trojan Horse

• Not so good for acquirers

But acquirers as terminal network operators can still play a key role in delivering secure services to retailers & SPs

© Mike Hendry Page 24

November 2013

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Thank-you for your attention

Mike Hendry

mike@mikehendry.com

www.mikehendry.com

Mike Hendry Page 25