zwipe is on a mission: making convenience secure · 2019. 6. 7. · zwipe is on a mission: making...
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Zwipe Making Convenience Secure
EIC ConferenceOslo, 5 June 2019André Løvestam, CEO
This is how it works - everywhere
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Dubliner Pub, Oslo
10 October 2018
Zwipe is on a mission:Making Convenience Secure
Note: (1) BPC is an abbreviation for biometric payment cards.
First-mover advantage with unique patented industry leading energy harvesting and power management
technology for biometric payment cards that will enable low production and manufacturing cost2
Strong market momentum for biometric payment cards with growing
commitments from leading industry stakeholders3
Experienced management team with leading industry experience4
Strong IPR Portfolio with 31 active patent applications with 8 granted to date5
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Launched world’s first battery-less, dual-interface biometric payment card pilot with world leading
industry giants VISA and Gemalto. No need for extra integration with existing infrastructure1
Cooperating with
European leaders
High potential – pursuing medium term annualised revenue of NOK 1bn
(Euro 105m) with an EBIT margin of 15% (long term potential of 20%)
The challenge of making Convenience Secure Remove the unnecessary trade-off between security & convenience
Challenge Zwipe innovation solves the challenge:
For consumers Zwipe eradicates the need to use
cash, or enter a PIN
Superior convenience and increased security
For merchants Zwipe reduces cash handling and
increases customer throughput
For the card networks Zwipe strengthens the growth of contactless by improving convenience & security
For the banks Zwipe ensures brand visibility by enhancing
top of wallet effects and reduced fraud
FOR PAYMENT
SCHEMES
Drives
contactless and
cashless
transactions by
improving
convenience and
security
FOR
BANKS
Enhances
branding and
top of wallet
effects.
Reduces fraud
and offers
cardholders
peace of mind
For consumers Zwipe eradicates the need to use
cash, or enter a PIN
Superior convenience and increased security
For merchants Zwipe reduces cash handling and
increases customer throughput
For the card networks Zwipe strengthens the growth of contactless by improving convenience & security
For the banks Zwipe ensures brand visibility by enhancing
top of wallet effects and reduced fraud
FOR
CONSUMERS
Eliminates the
use of PIN.
Offers a
consistent, fast
and convenient
user
experience.
Peace of mind
For consumers Zwipe eradicates the need to use
cash, or enter a PIN
Superior convenience and increased security
For merchants Zwipe reduces cash handling and
increases customer throughput
For the card networks Zwipe strengthens the growth of contactless by improving convenience & security
For the banks Zwipe ensures brand visibility by enhancing
top of wallet effects and reduced fraud
FOR
MERCHANTS
Reduces cash
handling,
saves
transaction
time and
increases
customer
throughput
For consumers Zwipe eradicates the need to use
cash, or enter a PIN
Superior convenience and increased security
For merchants Zwipe reduces cash handling and
increases customer throughput
For the card networks Zwipe strengthens the growth of contactless by improving convenience & security
For the banks Zwipe ensures brand visibility by enhancing
top of wallet effects and reduced fraud
Strong adoption of contactless cards, but cardholders still have security concerns with contactless…
…and banks introduce transaction limits to limit fraud
Zwipe solves challenges for several groups
Source: Fingerprint Cards Research, 2018
Addressable market for biometric payment cards growing fast
23 61 148 370
866
1 504
2 566
4 298
6 805
10%
16%
25%
38%
2020e
0% 0%
2018e
0%
2019e 2027e
1%
2021e
3%
2022e
6%
2023e 2024e 2025e 2026e
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Biometric payment card addressable rate
Biometric payment cards in circulations
*Key determinants of the timing and speed of adoption of biometric payment card will be;
i) timing and completion of certification processes and systems for enrolment, ii) the successful
execution of pilot programs and consumer acceptance and adoption of the new technology, iii) inlay
production capacity, iv) the competitive intensity at every step in the value chain (from technology
solution providers to issuers), and vi) manufacturing cost development for biometric cards
Source: Edgar Dunn. The addressable market represents the total number of payment cards that could potentially be converted to biometric payment cards according to Edgar Dunn’s analysis.
