2015 German Consumer Mobile Payment Study

2015 German Consumer Mobile Payment Study

www.tsys.com

“It is not the strongest of the species that survive, nor the most intelligent, but the one most

responsive to change” — Charles Darwin

TSYS® is pleased to publish its first research report exploring mobile payments (m-payments) in

Germany. The report includes information regarding German consumer payment preferences

and other insights. The aim of this report is to provide valuable information to help our clients

and other stakeholders in navigating the current market trends for m-payments and related

topics like mobile banking, communication and retailer apps. The report also compares selected

m-payment German market data with U.K. market data.

Building on our belief in keeping payments people-centred, this primary research is based on end-users’ preferences and beliefs. The goal of this research was two-fold:

1) to investigate consumers’ current behaviour; and

2) to understand how their attitudes and concerns could help predict future behaviour.

With the multitude of choices available to consumers, mobile payments are approaching a critical mass. In 2013, worldwide mobile payments reached €140 billion, and it has been predicted that this figure will reach €655 billion by 20171_.

In Germany, the m-payment trend is still in its infancy. In 2014, the value of m-commerce reached €1.4 billion, and the prediction is a CAGR of 20 percent through 20192_{. Point-of-sale (POS) terminals allowing contactless payments} will be crucial to adoption of m-payment transactions in the near future. According to Visa3_{, within the next}

1 _{Gartner, Inc., (2013). [Online]. 4 June 2013. Available at: http://www.gartner.com/newsroom/id/2504915 [Accessed 14 July 2015]} 2 _{Euromonitor, (2015). Financial cards and payments in Germany. [Online]. February 2015. Available at: Euromonitor database}

[Accessed 7 September 2015]

3 _{Visa, (2015a). Growing appetite for mobile contactless payments in Germany. [Online]. Available at:}

About the Study

Our research is based on an online survey of 501 German residents. The respondents represented diverse socio-demographics, including gender, age, income, occupational status and level of education. We required that the respondents possess a smartphone. We also required that the respondents be at least 18 years old, reside in Germany and own at least one credit card or one debit card.

We asked this group payment-specific questions to comprehend consumers’ attitudes, preferences and perceptions regarding specific digital and mobile payment topics.

This report provides several insights from our primary research, and is organised as follows:

TABLE OF CONTENTS

I. SUMMARY OF STUDY’S KEY FINDINGS

...3

II. DETAILED FINDINGS

A. Communication apps penetration ...4

B. Interaction with mobile banking app ...4

C. Mobile payments ...6

i. General m-payments ...6

ii. Online m-payments ...10

iii. In-store m-payments ...11

III. ABOUT THE ONLINE SURVEY RESPONDENTS

... 13

IV. CROSS-NATIONAL COMPARISON

... 14 three years the number of contactless terminals will grow significantly. German retailers will replace 200,000 to 300,000 old terminals and most will likely add contactless payment functionality.

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I. SUMMARY OF STUDY’S KEY FINDINGS

First Surprise: Sixty-nine percent of respondents are likely to use m-payments for in-store purchases in the next two years.

Second Surprise: Bank branches are still a popular channel for Germans. Indeed, they are still used more frequently than m-banking apps.

Third Surprise: Seventy-four percent of respondents do not think that security is a benefit of m-payments made in physical stores. However, more than 69 percent of respondents expressed interest in using m-payments technology if security and fraud protection were guaranteed.

German consumers expect in-store m-payments —

those made at physical, bricks and mortar stores

with mobile phones — to be an integral part of their

shopping in just two years.

a.

d.

b.

e.

f.

c.

1.

2.

3.

More than one in four respondents made an

m-payment in the last six months. Their level of

satisfaction was, on average, high.

M-banking app users are not restricted to specific

socio-demographics; a typical m-banking user defies

easy categorisation.

Security is the overwhelming concern expressed

by the majority of respondents.

German consumers trust financial institutions

more than any other type of organisation to

safeguard their personal financial information.

While the German market differs from the

UK in many areas, their similarities may have

pan-European implications, particularly in the

expressed high likelihood to use m-payments

in the near future.

