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Mobile Payments 2012 My Mobile, My Wallet? Mobile payments 2012 My mobile, my wallet? 1 ‘Mobile payments 2012 – My mobile, my wallet?’ is an overall report on the evolution of mobile payment in various parts of the world. It concisely illustrates the diversity of market drivers, technologies and stakeholders and is a source of trusted information of the status of the markets. Recommended reading for those aiming to understand more on the status of the market. Sirpa Nordlund, Executive Director of Mobey Forum. 2 Mobile payments 2012 My mobile, my wallet? Publisher: Innopay Editors: Chiel Liezenberg and Douwe Lycklama (Innopay) Authors: Jeroen de Bel (Innopay) and Monica Gâza (The Paypers) Edition Version 1.0 1 September 2011 ISBN: 978-94-90587-00-0 Copyright © Innopay BV All rights reserved 3 Preface You are reading the report ‘Mobile payments 2012 – My mobile, my wallet?’ that provides an overview of the current affairs in mobile payment, both on a global and regional level. While the earlier editions ‘Mobile payments 2008’ and ‘Mobile payments 2010’ included an extensive list of regional mobile payment initiatives, this year’s version is based on a new approach. ‘Mobile payments 2012’ follows the structure of our latest ‘Online payments 2011’ report and consists of both general developments and specific regional developments. The list of initiatives will be included in a separate, new publication by The Paypers to be published next year. This report consists of two parts. Part 1 presents the general, global developments in mobile payments, including the rise of smartphones and apps as a driver for mobile payments and the high attention given to NFC. Part 2 elaborates on the developments in various regions of the world. This part also includes case studies on the Cityzi NFC initiative in Nice, France, on mobile PoS solution Square, on Telefónica & MasterCard in Latin America, and on the activities of Orange in Africa. The report is intended for everyone active in the ‘transaction services industry’, including merchants, banks, payment service providers, risk service providers, scheme organisations and policy makers. With this report we hope to provide a clear insight into the global mobile payments industry. All details concerning mobile payment methods, specific payment products and payment service providers are based on information that was publicly available at the moment this report was written. Although we do not claim to provide a complete description of the market, we do feel that we present an overview of the main and relevant developments. Finally, this report has been written with the utmost care. If you feel that, despite our efforts, it contains information that is unclear or find certain information to be missing, we appreciate it if you could let us know. Please mail us at [email protected]. Amsterdam, September 2011 Chiel Liezenberg – Founding Partner Innopay Douwe Lycklama – Founding Partner Innopay 4 Innopay on mobile payments Innopay is an independent full service consultancy firm specialised in payments and related transaction services. It is our vision that: — Globalisation increasingly leads to a network economy and electronic infrastructures enable industries to cooperate in networks, in real-time. — (Mobile) Internet is developing into true transaction channel, creating new transaction contexts. New contexts require new transaction services and new options emerge in existing contexts. — Transaction services are part of two-sided markets, with sophisticated network effects. Development of successful transaction services requires thorough understanding of the context. Development is complex and costly and asks for specialist expertise and a specific approach. Innopay has been active in mobile payment since 1999. Several of our senior consultants have experienced the rise and fall of the first wave of mobile payment initiatives and the current upcoming second wave first hand. We have come to recognise that mobile payments are greatly dependent on the economic, regulatory and cultural context. The European marketplace is very different from that in developing countries. Where in the EU there is a strong focus on NFC technology and key issues include the business case, interoperability and positioning, in developing countries the focus is on remittance and money transfer solutions and associated regulation, funding and risks. Based on our experience we have created the ‘Innopay Transaction Context Model’ to better understand the success factors for mobile payment services development. Our services address three domains: — Help you as a professional or regulator to ‘structure & understand’ the mobile payment services industry. — Help you as a provider to ‘develop & manage’ mobile payment business, services and products. — Help you as a corporation to ‘choose & use’ mobile payment solutions. 5 Mobile payments 2012 - Innopay on mobile payments Some of our references cases include: — Market analysis on introducing mobile payments in a developing nation for a leading bank. — Business development in using NFC stickers as contactless payment method. — Development and piloting of a mobile micro payments solution for a large multinational bank. — Product development of an SMS payment solution for a large international bank. — Product development and prototyping of a voice recognition mobile payment method for a large international bank. Innopay is a member of the European Payments Consulting Association (EPCA) and an associate member of the Euro Banking Association (EBA). Innopay was a also member of the former Payment Systems Market Expert Group (PSMEG) of the European Commission. Innopay’s other key practices include: online payments, e-invoicing, e-identity, cards and related regulation. On most of these topics we regularly publish leading industry reports which can be downloaded for free. For more information visit www.innopay.com or contact us directly at [email protected] or +31 20 6580651. 6 Contents Preface ................................................................................................................................ 4 Innopay on mobile payments ............................................................................................... 5 Management summary – My mobile, my wallet? ................................................................. 9 PART 1: GENERAL TRENDS AND DEVELOPMENTS 1 The mobile payments ecosystem explained .............................................................. 12 1.1 Defining mobile payments ...................................................................................... 12 1.2 Mobile payment categories .................................................................................... 13 1.3 Mobile payment enabling technologies ................................................................. 16 1.4 Key stakeholders ..................................................................................................... 18 2 Mobile payments at a tipping point? ........................................................................ 21 2.1 The rise of smartphones ......................................................................................... 22 2.2 Mobile apps adding functionality ........................................................................... 23 2.3 Changing consumer needs ...................................................................................... 24 2.4 The tipping point: we are not there yet ................................................................. 26 3 The hype -or hope- of NFC ........................................................................................ 28 3.1 Drivers for NFC adoption ........................................................................................ 29 3.2 Obstacles to overcome ........................................................................................... 32 3.3 Putting the hype into perspective .......................................................................... 36 PART 2: TRENDS AND DEVELOPMENTS PER REGION 4 Europe: working together on mobile payments ......................................................... 39 4.1 The European mobile payments landscape divided in two .................................... 39 4.2 Multi-stakeholder collaboration on implementing NFC ......................................... 43 4.3 CASE STUDY: CITYZI ACHIEVING NFC IN NICE, FRANCE .......................................... 44 4.4 M-SEPA: collaboration on a European level ........................................................... 46 7 Mobile payments 2012 - Contents 5 North America: betting on NFC ................................................................................. 48 5.1 Overview of the North American mobile payments landscape ............................. 48 5.2 Smartphones changing people’s behaviour ........................................................... 52 5.3 Betting on NFC ........................................................................................................ 54 5.4 Alternative contactless methods for proximity payments ..................................... 58 5.5 Mobile phone used as PoS device .......................................................................... 62 5.5.1 CASE STUDY: THE RISE OF SQUARE ........................................................................ 64 6 Asia: a fragmented market ....................................................................................... 65 6.1 Differentiation based on market segmentation ....................................................
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