Millions
Demand from different key players in the payments ecosystem
expected to trigger exponential adoption of biometric sensors on
payment cards:
• Biometric authentication technology already validated and accepted by
the mass market due to smart phones
• Card issuers looking for new ways to differentiate and meet evolving
consumer expectations
• Governments and regulators promoting use of biometric solutions to
minimise fraud and identity issues
• VISA & Mastercard industry mandate that all POS terminals must
accept contactless payments by 2020 in Europe
Nathan Cushnie, Visa´s Head of Digital solutions for MENA:
98 PER CENT OF CONSUMERS SURVEYED IN THE UAE ARE KEEN
TO USE BIOMETRICS SUCH AS FINGERPRINT RECOGNITION FOR
PAYMENTS
http://saudigazette.com.sa/article/532717/BUSINESS/Visas-first-biometric-payment-card-pilot-in-the-Middle-East
Growth in contactless drives demand and create a new market for dual-interface biometric payment cards
Our proprietary core technology..Zwipe is a technology solution provider that enables battery-less,
contactless, ultra-low power, self-contained biometric authentication
solutions in constrained environments
..is successfully embedded in payment cards…
Zwipe´s solution is a highly innovative and breakthrough innovation
Zwipe’s issued and filed patents address factors that are essential in the mass
deployment of this type of technology, focusing on manufacturing and production
processes, biometric algorithms, energy harvesting, biometric enrolment applications
and security
✓ 31 active patent applications (PCT regime), with 8 patents granted to date
✓ Energy harvesting technology
✓ Biometric engine
✓ Method of high volume manufacturing
Commercialisation strategy and business model
Business model
for Zwipe
technology:
Key factors for choice of target markets:
• European directives has set the way for biometric authentication
• Value chain ready for licencing- partnerships with 7 of the world’s largest card manufacturers
• Being able to migrate biometric authentication to multiple devices, due to the success of biometrics with smart phones
• Advantage through EMV(Europay, Mastercard and Visa) certifications
• All terminals in Europe to accept contactless payments by 2020, through mandates imposed by major payment schemes
• Validation through pilots in all target continents
• Low cultural barriers for Zwipe management- understanding European demands and culture
Target markets:
Target 1: Europe
Target 2: Middle east
Target 3: North America
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The project applied for has the main targets:
1) Development of an ASIC that will reduce the manufacturing cost and increase production scalabilty
2) Certification for payment transaction through EMV and separately Visa and Mastercard
3) Commercialization for mass deployment
The work plan will be divided into 4 work packages which directly supports Zwipe’s strategic pillars:
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HORIZON 2020 is key for Zwipe’s strategic pillars
Leverage first mover advantage to secure #1
position, developing strategic partnerships and
technological advantage, offering multiple
enrolment solutions
Biometric Payment Cards
Become a trusted digital authentication partner for
financial services with on-card digital
authentication solutions for e-commerce (Card Not
Present (CNP) transactions) in addition to POS.
A trusted digital authentication
The Zwipe Generation NxT program entails
performance improvements, supply chain
readiness and cost reduction. The plan is to
leverage economies of scale effects from the
Payment card vertical into a range of other future
Opportunities.
Economies of scale effects
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Transition from inlay to integrated circuits and
systems securing price competitiveness and
reduction of capital requirements
BSIC Development
Transition from inlay to
integrated circuits and systems
Zwipe is a pioneer in its field and, consequently,
has a strong IP portfolio addressing factors
essential for mass deployment of its technology
Licensing of IP
Authentication of internet services. Developing the
inlay technology to be used in wearables in
security and IoT. Offer multiple form factors
(wearables)
Future and other opportunities3
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Key medium term financial aspirations and risk factors
Revenue • Annualised revenue of NOK 1 billion (Euro 105 million)
Gross margin• Gross margin of 28% – 35%
– The transition from inlays to integrated circuit/system bundles is planned to trigger a margin expansion from approximately 20% in the inlay production phase
Volume and ASP
• Targeting to sell 20-40 million embedded systems for dual-interface biometric cards annually in the medium term
– Targeting 30% market share
– Expecting to reach cash flow break-even at these volumes
• ASP in the range of Euro 2,5 – 3,5 derived from COGS with mark-up
EBIT margin
• Targeting an EBIT margin of 15% in the medium term driven by;
– Generation NxT cost reduction program and general economies of scale, transition from inlays to integrated circuits and optimisation of supply chain
– Long term potential of ~20% EBIT margin
• Competing technology: Higher than expected penetration rate of mobile payments may impact the smart card market.
• Slow adoption rate: The US still only at 7% adoption rate for EMV cards. Total cost to end-user: ASP ~USD 10 for Zwipe’s payment card to end-customer
may be considered too high for the mass market
• Total cost to end-user: Cost reduction program is ambitious, although management believes this is realistic. Zwipe’s success is dependent on its ability to
scale on existing frame work agreements and increase commercial orders, and there is no guarantee that Zwipe will sell in accordance with the forecast
provided.
• Risks relating to the industry in which Zwipe operates: The business, earnings and financial condition of Zwipe can be affected by any deterioration in
the economic conditions in the markets in which Zwipe operates. Unexpected changes to the legal landscape could adversely affect Zwipe’s business
operations
• Risks relating to financing and market risk: Zwipe’s ability to generate cash depends on many factors beyond Zwipe’s control, and Zwipe may not be
able to generate cash required to service its debt failure by Zwipe’s counterparties to meet their contractual obligations may have a material adverse effect
on Zwipe’s financial position.
Risk factors
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Summary: Worry-less payment with biometric smartness
Industry awards
1Ease of use: A simple and consistent user experience that interact with all existing payment
infrastructure - Chip and contactless terminal. No need for changes to be made to the existing
legacy infrastructure.
Decentralized storage of data inside the card and NOWHERE else. EC regulations -GDPR and
PSD2- is an advantage for Zwipe since we are not storing personal biometric data inside a big
database. No reachable tunnel software as for example as in mobile phones.
Basis of costs: Unique patented contactless payment method without the need of a battery.
Developing the BSIC for large scalable low production cost hot lamination manufacturing
method to create a scalable supply chain.
Biometric (fingerprint) technology is at highest standard and qualified as a highly safe method by
industry giants as Visa and Gemalto. Zwipe specific system combines best-in-class biometrics
with firmware designed for payment ecosystem.
First mover market leadership position in a conservative industry. Ensured IP
differentiation/barriers to entry. Technical and business partnerships with all relevant stakeholders in
the value chain.
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