II. DETAILED FINDINGS

A. Communication apps

This section details the usage level of specific texting and video-conferencing apps such as WhatsApp, Viber and Facetime in comparison to retailer, digital wallet and banking apps. What we learned has been surprising. In line with our expectations, the penetration of communication apps is higher than mobile banking apps and retailer apps. However, we expected the usage of m-banking apps to outpace retailer apps, and respondents reported the opposite.

Question: Please select the option that best describes your usage of each of the following mobile apps for your smartphone or tablet listed below.

* To help analyse the results, we excluded those who did not have the app and those who do have it but have not used it.

Observation: As shown in the above graph, communication apps obtained the highest level of penetration (80 percent), followed by retailer apps (68 percent). Mobile banking apps and digital wallets have the lowest level of market penetration with 44 percent and 33 percent respectively. This indicates that German consumers might possess a propensity toward m-payments in the near future, considering the user-friendliness of such apps.

B. Interaction with mobile banking app

Mobile banking apps allow customers of a financial institution to conduct a number of financial transactions (e.g., viewing account balances and transactions, moving money between accounts, making payments, and choosing how to receive account statements) through a device such as a mobile phone or tablet. We investigated how often German consumers interact with a mobile banking app relative to other main channels.

Graph 1 Communication App (e.g. WhatsApp, Viber, Facetime) Retailer App (e.g. Amazon, Ebay)

Mobile Banking App

Digital Wallet App (e.g. Starbucks)

80%

68%

44%

33%

Question: How often do you use each of the following methods to access your banking services?

* To help analyse the results, we grouped the answers in three ranges: “Never” — those who do not use a specific banking service”; “Occasionally” — those who use the banking service once a month or less; and “Often” — those who use the channel more than once a month.

Observation: The data provides insight into the importance of the self-service process, with “online banking” and “ATM” ranking highest in usage level. It is interesting to note the resilience of the bank branch — whose usage outpaces the m-banking app. On the other hand, the traditional service channel of telephone banking obtained the lowest indices for frequency of usage, confirming the popular belief in its diminishing roles in customer engagement.

Surprisingly, there is no significant association between specific socio-demographics (e.g., gender, level of education, age and income), and the m-banking usage level. This indicates that there is no “typical” profile of a German m-banking user. We find this interesting because, in the past, adoption of such technologies was often the purview of the younger, better-educated and higher-income earners. In the German digital era this may no longer be the case.

Online Banking

ATM

Bank Branch

Mobile Banking App

Telephone Banking 79% 9% 13% 77% 21% 2% 31% 55% 13% 31% 13% 56% 10% 18% 72%

Often Occasionally Never Graph 2

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Among the 44 percent of respondents to have downloaded a mobile banking app, we identified the most popular actions undertaken in the last six months.

Question: Using your mobile phone and banking app, which of the following have you done in the past six months? Please select all that apply.

Observation: We anticipated high popularity of more passive actions, such as “checked account balance” and “checked recent transaction,” and found they occurred at 90 and 55 percent respectively. Interestingly, the more active events of “transferred money between bank accounts” and “located the closest in-network ATM or bank branch” ranked highly too. Indeed, about 50 percent of respondents have used their mobile banking app for those purposes.

Checked an account balance

Checked recent transactions

Transferred money between bank accounts

Made a bill payment

Received an alertfrom your bank (e.g., a text message or email) Located the closest in-network ATM or bank branch

Other (e.g., changed address)

90% 55% 51% 49% 26% 11% 2% Graph 3

Less popular actions included “received an alert.” The implication is that there may be a corresponding opportunity to proactively engage cardholders with alerts, especially considering the popularity of activities such as “checked an account balance” and “checked a recent transaction.” We also analysed the potential reasons a specific respondent may not use a mobile banking app.

Question: There could be many reasons you might choose not to use a mobile banking app. Please indicate your agreement or disagreement with the following statements.

Observation: Top reasons given for not using m-banking apps are “my banking needs are being met without mobile banking” and “I am used to relying on other methods.” This is consistent with responses regarding the usage level of specific banking services. In effect, ATM and online banking have a higher usage level than that of mobile banking apps. However, it is evident that security is one of the most significant factors that can lead consumers to avoid using mobile banking apps — whereas the dimension of the screen has the lowest impact. In sum, banks should ensure a secure experience and educate customers regarding that security.

