Reinventing mobile payments

Reinventing mobile payments

Prepaid closed loop mobile payments schemes

Miha Culiberg Warsaw, 31.10.2013

We are the largest transaction automation vendor in S.E.E. / C.E.E.

 25+ years of Experience in the Transaction Automation and Systems Integration area

 Partners to the leading vendors in the industry

 The most integrated portfolio of services, through 500+ engineers and 90+ service centers in 15 countries

 Client portfolio includes almost all of the leading financial institutions as well as some of the largest retail, petrol and telco players in the region.

Our footprint spans 15 markets

We are a multinational technology firm, operating in S.E.E. / C.E.E

.

We provide 8 families of products, services,

and solutions Flexible and effective organization

Printec corporate profile

ATM Network Value Added Solutions EFT/PoS Network Value Added Solutions Self Service Kiosks & Branch Automation E-Payments & Banking Software Retail & Emerging Industries Telecom Solutions Information Security Solutions & Services Enterprise Solutions

 Printec is a privately held company, 100% owned by its Chairman & CEO

 High-caliber professional management team

 Matrix organization, promotes effective monitoring and communication

 Transfer of knowledge and effort/load through global staffing practices and centers of excellence

 Established corporate governance procedures

Ukraine Slovakia Czech Republic Slovenia Croatia Bosnia Herz . Serbia

Romania _Moldova Bulgaria FYROM Albania Greece Cyprus 2

Reaching the customer in mobile payments

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Mobile payments? Do they need to be mobile?

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MNO’s as a payment providers

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Closed loop mobile payment scheme vs. open loop

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Whom do we need first: end users or merchants

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How to reach the customers

 Mobile payment is an alternative payment method. Instead of paying with cash, check, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods.

Source:mobile paymentsonFreebase, licensed underCC-BY

 Juniper Research has a simple definition of a mobile payment as “payment for goods or services with a mobile device such as a phone, Personal Digital Assistant (PDA), or other such device.

 One definition is talking about the access channel the other about alternative payment method

 Mobile payments as an alternative payment method in Africa

Example:

M-Pesa (M for mobile, pesa is Swahili for money) is a mobile-phone based money transfer and microfinancing service for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania. Currently the most developed mobile payment system in the world, M-Pesa allows users with a national ID card or passport to deposit, withdraw, and transfer money easily with a mobile device. Source: Wikipedia

 BUT, most of us are living in Europe not Africa

 Financial services and access to credit/debit/prepaid cards, bank accounts are more than available

 In Europe mobile payments are just another payment access channel

Example: Apple, iTunes

 Mobile payments are nothing more and nothing less then e-payments

 Mobile financial services – mobile banking or e-banking on a mobile?

Example: Personal experience from CEE markets

Mobile payments? Do they need to be mobile?

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Again we are not living in Africa

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In Europe MNO‘s are facing strong entry barriers, due to:

– Regulatory issues

– Maturity of the market

– Strong competition from banks

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MNO‘s in Europe are more or less infrastructure providers in a collaboration mobile payment scheme

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MNO‘s generate revenues from their core business

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MNO‘s are going into Mobile financial services BUT then they usually become a financial institution

Example: Telenor Group & Telenor Serbia

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Mobile payments are all about the business not the technology

Closed loop mobile payment scheme vs. open loop

 Gartner defines mobile payment as transactions conducted using a mobile phone and payment instruments that include:

– Banking instruments such as cash, bank account or debit/credit card, and

– Stored value accounts (SVAs) such as transport card, gift card, Paypal or mobile wallet

 Open-loop cards: A general purpose card carrying the Visa, MasterCard logo that can be used anywhere those cards are accepted.

 Closed-loop cards: A card or account that can be used at a select store or group of stores

Whom do we need first: end users or merchants

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Mass adoption of mobile payments requires mass adoption by merchants and consumers - no middleman is required

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Merchants & consumers – condition sine qua non for a transaction to take place

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Banks, processors, MNO‘s are optional in the transactional chain

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Large merchants are reinventing themselves keen to enter new prepaid/postpaid schemes

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Closed-loop systems give value to the to parties in the payment process that count the - most merchants and consumers

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Mobile payments are just a technological upgrade and additional access channel

Closed loop prepaid cards from a Merchant perspective

9

CUSTOMER LOYALTY

MARKETING

COST SAVINGS

Closed loop prepaid cards from a Merchant perspective

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Simplifying the purchase user experience by offering their own system

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Seamlessly integrating loyalty and payments schemes

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Regaining ownership of their own customers

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Extending payments scheme to cross merchant payments and loyalty schemes (e.g. Retail+Petrol+Telco)

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CUSTOMER LOYALTY

SOURCE: ROAD TO INCLUSION A look at the Financially Underserved and Excluded across Europe A white paper prepared by Ipsos MORI for MasterCard Worldwide 16th September 2013 where the quantitative intercepts consisted of n=631 interviews split over 6 markets: Poland, Italy, UK, Russia, Spain and France in July 2013

Closed loop prepaid cards from a Merchant perspective

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Closed loop systems minimize transaction costs by avoiding processing fees

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Cash in advance, no credit line, predictable income

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Utilizing existing EFT POS infrastructure without additional investments

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Minimizing cost associated with issuing of loyalty cards

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Additional savings by replacing card with a mobile

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Closed loop prepaid cards from a Merchant perspective

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Closed loop system gives merchants the ultimate access to consumer data tracking their habits and spending's in order to provide them with targeted offers

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Extending branding into customized statements, plastics, point-of-sale materials, etc.

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Marketing through the SMS/WEB channel

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TARGETED MARKETING

SOURCE: ROAD TO INCLUSION A look at the Financially Underserved and Excluded across Europe A white paper prepared by Ipsos MORI for MasterCard Worldwide 16th September 2013 where the quantitative intercepts consisted of n=631 interviews split over 6 markets: Poland, Italy, UK, Russia, Spain and France in July 2013

How to reach the customers?

 What do different types of merchants (Retailers, Petrol, MNO‘s) have in common?

– Significant customer base

– Strong brand and brand awareness

– Wide network of stores/petrol stations

 Daily face to face interaction

– Cash in for the prepaid - at the stores,

– Direct Debit enrolment - at the stores

– Direct marketing for prepaid cards - at the check out

– Simplified enrolment for the prepaid - at the check out

 Loyalty incentives for the closed loop mobile payment system users (due to reduced transaction costs)

 Bundling loyalty and payment schemes

 Payment flexibility (prepaid, postpaid, card, mobile, NFC, QR code)

Key success factors

 Merchants need to recognize the value of the closed loop schemes

 Consumer needs to recognize the value of loyalty and prepaid cards

 Mobile needs to be just additional access channel in addition to a prepaid card

 Subscription should be simple and straight forward

 Technology should enable the utilization of existing POS infrastructure