innopay @ iqpc: the role of banks in mobile payments
TRANSCRIPT
tomorrow’s transactions today
Role of banks in m-payments Understanding the various options
Jeroen de Bel – January 31st 2012
2 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Jeroen de Bel – Innopay
• Studied Business Economics & Finance in NL and USA, graduated Cum Laude in 2009
• Held multiple positions at various departments of major banks
• Joined Innopay in 2010
• Advising major financial institutions and large corporates
• Focus on strategy and innovation in retail banking (e.g. e-banking, mobile payments)
• Author of ‘Mobile payments 2012 - My mobile, my wallet?’
3 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
innopay. tomorrow’s transactions today
• Innopay is an independent full service consultancy firm, specialised in payments and related transaction services
• E-payment, e-invoicing, e-identity, m-payment, cards, rules
• From ‘Powerpoint to Production’
• Reputed player with active contribution to development of the industry. Member of a.o. EPCA, EBA en ECP/EPN
• Truly independent from IT vendors & financial institutions
• Founded in 2000, employs 15 consultants, from Amsterdam − Founded by Chiel Liezenberg (1968) and Douwe Lycklama (1965)
− Extensive experience in consulting in complex organisations
Online payment
E-invoicing
E-identity
Cards
Mobile payment
Rules
4 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Innopay reference customers
tomorrow’s transactions today
Understanding the various options
Role of banks in m-payments
6 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Contents
• Banks and the mobile opportunity
• Role of banks in mobile NFC payments
• Summary and conclusions
7 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
The role of banks in payments: Issuing, Acquiring and Clearing & Settlement
ISSUING ACQUIRING
CLEARING & SETTLEMENT
Consumer Corporate
8 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Banks already handling payments … mobile payments seems a logical next step
BANK MOBILE OPPORTUNITY
9 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Banks are uniquely positioned
1. Experience in handling payments:
• Issuing, Acquiring , Clearing & Settlement
2. Direct access to funding:
• Direct access to bank account and funds
3. Capabilities to deal with regulation & compliance:
• License to perform transactions and hold funds
4. Banks are trusted as mobile payments provider
• …
10 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Banks and card schemes enjoy highest trust
Source: Lexus Agency - Wallet Wars 2011
BANK
CARD SCHEME
MOBILE NETWORK
RETAIL IT
11 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Gap between FI’s and others
Source: Ogilvy & Mather - The New Mobile Shopper: From Armed to Charmed
Percentage of respondents expressing trust in brand
12 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
However, mobile payments is a complex ecosystem
13 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Many stakeholders Where are you? Where is the bank?
Payee
Payer
OEM
PoS
Issuing Bank
Acquiring Bank
Card network
E-Payment platform Mobile Wallet
Mobile Network Operator
14 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Multiple mobile payment categories Which context do you want to address?
Source: Innopay Mobile payment s 2012
15 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Multiple technologies Which technology best fits your needs?