I am concerned about the security of mobile banking apps

I am used to relying on other methods

The mobile phone screen is too small

64% 20% 16%

64% 22% 14%

36% 29% 35%

Agree Neutral Disagree Graph 4

Rogers Diffusion of Innovation: Adopter Categories

Innovators Early Adopters Early Majority

Critical Mass

Laggards

Time Late Majority

2.5% 13.5% 34% 34% 16%

Please select the option that best describes your usage of M-Banking Apps

Use it daily _{times a week}Use it a few _{times a month}Use it a few

Hyper Accomplished Emerging

Digital Capability

Use it once a month than monthlyUse it less Do not use

37% 56% 7% 5% 8% 56% 11% 13% 7%

Segmenting the Respondents by

Digital Capability

As demographics are no longer sufficient to differentiate in an era where all have equal access to digital tools, we segmented our respondents in three categories based on their level of digital capabilities.

According to Rogers’ theory of the diffusion of innovation5_,

there are five different types of technology adopters linked to a specific innovation: Innovators, Early adopters, Early Majority and Late Majority, and Laggards. For this study, we grouped the five Rogers categories into three groups in order to simplify the process of analysis. We also used the

ownership of an m-banking app as a proxy to segment our sample:

• Hyper Digitals represent the “Innovators” and “Early Adopters” categories. In our context, they are the respondents that use the app daily.

• Accomplished Digitals represent the “Early Majority” and “Late Majority” categories. In other words, they are the respondents that use the app from less than monthly to a few times a week.

• Emerging Digitals represent the “Laggards” category of the Rogers theory. These respondents simply do not have m-banking apps yet.

4 _{Capgemini (2013). Word-payment report. [Online]. Available at https://www.capgemini.com/resource-file-access/resource/pdf/wpr_2013.pdf}

[Accessed 25 July 2015]

5 _{Rogers, E.M. (2003). Diffusion of innovations (5th ed.). New York: Free Press.}

C. Mobile payments

In this section, we explore the behaviour and attitudes of German consumers in the area of m-payments. There are several payment methods that individuals can use in different locations and circumstances. We define m-payments as payments that can be made directly from mobile devices. In order to ensure that respondents would understand our interpretation of m-payments, we provided the aforementioned definition and also showed an explanatory video clip regarding the process of m-payments in store.

We divided the following section into:

i. General m-payments

ii. Online m-commerce payments iii. M-payments in-store

i. General m-payments

Globally, m-payments have grown dramatically with a compound annual growth rate (CAGR) of 58.5 percent in transactions from 2010 to 20144_{. The respondents} corroborated such positive indicators.

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Question: Have you made mobile payments using your smartphone in the last six months?

Observation: More than one in four respondents made an m-payment in the last six months (27 percent). As anticipated, the Hyper Digitals have the highest percentage of usage (69 percent), followed by Accomplished and Emerging categories with 49 and 6 percent respectively. While not everyone has used m-payments, those who do are very satisfied. Seventy percent of respondents who made an m-payment reported a good to excellent level of satisfaction, with only four percent responding “poor” or “very poor.”

Level of Satisfaction

Among 27% Who Report

Having Used M-Payments

Yes 33% No 67% Good Excellent Average Poor 26% 17% 2%

Level of Satisfaction Among 33% Who Report Having Used M-Payments

Graph 5 54% 16% 26% 2% No 73% 27%Yes Excellent Good Average Poor Very Poor

Usage of m-payments across digital categories

Hyper Accomplished Emerging Overall 69% 49% 6% 27% Graph 6 Overall Adoption Rate % Time

Hyper

Accomplished

Emerging

>> Satisfactory Experience Satisfactory Experience Word of Mouth Word of Mouth Trial Trial Established User / Increase Adoption Established User / Increase Adoption Satisfactory Experience Satisfactory Experience Word of Mouth Word of Mouth Trial Trial Established User / Increase Adoption Established User / Increase Adoption Satisfactory Experience Satisfactory Experience Word of Mouth Word of Mouth Trial Trial Established User / Increase Adoption Established User / Increase Adoption

Customer Satisfaction Drives Adoption

There is also a recognised link between customer satisfaction, retention and word-of-mouth advocacy. Given the high level of satisfaction of those who used m-payments, we expect the cycle of trial (figure below), adoption and user-base growth to reach critical mass in the near term.

