mobile payments in europe: making it pay
TRANSCRIPT
Mobile Payments in Europe: Making it Pay
Adrian Drozd, Principal AnalystInformation & Communication Technologies
September 2010
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Focus Points
Current user adoption status
Available and substitute technology options
Market structure & dynamics
Summary & key messages
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Current user adoption status
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Defining m-payments
• GSMA – Mobile Money Initiative• Pay-Buy-Mobile • Mobile Money Transfer• Mobile Ticketing• Mobile Money for the Unbanked
• Frost & Sullivan Mobile Payment• NFC based m-payment• Non-NFC based m-payments• Remittance• Mobile banking
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M-payment is positioned as a potentially lucrative revenue stream
Time
Mar
ket
Vo
lum
e
Low
Introduction Growth Maturity DeclineHigh
Fixed telephon
yMobile
communications
Enhanced TV
services
Fixed broad-band
Source: Frost & Sullivan
Broadcast mobile TV services
NB: bubble size approximates revenue accruing to communications service providers
Mobile payments (excluding
SMS-based)
Quad-Play servicesQuad-Play services
Mobile broadband
Mobile broadband
Triple Play
services
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M-payment status around the world – some examples
Source: Frost & Sullivan
•France•NFC trials•Mobile ticketing
•Italy•Mobile ticketing
•Germany•Mobile ticketing
•NFC trials
•United Kingdom•NFC trials•Oyster
•Bangladesh•Mobile remittance
•China•Contactless mobile payment (Non NFC based)
•The Philippines•Mobile banking
•Japan•Contactless payments since 2004
•Korea•Proximity payment services since 2002
•Kenya•Mobile for the Unbanked
•South Africa•Mobile remittance
•Sub-Saharan Africa
•Mobile remittance
•Canada•NFC trials
•USA•NFC trials
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Advanced markets in Asia Pacific show the way
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Expectations of mass market M-payment adoption yet to materialise in Europe
•Expectations of mass market adoption yet to materialise in 2010
•Timelines expected to move another 18-24 months
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Available and substitute technology options
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Available technology enabling M-payment services
M-paymen
t user
SMS based transactions
IM based transactions
M-Internet based
transactions
Bluetooth based
transactions
Contactless Non-NFC based
transactions
Contactless NFC based
transactions
Source: Frost & Sullivan
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There is currently a coexistence of m-payment technologies
Low
High Introduction Growth Maturity Decline
Timeline
SMS
IM
M-Internet
Bluetooth
NFC
Contactless Non-NFC
Timeline: 2010
Source: Frost & Sullivan
Mar
ket r
eadi
ness
12
Future technology landscape defined by demand for improved security
Low
High Introduction Growth Maturity Decline
Timeline
SMS
IM
M-Internet
Bluetooth
NFCContactless
Non-NFC
Source: Frost & Sullivan
Timeline: 2020
Mar
ket r
eadi
ness
13
Market structure & dynamics
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The eco-system for m-payment remains fragmented
• Industries involved• Financial institutions • Retail• IT & Communications • Technology
• Types of stakeholders involved• Telecommunication service providers• Regulators (Financial and Telecoms)• Financial institutions• Application & Solution providers• Merchants• Device/POS/Terminal vendors• Consumers
• Types of enabling technology platforms• Barcode• IM• SMS• Bluetooth• Internet• Contactless (such as NFC) Source: Frost & Sullivan
Complex interactions amongst stakeholders
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Progress in m-payment can be accelerated through standardisation and achieving interoperability
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Emerging providers – including mobile operators – seek to meet growing demand from financial institutions
Infrastructure and service enablers
Payment service providers
End user
Emerging
Traditional
Mobile operatorsMobile devices
Retailers
Financial institutions
Non bank affiliated payment communities CampusesPublic transport
Payments IT & Communications infrastructure providers
Software applications providers
Service providers
Hardware providers
Source: Frost & Sullivan
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Key players to watch: mobile money enablers – Monitise
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Key players to watch: mobile operators
• Telefonica’s UK mobile operation, O2, has pushed into the financial services space, teaming up with the bank, NatWest, to launch a prepaid debit card.
• This is the first fee-free prepaid VISA card and has been available to O2 contract and prepaid customers since Q3 2009. The card is designed to help people manage their spending by doing away with overdrafts and providing real time balance updates on the mobile phone.
• The card can be used anywhere that accepts VISA within the United Kingdom and overseas. It can be used online and the card can be used to withdraw cash from an ATM. These cards can also be personalised to define the appropriate uses available to children aged 13 and above. For example, there are user specified rules that prevent a card to be used on different web locations such as online gambling sites.
• Mobile operators are taking different routes, including collaboration with financial institutions, to create awareness of alternative payment methods. This push certainly adds to Visa Europe’s optimism of contactless technology adoption in UK. It expects the number of Visa contactless cards in use in the UK to reach 12million by the end of the year.
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Summary & key messages
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Summary & key messages
Market status There has been progress in m-payment trials and deployments in Europe but mass adoption remains to be seen.
Market outlook
The outlook for m-payment remains positive because of technology availability, an increased sense of urgency amongst key stakeholders to enable m-payment functions, and a growing number of end users being comfortable with m-payment functions.
Market expectations
M-payment methods will vary across Europe; the dominance of SMS-based m-payment functions will continue but contactless technology may become important over the medium term.
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Key success factors
Ease of use for the consumer
In the absence of any life critical need, m-payment is a new service that requires consumers to change their habits. Convenience of use becomes very critical.
Security assuranceFrost & Sullivan strongly believes that the predominant m-payment technology will be the one that provides an appropriate security level proportionate to the m-transacton.
Standardisation & Interoperability
The eco-system requires further development to reduce complexity in interactions amongst stakeholders. Standardisation and efforts of interoperability are crucial to decrease fragmentation in the eco system.
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Security concerns will remain a key inhibitor
Mobile Money Market: Key Market Drivers & Restraints (2010-2015)
Security concerns
Lack of regulation on mobile transactions
Quality of service
Lack of collaboration between players
High cost of solution
Better user awareness
Ease of payment
Secure network
Interoperability across networks and platforms
Efficiency and speed of mobile networks
Drivers Restraints
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A €6 billion opportunity by 2013 in Western Europe
The market is expected to grow at an average of 25 per cent annually over the next five years
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For Additional Information
Joanna LewandowskaCorporate CommunicationsICT Europe
(0048) 22 390 41 46 [email protected]
Gustavo CurySales managerICT Europe(0048) 22 244 [email protected]
Adrian DrozdPrincipal Analyst & Research ManagerTelecoms Europe(0044) 1865 398 [email protected]