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Copyright 2007 © Welcome Real-time
All rights reserved. Material in this presentation can be copied on condition that “Source : Welcome Real-time” is included in a clearly visible fashion next to the copied material.
Will contactless change the global payments landscape?
Aneace HaddadChairman & FounderWelcome Real-time
London June 2007
The main contactless promise: “No more lines”
“No more lines.”Does contactless deliver this promise?
Yes, if the shoppers in front of you also have contactless cards.
25 million contactless cards will be issued in the US in 2007, versus 300 million magstripe cards.
1 out of 12
“Of the largest banks, only JPMorgan Chase has begun a significant rollout, although it has only put contactless chips on part of its portfolio.”
Card Technology, June 2007
Only JPMorgan Chase
Contactless forecasts for 2007
230 million
Jupiter Report (2004)
37 million
Jupiter Report (2006)
25 million
Card Technology (June 2007)
Percent of spend in 2010
US contactless payments forecast (Jupiter)
1.6%
“A major obstacle is persuading more merchants
to accept contactless.”Card Technology, June 2007
1 out of 133“There are 6 million places where you can use your credit card, 45,000 (contactless locations) doesn’t excite me.”
John Suchanec, Bank of America
“Until you have a better merchant coverage, there’s
clearly a problem .”Leigh Malnati, American Express
“[We] haven’t moved aggressively to contactless because there is little consumer demand – been
more of an issuer/association push.”
David TryderDunkin’ Donuts
May 2007
“The contactless cards are not yet affecting the parking lots. Get more
cards out in the market!”
Manager, Sheetz, Inc.Source: American Banker
“Waving a card in front of a reader takes about as much time
as swiping one through.”
Manager, Sheetz, Inc.Source: American Banker
“Visa launches No Signature Required program to boost card usage for small purchases with traditional magnetic
stripe cards.”
April 11, 2006
Is this ad for contactless or traditional magstripe cards?
“Because money shouldn’t slow you down”
THE IRONY:
Contactless can deliver uniquefeatures that are irresistible to merchants … not just “Speed”.
(But the technology needs to be used to its fullest.)
Which brand offers irresistiblefeatures to merchants?
An opportunity to differentiate.
How might contactless become irresistible to merchants?
Bank-managed data could help retailers identify their best customers and prospects.
[help] entice customers to visit the retailer - either for the first time or for repeat patronage.
[banks can charge] direct fees or indirect/bundled pricing e.g., in the form of higher interchange.
[Couple] EMV technology and loyalty best practices …(customer analytics … merchant-funded rewards …)
Mercator Advisory Group, Nov 2006
DiamondCluster, Dec 2005
How might contactless become irresistible to merchants?
Introduce payment information value-added services to reduce pricing pressure from merchants and convince them of the real value of bank-sponsored retail payment networks.
An EMV-compliant card would store cardholders' shopping patterns on the chip.
– For example, how many times the cardholder has used a card at a specific retailer or whether the person has shopped at that retailer.
The retailer will have a platform to deliver tailored promotions at the POS. The promotion or messagecan be delivered via a POS receipt.
Gartner, May 2007
Promotional marketing is huge($342 billion in the US alone!)
France
Germany
Italy
Spain
Pakistan
Thailand
China
Newspaper ad, half page:€9,000 - €12,000
Co-op package mailing,1 insert: €350
Local coupon book,1 page: €350
Make it possible for merchants to use data hidden inside the card’s chip to deliver targeted messages at the POS, at very low cost.
Your cards willbecome muchmore valuableto merchants.