Question: Please indicate how often you used your phone to make a mobile payment at the locations listed below over the last six months*.

Observation: This question focused on the actual behaviour of respondents. In order to improve our understanding of the data reflected in graph 7, we have divided it into two groups. The most frequent m-payments were in the categories of “Purchase items online from Amazon, eBay, etc.,” “Purchase mobile apps” and “Purchase clothes.” In such scenarios, the user experience has often been tailored specifically and painstakingly for mobile devices by the app developers and e-tailers, accounting in part for the large usage reported by respondents.

Lower percentages were revealed by the second group (From 39 percent to 28 percent). The reasons the second group has lower percentage significance may be linked to factors such as more complex purchases, lack of a well-developed infrastructure for accepting m-payments, and the lower prevalence of specific apps or preference to shop online via different devices.

Purchase items on-line (Amazon, Ebay, etc.)

Purchase mobile apps (Google, Apple Store, etc.)

Pay another person

Group 1

Group 2 Purchase groceries

Purchase clothes

Purchase digital content (movies, music, etc.)

Pay a utility bill

Purchase tickets (sporting events, theatre, cinema, etc.)

Pay at a restaurant Purchase electronics or appliances

Transportation (underground, bus, taxi, etc.)

59% 50% 45% 39% 37% 36% 31% 31% 31% 28% 31% Graph 7

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Question: How likely would you be to use your smartphone to make a mobile payment in the following scenarios?

* Percentage of respondents selecting “likely” and ”very likely”.

Observation: Having examined actual consumer behaviour, we then analysed potential behaviour, investigating the propensity to make m-payments in specific circumstances. In the short-term, prospects for adoption are not overwhelming, considering the uniformly low propensity of usage across all retail types. However, when we looked at this through the lens of the Hyper Digitals, there is an apparent long-term attractiveness in the entire m-payments space.

Supermarket

Coffee shop Department store

Payment to individuals (friends, family, handy man, etc.) Restaurant Car parking

Paying bills (utility, phone, cable, etc.) Holiday travel DIY 34% 64% 34% 67% 34% 58% 30% 58% 28% 64% 28% 58% 27% 61% 26% 64% 26% 64% Overall Hyper Graph 8

Question: There are a number of sources from which you can get an app for your smartphone to make a mobile payment. Whose mobile payment app would you most trust to safeguard your personal and financial information?

Observation: When it comes to using mobile apps for payments, respondents trust their primary financial institutions to safeguard their personal financial

information much more than any other type of company. This is consistent with market data from other international markets, particularly the U.S. Indeed, a PwC report (2014)6 _{showed a similar attitude among U.S. consumers} regarding their financial information. While many mobile device manufacturers and operating systems are launching new apps promising users a secure and easy mobile payment experience, banks should act now to leverage this position of trust.

My primary financial institution / bank

Payment card scheme (Visa, Mastercard, American Express, etc.)

Mobile device manufacturer (Apple, Nokia, Blackberry, etc.)

Online retailer (Amazon, Ebay, etc.)

High street retailer (Metro, Aldi, Manufactum, etc.) Mobile network operator (Vodafone, O2, E-plus, etc.)

Mobile device operating system provider (Android, Microsoft, etc.) 73% 1% 1% 3% 3% 7% 11% Graph 9

6 _{PwC report (2014). Consumer Intelligence Series: Opening the Mobile Wallet. [Online]. Available at:}

Question: How influential would the following features be in attracting you to use mobile payments on your smartphone?

