Being fast, being mobile, being innovative

Kris Kubiena

VocaLink

Traditional (batch-based) ACH

International Card Schemes

Overlays

ApplePay PayPal AliPay Amazon

Payments

Visa MasterCard

BACS

E-commerce /

P2P

POS

Account to

account

Traditional infrastructure was built over 30 years ago Cards and overlays are needed to complement its services

3

Instant

and speed

1.Authentication Funds availability

2. Posting Funds available to

beneficiary in real

time

3. Settlement Instant settlement

between financial

institutions

What is an instant payment?

What isn’t an instant payment ?

Paying money out of one bank account into another delivering an end to

end real time experience for customers

• Not card payments

• Not e:wallets

• Not pre-paid

• Not RTGS

• Not a real time promise to pay, or payment guarantee

21.393% 15.905% 15.177% 7.750% 4.343% 25.788%

3.240% 0.845% 0.793% 0.725% 0.725% 3.312% 0.687%

Collaborative and ubiquitous payments Ownership structure of VocaLink

14%

senders

14%

receivers 2% of

potential

transactions

50%

senders

50%

receivers

25% of

potential

transactions 100%

receivers

and

senders

100% of

potential

transactions

Value of ubiquity

16million Peak daily Faster Payments

transactions; 2 April 2013

1.1billion Faster Payments transactions

in 12 month to November 2014

4.03billion Faster Payments transactions

processed up to 31 October 2014

0

10

20

30

40

50

60

70

80

Millio

ns

Faster Payments

BACS

Remote Banking single payments, transactions / month

Faster Payments is a tremendous success in the UK

Receiving

bank

mobile app

Sending bank

mobile app

Vocalink’s

mobile

payments

infrastructure

Existing

payments

channels

Paym: real-time account-to-account payment by mobile number

Faster Payment (real-time)

E-commerce /

P2P

POS

Account to

account

Overlays

Card Schemes ZAPP PayM

Introduction of real-time and ubiquitous access opens up

opportunities to serve market

Direct Access to A2A payments

Real-time payments

• Real-time lending

• Direct Corporate Access

• Mobile Banking

• Mobile Proxy: Person-to-person payment

• Handset fraud detection

• Identity attributes

• M-commerce

• E-commerce

• Bill payments

Real-time payment / ISO20022

• Affordability assessment

• Fraud detection

• SME lending

Proxy databases

Mobile Payments

Data

Real-time / ISO20022 creates cascading benefits

Fast goes live in Singapore

12

The future is not set: Banks have a right to win in mobile payments

– if they can move quickly to meet consumer demand

13

Banks are highly trusted institution for payments1

28%

4%

58%

26%

9% 36%

10%

29%

UK Netherlands

Other

Debit card

Credit card

iDeal

PayPal

54% 51% 50%

47% 47%

42% 40%

37%

32% 31%

16%

9% 9%

% of respondents expressing high trust Last Payment Method Used Online

1. McKinsey Global Payments Survey 2014; 2. Accenture and Payments Council 2013

Today’s alternative payment solutions

Online payments via PC or mobile internet

Micropayments Low-value transactions

(often bundled) for digital products

Mobile POS Payment acceptance via

mobile devices using NFC

P2P Person-to-person

payments

Traditional 3- or 4-party model

Piggy Back Additional layer using the 4-party model

New Entrant Payments made outside 4-party model

(in partnership w/

manufacturers/ operators)

Card

A

CH

& c

ard

C

ash

& A

CH

Latent consumer demand and the US switch to Chip & Pin has prompted Apple to

enter the market – ApplePay are “targeting” revenues and the customer

relationship.

15

ApplePay is a ‘five-party’ model

ISSUER GETS DISRUPTED:

APPLEPAY INSERTED IN TRADITIONAL FOUR-PARTY

MODEL

Customer interaction ‘owned’ by Apple

Consumer

Issuer /

Scheme

Apple

1

2

3

4

5

I paid

using my

iPhone

Real time

Secure

Digital

Convenient

Provided by banks

Not a Wallet

Not an App

Not card-based

Full payment scheme

No multilateral

interchange

M-commerce

E-commerce

Bill Payment

SMB

In store

Value-added

services

Loyalty

Data

Identity

Zapp: real-time payment for goods from mobile device

Request to Pay (RTP) based

payment (ZAPP) Traditional push payment

• Requires entry of payment details

• Not suitable for commerce

• Based on Request to Pay

• Designed for commerce

Zapp reverses the logic of the payment flow

Payer Payee

RTP

Payer Payee

Permission

Mobile proxy Person to Person

Request to Pay

Tokenisation

Bill Pay

F2F Small

Business

Online

Bricks &

Mortar

Channels

Zapp with Pay-m offers a full mobile payment solution underpinned by IPS

Mobile

Mobile

Retail

Pay-out Top Up

Use Cases

Telephone

Paper Loyalty &

Offers

18

Key take-aways

Real-time opens up opportunities

• New products to serve evolving market

• Brings value back to the core

• Process simplification and lower cost

Ubiquity and reach are crucial, collaboration is a winning strategy

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