INTERACTIVE VOICE RESPONSETEXT MESSAGING
(SMS, USSD)
2D BARCODEHIGH FREQUENCY RADIO
(mobile speaker & microphone)
MOBILE INTERNET
NEAR FIELD COMMUNICATION(chip based electronic)
16 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Source: Innopay analysis
Scope of today: Banks’ role in mobile NFC payments
tomorrow’s transactions today
Analysis per category
Role of banks in mobile NFC payments
18 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
2a. C2B NFC payments
ISSUING ACQUIRING
CLEARING & SETTLEMENT
ACCOUNT DETAILS
ACQUIRING NETWORK
19 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
2a. Role of banks in C2B NFC payments
Issuing:
• Get debtor bank account details on secure element
• Cooperate with TSM
Acquiring:
• Arrange PoS terminals to have NFC capabilities for mobile NFC transactions
• Invest in new infrastructure
• Changes in business rules, e.g. security, liabilities, guarantees, interchange fees, user experience
Clearing & Settlement:
• Via regular bank and card networks
20 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
2a. Position of banks in C2B NFC payments
Banks hold a unique position
• Banks already have large acquiring networks for cards
• Card networks can create their own wallets, but also must first agree with banks on technical standards and business rules
Competitors cannot go without banks and cards
• E-wallets still have to secure their position in the terminal
• E-wallets better positioned to provide value added services as couponing
Multiple parties cooperating and/or competing
• Combination of banks, e-wallets and card networks operating in this area
• If banks already have issued contactless cards, mobile NFC seems small step
• The ‘winner’ may differ per market
21 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
2b. Mobile PoS NFC payments
ISSUING ACQUIRING
CLEARING & SETTLEMENT
ACCOUNT DETAILS
ACQUIRING NETWORK
22 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
2b. Role of banks in Mobile PoS payments
Issuing:
• Issuance of contactless card by bank
• Secure element is in card
Acquiring:
• The terminal enables a mobile phone to receive contactless data
• The terminal acts as a PSP for card transactions; online acquiring with a contactless card
• The banks’ role of acquirer remains the same as online card transactions
Clearing & Settlement:
• Via regular bank and card networks
23 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
2b. Position of banks in Mobile PoS
Banks can leverage on existing merchant services
• Online card PSP is related to current PSP services of offline PoS
• However, banks also missed the opportunity for online PSP services
• Risk of fraud making banks reluctant
Startups also have ample possibilities
• Only a nice application and an add-on card reader are needed to become a PSP for online card transactions
• Add-ons must be distributed to merchants
Innovations expected from startups:
• E-wallets may also issue their own add-ons (making it similar to P2P)
• Banks may lack behind in innovative solutions but can leverage on current business
24 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
1. P2P NFC payments
ISSUING ACQUIRING
CLEARING & SETTLEMENT
ACCOUNT DETAILS
ACQUIRING NETWORK
25 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
1. Role of banks in P2P NFC payments
Issuing:
• Get debtor bank account details on secure element
• Cooperate with TSM
Acquiring:
• Enable communication with networks
• Banks must cooperate and trust each others systems (4-party model), e.g. allowing RBS on iPhone to communicate with Barclays on Blackberry
Clearing & Settlement:
• Via regular bank and card networks
26 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
1. Position of banks in P2P NFC payments
Banks may take some time:
• Issue account details on secure element and allow banks to communicate with each other (4-party), e.g. different security and business rules
• Advantage bank is that users already have an account
E-wallets seem to be in a better position:
• E-wallets are platforms that serve both the debtor and creditor (3-party)
• E-wallets product development more agile
• E-wallets sign up enables quicker user adoption
E-wallets are likely to take the spot…
• …but when banks have secured their place on the secure element, P2P is only a small step
tomorrow’s transactions today
Banks’ roles and positions dependent on various factors
Summary and conclusions
28 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Banks will have a role in m-payments
Issuing: get account details on secure element
• Banks can issue account details on secure element
• Alternatives are e-wallets and card networks
Acquiring: unique role through existing acquiring networks
• Banks have a very important role in the acquiring through PoS
• Alternatives must have their own acquiring network
Clearing & Settlement: nothing new
• Banks have exclusive access to clearing & settlement systems
• Alternatives may settle within their own system when they have both the debtor and creditor (3-party)
29 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Banks hold a unique position … but its position may differ per category 2a. C2B payments: the winner may differ per market
• Unique position for banks and card networks in the PoS acquiring network
• E-wallets need to cooperate with banks and card networks to participate
2b. Mobile PoS payments: startups likely to take the spot
• Banks can leverage on existing merchant acquiring services
• Startups seem better positioned to innovate
1. P2P payments: e-wallets seem better positioned
• Possibilities for alternatives as traditional acquiring network is not necessary
• In near future e-wallets seem to be best positioned
30 The role of banks in m-payments. Jeroen de Bel – January 31th 2012. © Innopay BV.
Mobile payments 2012 – My mobile, my wallet?
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tomorrow’s transactions today
Thank you For your attention
Jeroen de Bel e: [email protected] t: @jeroendebel