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Mobile payments 2013 Changing checkout 1 Mobile payments 2013 Changing checkout Publisher: Innopay BV Editors: Chiel Liezenberg and Shikko Nijland (Innopay) Authors: Alessandro Longoni (Innopay) and Monica Gâza (The Paypers) Edition Version 1.0 March 2013 ISBN 978-94-90587-09-3 Copyright © Innopay BV All rights reserved 2 Preface Innopay presents the new edition of the ‘Mobile payments 2013 – Changing checkout’, which aims to provide an overview of the main developments in the area of mobile payments worldwide. In 2012 we introduced a new format for the ‘Mobile payments’ report, with an overview of the global developments and chapters specifically aimed at covering regional trends. This year we tweaked the format to give, in the first part, an overview of the developments we see in Developed and Emerging markets; while the second part is still centred on the developments in the different regions. Though many things have changed last year, some of the identified trends and technologies in our previous report have not. Therefore some of the content might look familiar. We have also chosen to use the same analytical context framework since it has proven to be still valid and insightful. We believe all professionals active in the payments and transaction services industry can benefit from reading this document, including people employed at banks, policy makers, payment schemes organizations and payment service providers. This report, as every other publication by Innopay, is strictly independent and aims to give a comprehensive and unbiased overview of the market and its participants. For this reason we based our analysis on information available publicly at the moment of writing the document. This report has been written with the highest degree of care. In case you, despite our efforts, happen to find information which you deem unclear or perhaps not 100% correct, we appreciate your feedback. If you have any suggestion or questions regarding the text, please don’t hesitate to email us at [email protected] We hope you will enjoy reading this report and that you would be able to learn new aspects of this interesting area of transaction services. Amsterdam, March 2013 Chiel Liezenberg – Founding Partner Shikko Nijland – Managing Partner 3 Innopay consulting Innopay is an independent full service consultancy firm specialised in payments and related transaction services such as e-identity and e-business. It is our vision that: Globalization 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. Innopay has been active in mobile payment since 1999. Several of our consultants have experienced the rise and fall of the first wave of mobile payment initiatives and the current upcoming second wave first hand. Based on our experience we have created the ‘Innopay Transaction Context Model’ to better understand the success factors for mobile payment services development. Our consultancy 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. Innopay’s other key consultancy practices include: online payments, e-invoicing, e-identity, cards and related regulation. For more information visit www.innopay.com or contact us directly at [email protected] or +31 20 6580651. 4 Contents Preface ................................................................................................................................ 3 Innopay consulting .............................................................................................................. 4 Management summary ........................................................................................................ 7 PART 1: GENERAL TRENDS AND DEVELOPMENTS 1 Changing checkout ..................................................................................................... 11 1.1 Payments are context dependant ............................................................................... 11 1.2 Mobile payment: more than a financial transaction ................................................... 15 1.3 Smarter technology is not always better ..................................................................... 17 1.4 Stakeholders determine speed of change ................................................................... 20 2 Developed markets: lagging commercial adoption....................................................... 22 2.1 Focus on Proximity, B2C payments ............................................................................. 22 2.2 Accelerating commercial adoption .............................................................................. 24 2.3 Cash is king? ................................................................................................................. 27 3 Emerging markets: beyond empowering the underbanked .......................................... 30 3.1 Reaching the underbanked .......................................................................................... 31 3.2 Developing markets push global volume growth ........................................................ 35 3.3 BRIC countries: great growth pace, blurring opportunities ......................................... 36 3.4 Rest of emerging countries is catching up quickly ....................................................... 43 3.5 Leading the mobile banking revolution ....................................................................... 44 PART 2: TRENDS AND DEVELOPMENTS PER REGION 4 Europe: on the edge of convergence ........................................................................... 48 4.1 Coalitions of the willing ............................................................................................... 49 4.2 United in Diversity ....................................................................................................... 51 4.3 Multi-stakeholder collaboration on implementing NFC .............................................. 55 4.4 CASE STUDY: iZettle, Mobile Point of Sale from the Nordics ...................................... 57 4.5 M-SEPA: piggybacking on standardization .................................................................. 58 5 Mobile payments 2013 - Contents 5 North America: epic battle for consumer ownership .................................................... 60 5.1 Overview of the North American mobile payments landscape .................................. 61 5.2 Smartphones taking over the US market ..................................................................... 65 5.3 Hoping for the “American dream” ............................................................................... 73 5.4 The mobile PoS revelation ........................................................................................... 75 6 Asia-Pacific: taking the lead in m-payments growth ..................................................... 76 6.1 Differentiation based on market segmentation & the urban – rural divide ............... 77 6.2 Three main regional models ........................................................................................ 79 6.3 Countries vary between sophisticated and simple services ........................................ 83 7 Africa: pace is slowing down ....................................................................................... 87 7.1 GSMA: Africa poised to become world’s 2nd largest mobile market ........................... 87 7.2 Untapped potential...................................................................................................... 88 7.3 Key players take decisive steps .................................................................................... 91 7.4 The success story of M-PESA ....................................................................................... 93 7.5 West Africa on its way to becoming Africa’s hottest market ...................................... 93 8 Latin America: still in development stage .................................................................... 96 8.1 Typical emerging markets outlook .............................................................................. 96 8.2 Economic and social context shape mobile financial services .................................... 97 8.3 Brazil leading the way .................................................................................................. 99 8.4 Various speeds of development ................................................................................ 100 PART 3: ANNEXES Annex 1: Glossary ............................................................................................................ 103 Annex 2: References ........................................................................................................ 108 Annex 3: About the editors and publishers ....................................................................... 109 6 Management summary Both online and offline checkout experiences
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