Dining &Fast Food
Cosmetics
Ex: Frequent Shopper Messages
Coupon at 1st visit-----------------------------
Coupon
BUY 1 VALUE MEALGET A FREE
DESERT
-----------------------------Coupon
BUY 1 VALUE MEALGET A FREE
DESERT
Coupon at 2nd visit-----------------------------
Coupon
BUY 1 VALUE MEALGET A FREEHAPPY MEAL
-----------------------------Coupon
BUY 1 VALUE MEALGET A FREEHAPPY MEAL
Coupon at 3rd visit-----------------------------
Coupon
BUY 1 VALUE MEALGET A SECOND
VALUE MEAL FREE
-----------------------------Coupon
BUY 1 VALUE MEALGET A SECOND
VALUE MEAL FREEExpires Jan. 31, 2006p Expires Jan. 31, 2006p Expires Jan. 31, 2006p
After 100£-------------------------
COUPON
CHOOSE A SILVER CATEGORY GIFTExpires Jan. 31, 2006
-------------------------COUPON
CHOOSE A SILVER CATEGORY GIFTExpires Jan. 31, 2006
After 100£-------------------------
COUPON
CHOOSE A SILVER CATEGORY GIFTExpires Jan. 31, 2006
-------------------------COUPON
CHOOSE A SILVER CATEGORY GIFTExpires Jan. 31, 2006
After 200£-------------------------
COUPON
CHOOSE A GOLD CATEGORY GIFTExpires Apr. 30, 2006
-------------------------COUPON
CHOOSE A GOLD CATEGORY GIFTExpires Apr. 30, 2006
After 200£-------------------------
COUPON
CHOOSE A GOLD CATEGORY GIFTExpires Apr. 30, 2006
-------------------------COUPON
CHOOSE A GOLD CATEGORY GIFTExpires Apr. 30, 2006
After 300£-------------------------
COUPON
CHOOSE A PLATINUM CATEGORY GIFTExpires Aug. 31, 2006
-------------------------COUPON
CHOOSE A PLATINUM CATEGORY GIFTExpires Aug. 31, 2006
After 300£-------------------------
COUPON
CHOOSE A PLATINUM CATEGORY GIFTExpires Aug. 31, 2006
-------------------------COUPON
CHOOSE A PLATINUM CATEGORY GIFTExpires Aug. 31, 2006
After 400£-------------------------
COUPON
CHOOSE A DIAMOND CATEGORY GIFTExpires Dec. 31, 2006
-------------------------COUPON
CHOOSE A DIAMOND CATEGORY GIFTExpires Dec. 31, 2006
After 400£-------------------------
COUPON
CHOOSE A DIAMOND CATEGORY GIFTExpires Dec. 31, 2006
-------------------------COUPON
CHOOSE A DIAMOND CATEGORY GIFTExpires Dec. 31, 2006
Merchants can avoid giving high value promotions to all customers. They can deliver increasingly valuable coupons encouraging the customer to come back
again soon. Customers are pleasantly surprised to get the offer.
Dining &Fast Food
Cosmetics
Ex: Competitive Shopper Messages
Petrol
----------------------------Coupon
LIMITED TIME OFFER
CHOOSE ANY SILVER GIFT SET
ONLY £2.00AT YOUR NEXT VISIT
Expires Nov. 15, 2005
----------------------------Coupon
LIMITED TIME OFFER
CHOOSE ANY SILVER GIFT SET
ONLY £2.00AT YOUR NEXT VISIT
Expires Nov. 15, 2005
----------------------------Coupon
TRY OUR NEW EZ CAR WASH AND
ENJOY A COFFEE WHILE YOU WAIT
CAR WASH+COFFEE SPECIAL $2.00
Expires Nov. 15, 2005
----------------------------Coupon
TRY OUR NEW EZ CAR WASH AND
ENJOY A COFFEE WHILE YOU WAIT
CAR WASH+COFFEE SPECIAL $2.00
Expires Nov. 15, 2005
-----------------------------Coupon
BUY 1 VALUE MEALGET A SECOND
VALUE MEAL FREE
Not valid with any other specialExpires Jan. 31, 2006
-----------------------------Coupon
BUY 1 VALUE MEALGET A SECOND
VALUE MEAL FREE
Not valid with any other specialExpires Jan. 31, 2006
Merchants can avoid losing customers to the competition. They can recognize occasional customers probably shopping elsewhere, and offer an incentive on the
next purchase, to encourage customers to shop more frequently.