* Percentage of respondents selecting “somewhat influential” “influential” or “very influential”

Observation: Security and fraud protection surpass all other features listed in its attractiveness. This is similar to the U.K. market, which suggests that driving awareness of the m-payments’ security features should be a pan-European marketing initiative. Self-direction initiatives also rank highly, with 57 percent expressing a preference for the “ability to instantly check my balance” and 53 percent preferring “the

ability to scan items in the store and check out on my smartphone.” Among the lower influencers, however, are the ability to leave the physical wallet at home (44 percent), the opportunity to instantly apply and receive approval for a new credit or debit card account directly from a smartphone (37 percent) and, surprisingly, the existence of a reward program associated with the specific mobile app (36 percent).

ii. M-payment online

For this section, we define online m-payments as those payments made by a mobile device using Internet connection via a Web browser or an app. Our aim was to determine which devices consumers prefer to use in shopping online.

Question: Question: When shopping online (check out and pay) how often do you use different devices?

* Percentage of respondents who report having used selected devices

Observation: The devices used most often are PCs/ laptops, followed by smartphone devices. This result is consistent with the general belief that consumers feel more secure when they shop online via a computer, especially for expensive purchases. As Rogers’ diffusion of innovation theory suggests, early adopters will presage the rest of the market. In this case we expect an increase in smartphone and tablet adoption for shopping online in the near future — increasing overall m-payment transactions as well.

Security and fraud protection

Ability to instantly check my balance

Ability to install all my loyalty cards in the phone Special offers or discounts provided at the time of purchase Not having to enter my PIN in the presence of clerks

Reward program associated with the specific mobile app Ability to scan items in the store and check out on my smartphone

Ability to leave my physical wallet at home Instant application and approval of a new credit card account directly from your phone

69% 36% 37% 44% 48% 52% 53% 56% 57% Graph 10 PC or laptop Smartphone Tablet (iPad, etc.) 60% 89% 47% 81% 42% 81% Overall Hyper Graph 11

iii. M-payment in store

We define m-payments in store as payments made

between a mobile device and a POS, whereby the payment transaction is transferred to a sales terminal via Wi-Fi, NFC or Bluetooth. For a consistent understanding among respondents, we showed a video example of how in-store m-payments work.

We then analysed the perception and the potential attitude of German consumers.

Question: Over the next two years, what percentage of your in-store purchases made with your phone as described in the video will replace your use of physical, plastic credit and debit cards?

Observation: Although the current usage level of

m-payments is 27 percent of the respondents (see graph 5), the potential is promising as demonstrated in the above graph. Sixty-nine percent of respondents report being likely to use in-store payments in the next two years, and 37 percent of responents said they would use m-payments in store for at least half of their purchases.

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Question: Based on what you saw in the video, how would you agree with the following statements?

* Percentage respondents selecting “agree” and” strongly agree”.

Observation: Sixty-nine percent of respondents recognise self-direction capabilities of “checking the current balance immediately” as a clear benefit of m-payments in store. Not having to enter their PIN in the presence of others (68 percent) was next in the most prominently recognised benefits. Overall, we can infer that the common perception is that m-payments are easy, fast and convenient, even if the consumer may not be able to leave their wallet at home. However, the overwhelming majority (74 percent) of these respondents do not think that m-payments are secure. I can see my current

balance immediately

I do not have to enter my PIN in the presence of clerks I do not have to show my personal documents It is easy to use It is a faster way to pay I can leave my wallet at home It is secure 69% 26% 45% 55% 56% 60% 68% Graph 13 2% 31% 33% 26% 9% 100% of purchases 75% of purchases 50% of purchases 25% of purchases 0% of purchases Graph 12

Question: Based on what you saw in the video, please share your degree of concern based on the following statements.

* Percentage respondents selecting “somewhat concerned”, “moderately concerned” and “extremely concerned”

Observation: The most common concerns of the

respondents involved fraud and information security, which is consistent with responses to the previous question. Other leading concerns are linked to the inability to make purchases in the event of the loss of a phone or a dead battery.

Privacy was also an issue, with 71% of respondents expressing concern that their shopping history and habits might be tracked. At the other end of the scale, respondents’ technical ability was not a concern for the vast majority. Responses to the previous two questions illustrate a popular belief in inherent security issues with m-payments. As such, there is a great opportunity to dispel such conceptions through marketing campaigns highlighting how m-payments enjoy the same fraud protection as physical card-based transactions. Specifically, promotional tactics explaining the benefits of tokenisation may prompt consumers to adopt m-payments that employ this security feature.

