mobile asia expo 2012 exicon presenting nfc in china
TRANSCRIPT
Proprietary & Confidential1
NFC: Advancing the Ecosystem
June 2012
Proprietary & Confidential2
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• Strategic advisory & execution in mobility since 2001
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Promote to our network of qualified software partners
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Significance of China: Population Comparison
Administrative Regions of China, labeled as countries with
Equivalent Populations
Source: Strangemaps, China; M. Rosenberg (about.com) on population size China
Total population of China
1.3+ billion (mid 2011)
Proprietary & Confidential6
China in numbers
1.3BILLIONSPOPULATION
485MILLIONSWITH ACCESS TO INTERNET
963MILLIONS
MOBILE SUBSCRIBERS
655MILLIONS
URBAN (50%)
135MILLIONS
MORE ININTERNET CAFÉ
44.5xGROWTH
IN GDP SINCE 1985AIM TO SURPASS
USG DP - 2020
534kMILLIONAIRES
115BILLIONAIRES
Proprietary & Confidential7
Significance of China: GDP Comparison
Source: The Economist, Country Equivalent Interactive China Map, Wikipedia on GDP total in China, IMF on EU and US PPP capita GDP.
Less than 50
50 < 120
120-200
200-400
400+
GDP 2010
in $ billion
Total GDP of China
2010: 5879 $ billion
2012: 7740 $ bn est.
Per capita 2011: $5,184
(nominal)
$8,394 (PPP)
US per capita 2011:
$48,387 (PPP)
EU per capita 2011:
$31,607 (PPP)
Proprietary & Confidential8
Estimated NFC payments in China
China Market Forecasts
• Increase driven by the nation’s huge number of cell phone subscribers, 900 million in 2011.
• Presently, more NFC handset add-ons have been shipped than actual NFC-enabled mobile handsets.
• Shipment of bridging technologies is expected to grow to 6.5 million in 2014
• Shipment of full NFC phones in 2014 is predicted to rise to 7 million.
US$ 8 Billion
2014
900m or 11,25 % in 2011
ABI Research, Mobile Payments in China
Proprietary & Confidential9
Overview of NFC in ChinaN
FC in
Ch
ina
Situation • 960 (!) million mobile subscribers -• Turnover to NFC phones takes time
• Consumers change mobiles every 40 months, • Smartphones every 29 month.
• Chinese consumer acceptance still uncertain, because security is a concern. • NFC business driven by telco & banking industry, both having large government involvement.• In sync with global standards• Contactless POS terminals are being deployed, creating a network of physical merchants• SIMpass has captured the market and is driving the momentum with their hybrid solutions.• Consensus around SWP as leading option for Secure Element.
Key Stakeholders
• China Mobile, China Unicom, China Telecom (3 MNOs serving over 960 m subscribers)• China Unionpay• UICC based technology governed by MIIT whilst other technologies governed by PBOC
Challenges • PBoC & MIIT• Consumer adoption (e.g. security issues)• Proprietary security technology & standards
Source: MobiThinking for subscriber numbers: On phone replacement: Ericsson Survey 2012.
Proprietary & Confidential10
China NFC Ecosystem
RegulatorsMNOs
Others Industry Players
• Issue SIM cards for NFC systems
• Provide support,
• Back-end services
• Partner with Financial Institutions to sell NFC to consumer.
• Do NOT subsidize or sell handsets.
• CIITA(China Information Industry Trade Association),
• Ministry of Industry and Information Technology (MIIT)
• People’s Bank of China (PBoC), governing the m-payments industry.
• NFI must obtain License from PBoC before engaging in payment & settlement services
• Based on the infrastructureand rules given by the otherstakeholders, technicalequipment manufacturersand suppliers, consumerapp, security or paymentservice developers
Financial Institutions
• 2.4 billion bank cards;
• serving 400+ financial institutions
• Loinking 1.2m ATM’s of 14 banks.
• The Bank of China, the Agricultural Bank, Construction Bank and the Industrial and Commercial Bank of China are the top 4 banks
• Combined individual accounts of over 600 million (>58% marketshare in 2011).
CIITA
MIIT
PBo
C
Proprietary & Confidential11
Key Technological Drivers
PBoC• Payment Cards to be converted to Smart Cards
• 3.3M POS terminals updated to support contactless payment
13.56MHz selected as national contactless
payment standard, CIITA: 05/2011
Consumer Adoption driven byAvailability
Security
• Solid Base of POS Terminals for NFC • OEMs leaning towards Unionpay for final NFC technology decision • It comes down to the merchants
Proprietary & Confidential12
Unionpay versus VISA
UNIONPAY 400 banks
% of Global
CARDS
(2011)
PROFIT
(2011)
ATMs
(2011)
Revenue $ not available
Net Profit: $3.65 Billion
Revenue $9.2 Billion
Net Profit: $ 1.6 Billion
72,000 (2009)
in 90+ countries1.93 million in 200 countries
VISA 15,200 banks
28.6 %
Source: http://pymnts.com/news on Unionpay and VISA cards usage; websites VISA; Unionpay, www.paymentlawadvisor.com
29.2 %
China UnionPay is at the center of a NFC standardization initiative in China. The technology they roll-out into the mass-market will probably be used by the majority of ecosystem players (result from interviews conducted). They have the leading position in China, as the sole domestic inter-bank bankcard processor, operating the sole domestic bankcard acceptance in China due to local regulation.