Ex: Game Programs
Petrol----------------------
Y---O---N-
Game expires 31 Jan 2006
----------------------
Y---O---N-
Game expires 31 Jan 2006
1st fill-up----------------------
Y---O---N-
Game expires 31 Jan 2006
----------------------
Y---O---N-
Game expires 31 Jan 2006
1st fill-up----------------------
YE--O-W-N-
Game expires 31 Jan 2006
----------------------
YE--O-W-N-
Game expires 31 Jan 2006
2nd fill-up----------------------
YE--O-W-N-
Game expires 31 Jan 2006
----------------------
YE--O-W-N-
Game expires 31 Jan 2006
2nd fill-up----------------------
YES-OUW-N-
Game expires 31 Jan 2006
----------------------
YES-OUW-N-
Game expires 31 Jan 2006
3rd fill-up ----------------------
YES-OUW-N-
Game expires 31 Jan 2006
----------------------
YES-OUW-N-
Game expires 31 Jan 2006
3rd fill-up ----------------------
Coupon
YESYOUWIN!
Expires 31 Jan 2006
----------------------Coupon
YESYOUWIN!
Expires 31 Jan 2006
4th fill-up----------------------
Coupon
YESYOUWIN!
Expires 31 Jan 2006
----------------------Coupon
YESYOUWIN!
Expires 31 Jan 2006
4th fill-up
Dining &Fast Food
Coupon at 1st visit----------------------
M---R---S--
Pay with your card at McDonald’s. When all the letters above are filled,
win your McSurprise!
----------------------
M---R---S--
Pay with your card at McDonald’s. When all the letters above are filled,
win your McSurprise!
Coupon at 2nd visit----------------------
MC--RPR-S--
Pay with your card at McDonald’s. When all the letters above are filled,
win your McSurprise!
----------------------
MC--RPR-S--
Pay with your card at McDonald’s. When all the letters above are filled,
win your McSurprise!
Coupon at 3rd visit----------------------
MC--RPRISE-
Pay with your card at McDonald’s. When all the letters above are filled,
win your McSurprise!
----------------------
MC--RPRISE-
Pay with your card at McDonald’s. When all the letters above are filled,
win your McSurprise!
Coupon at 4th visit----------------------
Coupon
MCSURPRISE!
Congratulations! Present this ticket to any clerk and
get your McSurprise!
Not valid with any other offer. Expires 31 Jan 2006
----------------------Coupon
MCSURPRISE!
Congratulations! Present this ticket to any clerk and
get your McSurprise!
Not valid with any other offer. Expires 31 Jan 2006
Merchants can avoid the cost and trouble of complicated loyalty programs. Instead, they can build continuity through games based on cumulative spending
or number of visits.
What happens when merchants prefer one brand over others?
A simple, merchant funded promotion helped a Malaysian bank boost acceptance and usage of
it’s cards at Pizza Hut.
Maybankcard Purchases at Pizza Hut
Sep 2005 Oct 2005 Nov 2005
+ 49%
+27% +30%
+49% +50%
+71%+80%
+96%
+121%
+150%
Superm
arket
Superm
arket
Fast fo
od chain
Fast fo
od chain
Audio/
Electro
nicsAud
io/Elec
tronics
Fashio
n Reta
iler
Home I
mprov
emen
tFas
hion R
etaile
r
Avg+ 75%
Payment brands see increased transaction volume when they support targeted
merchant promotions
An opportunity to differentiate
And an opportunity to address major pains which cannot easily be addressed with magstripe cards.
The problem must be solved at the payment network levelPayment schemes will find it more and more
difficult to attract issuers if they cannot promise higherinterchange.
Show issuers that the scheme’s new generation payment products provide more structurally stable
interchange revenues.
The problem must be solved at the payment network level
Merchants and regulators will continue challenging the interchange model if
schemes don’tprovide more
value.
Change perceptions by demonstrating to merchants and regulators that the payment scheme provides major new innovation for the benefit of merchants.
The problem must be solved at the payment network levelImportant scheme initiatives (contactless,
mobile, EMV …) can fail without active merchant participation.
Get merchants to see the scheme’s emerging payment technologies as an integral and strategic part of their
communications and marketing activities.
Copyright 2007 © Welcome Real-time
All rights reserved. Material in this presentation can be copied on condition that “Source : Welcome Real-time” is included in a clearly visible fashion next to the copied material.
Thank you
Aneace HaddadChairman, Welcome Real-time
a.haddad@welcome-rt.com
http://aneace.blogspot.com
www.welcome-rt.com