The risk of losing my phone and my information being stolen The risk that someone could steal my information when it is sent wirelessly

Limited battery life could prevent my making a purchase Not being able to pay for a purchase if my phone is lost or stolen The possibility that all my shopping experience is tracked

It can be used only in a specific situation My lack of technical knowledge 81% 40% 61% 67% 71% 71% 78% Graph 14

Question: What purchase amount limit would be most appealing to you when using your smartphone to make a mobile payment for in-store purchases?

Observation: We investigated the most appealing purchase limit for m-payments in store. While analysing this section, it is important to keep in mind that the current contactless card payment limit is €25, meaning transactions under this amount no longer require a PIN7_. In other countries like the U.S., higher-value contactless transactions are allowed, provided that a PIN is entered or certain biometric identification processes are used. It is interesting to note that 70 percent of respondents would spend more than the limit, and only 30 percent would consider spending less than the actual limit. This is something that the industry at large should consider in the near future, especially if the aim is to help m-payment growth. Further, with the advent of biometrics, such transactions should be much more secure, obviating the need for any purchase amount limits.

25% 19% 11%

19% 26%

Less than €10 Less than €20 Less than €100 Less than €50

I would not want a limit Graph 15

7 _{Visa, (2015b). Kontaktlos-Zahlungen. [Online]. Available at: https://www.visa.de/zahlungsmoglichkeiten/kontaktlos-zahlungen}

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III. ABOUT THE ONLINE SURVEY RESPONDENTS

We can say with 95 percent confidence that our survey size of 501 represents the approximately 50 million German population that meet the following four criteria:

• Holds a debit or credit card • Has a mobile phone • Is at least 18 years of age

The margin of error for the responses is 4.5 percent. Some questions required consumers to rank-order their responses according to their relative value. In these instances, response choices were presented at random to prevent undue influence on response data.

Gender

Male 50% Female 50% 18-24 25-34 45-54 35-44 65 or older 55-64

Age

24% 25% 5% 13% 12% 21% < €20,000 €20,000 — €30,000 €50,000 — €75,000 €30,000 — €50,000 > €125,000 €75,000 — €125,000

Prefer not to answer

Household Income

26% 21% 2% 10% 7% 17% 18%

Employment Status

10% 10% 5% 6% 69%

Employed full or part time Self-employed

Student Unemployed

Type of Smartphone Owned

70% 22% 5% 1% 2%

An Apple iPhone An Android-based smartphone A Blackberry smartphone A Microsoft-based smartphone Other type of smartphone

Education

8% 28% 27% 18% 7% 1% 11%

Incomplete secondary education Secondary education completed Some vocational or technical qualifications Vocational or technical qualifications completed

Prefer not to answer

University education completed Postgraduate degree or equivalent

IV. CROSS-NATIONAL COMPARISON

U.K. and German Markets

Overall, the UK market differs from the German market. However, their similarities likely have pan-European implications that issuers should note. Three areas of note from a wider European perspective are as follows:

1. Security awareness:

The m-payment ecosystem has become more defined in recent years. However, certain near-term market factors such as low consumer awareness and unfamiliarity with m-payment technology may represent impediments to growth. Our survey results illustrated how security could play a mainstream role in making consumers comfortable with m-payments.

2. Functionality awareness:

Those who use m-banking apps do so with great frequency; for virtually the rest of the respondents, they are not used at all. While there is indeed an opportunity to expand the richness of functionality, the initial focus of efforts should be to increase awareness about the current functionality of m-banking apps in order to spur more initial trials.

3. Acceptance of m-payments:

Mobile payments using smartphones, tablets, watches and other technologies have great potential. A frictionless experience would surely help the increase of m-payments adoption for in-store purchases—and that is hampered when cardholders cannot find places to use m-payments. A main problem in their proliferation remains retailers’ resistance in adoption of terminals capable of hosting m-payments in-store. While this is likely a short-term phenomenon, the industry should remain vigilant to ensure the ecosystem continues to grow.