1.94 billion cards issued 1.9 billion cards issuedOther Source: 2.4 bn cards
Proprietary & Confidential13
China Unionpay NFC Projects
Key Player China Unionpay
Project Banking Phones with Micro-SD
Micro-SD mobile payment Micros-SD payments and mobile point of sale terminals
Micro-SD and Mobile Point Of Sale Terminals with Banks
Activity NFC-enabled Jiang Yu banking phones for Public transport, restaurants & convenience stores
First trials of Micro-SD payment
Confirmed plans to deploy microSD cards. Mobile POS essential in a region where agriculture is the main industry.
Refitting and equipping POS
Location Chongqing Different regions in China Sichuan Across China
Launch 09/2011 Est. 2011 Est. 2011 2011
Users 9,000 100,000 500,000 300,000-400,000 equipped, 700,000 retrofitted
NFCDevice Type
• MicroSD• HTC
• MicroSD• NFC handsets
• MicroSD (GoTrust SWP)• In HTC Incredible w/ NFC
• Micro-SD
Partners • Chongqing Rural Commercial Bank• HTC• Datang• TCL
• China Construction Bank• Smaller Regional Banks• HTC• Datang• TCL
• GoTrust SWP • China Construction Bank• Datang, HTC , TCl, K-Touch, 2 otherhandset m.• Wuhan Tianyu Information Industryand Go-Trust/Eastcompeace + 6 otherfor Micro-SD
Source: Exicon
• CUP is focusing on 13.56 MHz with Micro SD cards• Strong relationship with HTC and DATANG whilst growing ties with TCL and GoTrust
• User numbers continue to grow significantly
Proprietary & Confidential14
3 Major Network Operations & User Amounts
Source: International Telecommunications Union.
CHINA MOBILE 628 M
USERS
(8/2011)
REVENUE
(1-6/2011)
ARPU
(1-6/2011)
US
ER
S B
Y A
UG
2011 158M Using 2G
JA
N –
JU
N 2
011
158M Using 2G
Revenue $391 Billion
Net Profit: $413 Million
Revenue $159 Billion
Net Profit: $96 Million
JA
N –
JU
N 2
011
$10.9 $7.3
CHINA UNICOM 186 M CHINA TELECOM 113 M
40.31M Using 3G 28.76M Using 3G
158M Using 2G158M Using 2G
25.61M Using 3G
87M Using 2G
Revenue $188 Billion
Net Profit: $39 Billion
$8.2
APRU = Average Revenue per user
Proprietary & Confidential15
Operator NFC ProjectsKey Player China Mobile China Unicom China Telecom
Project Date
SIMpass launch RF-SIM launch NFC Trial Shanghai Expo Beijing SIMpass Ticketing for transit
1st trial Ticketing
CT SIMpass project
Activity
Buses, taxis, parking facilities & restaurants
Ticketing & payment (entertainment), w/ 5,000 merchants
Ticketing, w/ 100 merchants, incl convenience stores, restaurants & movie theatres
15,000 POS terminals in Expo 2010 & city, incl. SMs, restaurants, CVS & cinemas
2,000 payment & ticketing locations, incl gas stations, restaurants, SMs & cinemas
Ticketing (transit)
Dual-interface SIMs, enabling fare pymt, ticketing
Payment, student ID, transport, w/ 11,000 merchants
LocationHangzhou Shanghai, Beijing &
OtherXiamen Shanghai Beijing Shanghai Chongqing Nanjing & Jiansu
Launch Date
3/2010 11/2009 7/2006 2011 05/2010, 01/2011 (com.)
01/2009 12/2008 12/2009
# of Users>50,000 >2M RF-SIM orders 100 5,000 + merchants 1,000 (initial) 5,000 phones
shipped10,000 700,000 SIMpass
shipped
NFCDevice Type
SIMpass RF-SIM Nokia 3220,Nokia 6131
RF-SIM SIMpass HedyShanghaiFudan
Changhong DG28 & F4, SIMpass
SIM-pass
Project Partners
Hangzhou CitizenCardHangzhou City 360°Card (local transit payment app)
China MobileExpo 2010 Organizers
E-Tong Card(transit farecollection)
Bank of China Bank of Communications (UnionPay-PBOC 2.0 contactless)
Beijing Municipal Admin.,Communications Card (BMAP card)
Shanghai Transportation Authority
Congqing, Yucheng Transportation
Nanjing CityNajing ZhongshanInstituteYangzhouTechnologyInstitute
Other Partners
Watchdata, Nationz Technologies, Eastcompeace
Fudan Microelectronics (chips)Hedy (largest local phone manufacturer)Changhong (Consumer Electronics Company)Watchdata
Watchdata, Lakala, Yifutong, Enpay, YeopayCommercial Partners:Nokia, Philips
Status• Pulled out of RF-SIM Cards @ 2.4 GHz due to technical and
cost reasons, use SIMpass & SIM-based NFC • Signed GSMA LOI
Limited success with RF-SIM, Focus on two solutions SIMpass & Sim-based NFCSigned GSMA LOI
SIMpass focusPlanning Disney andMicrosoft Lab NFC trials
Source: Exicon research & Smart Insights, NFC gains momentum in China 2011
Proprietary & Confidential16
Summary
NFC in China
• NFC is expected to reach the tipping point by end 2012.
• 4m+ POS terminals with contactless interface supporting 13.56 MHz
• Larger scale contactless mobile payment commercial rollout, led by the
MNOs.
• Anticipating VERY LARGE scale NFC roll-out over the coming years, lead by
MNOs and CUP.
• Key industry players waiting for network of merchants
• Market views China Unionpay as “leader” in this category.
Proprietary & Confidential17
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