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2. Online banking and ATMs are the preferred banking channels, whereas telephone banking has a very low usage level.*

80% 74% 12% 79% 77% 10%

U.K.

Germany

Online banking ATM Telephone banking 37%

33%

72%

68%

Level of digital wallet penetration

Level of retailer app penetration

U.K. Germany

The following section identifies some of the similarities and differences between the U.K. and German markets.

Significant Similarities:

1. Level of digital and retailer app usage, defined as having used app in the last six months.

4. In both markets, respondents see banks as the most trusted institutions capable of managing personal financial information. 3. Twenty-seven percent of German respondents and 31 percent of U.K. respondents made an m-payment in the last six months with a similar level of high satisfaction. Seventy percent of Germans and 81 percent of UK respondents reported “Good” to “Excellent” experiences.

54% 16% 26%

2%

Excellent Good Average Poor Very Poor

Level of satisfaction in relation to m-payment experience

55% 26% 17% 2%

U.K.

Germany

My primary financial institution / bank Payment

card scheme Mobile device manufacturer Mobile network operator Online retailer High street retailer operating system Mobile device provider U.K. Germany 2% 1% 62% 73% 18% 11% 11% 7% 2% 3% 3% 3% 2% 1%

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6. Security and fraud protection are essential in both markets in order to push the m-payment trend toward radical growth. Concerns mirror each other; they’re just more acutely felt in Germany.*

5. There is a high percentage of willingness toward m-payments in store in the near future.

2% 31% 33% 26% 9% 100% of purchases 75% of purchases 50% of purchases 25% of purchases 0% of purchases 3% 27% 31% 25% 14%

73% of respondents

will be likely to use

in-store payments in the next two years

69% of respondents

in-store payments in the next two years

will be likely to use

U.K.

Germany

The risk of losing my phone and my information being stolen The risk that someone could steal my information when it is sent wirelessly

Limited battery life could prevent my making a purchase Not being able to pay for a purchase if my phone is lost or stolen

The possibility that all my shopping experience is tracked

It can be used only in a specific situation

My lack of technical knowledge

81% 58% 40% 21% 61% 26% 67% 48% 71% 45% 71% 47% 78% 49% U.K. Germany

Security and fraud protection

Ability to instantly check my balance

Ability to install all my loyalty cards in the phone

Special offers or discounts provided at the time of purchase Not having to enter my PIN in the presence of clerks

Reward program associated with the specific mobile app Ability to scan items in the store and check out on my smartphone

Ability to leave my physical wallet at home

Instant application and approval of a new credit card account directly from your phone

87% 69% 49% 37% 54% 44% 65% 53% 65% 36% 66% 56% 67% 52% 68% 48% 77% 57% U.K. Germany

*Percentage of respondents selecting “somewhat influential”, “influential” and “very influential”

7. Security and fraud protection represent the most attractive features in Germany and the U.K. Attention should also be dedicated to some self-direction initiatives (e.g. “Ability to instantly check my balance”) which raked highly in both markets as well.*

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Significant Differences:

2. Potential usage of m-payment does not vary greatly by retail type in either country. In Germany, the average is 30 percent (+/-4 percent). In the U.K. it is 35percent (+/-8 percent).

44%

58% U.K. Germany

Supermarket Department Coffee shop

store Payment to individuals

(friends, family, handy man, etc.) Restaurant

Car parking Paying bills

(utility, phone, cable, etc.) Holiday travel DIY 43% 34% 39% 34% U.K. Germany 36% 34% 38% 30% 27%28% 39% 28% 28% 27% 35% 26% 41% 26%

to learn more contact +44 (0) 1904 562000 or email [email protected].

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About TSYS

At TSYS® _{(NYSE: TSS), we believe payments should revolve around people, not the other way around}SM

. We call this belief “People-Centered Payments®_{.” By putting people at the center of every decision} we make, TSYS supports financial institutions, businesses and governments in more than 80 countries. TSYS’ headquarters are located in Columbus, Ga., U.S.A., with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS is a member of The Civic 50 and was named one of the 2015 World’s Most Ethical Companies by Ethisphere magazine. TSYS routinely posts all important information on its website. For more, please visit us at www.tsys.com.