K connelly presentation texpo non bank payment systems revolution 2015 f

transcript

NON-BANK PAYMENTS REVOLUTION2015 UPDATE (APRIL)

Kevin H. ConnellyExecutive Vice PresidentThe RWC GroupKevin.Connelly@therwcgroup.com

• LAST YEAR’S PRESENTATION FOCUSED ON:– PAYMENTS EVOLUTION

– PAYMENTS REVOLUTION

– DISRUPTIVE TECHNOLOGIES

– MOBILE MERCHANT TECHNOLOGY

– ELECTRONIC WALLET

– NFC– BLE

• THIS YEAR FOCUS IS ON WHAT’S NEW

THE EVOLUTION OF PAYMENTSOVERVIEW

tech·nol·o·gytekˈnäləjē/noun1. the application of scientific knowledge for practical purposes, esp. in industry.

•rev·o·lu·tion•ˌrevəˈlo͞oSHən/•noun•1. a forcible overthrow of a government or social order in favor of a new system.

pay·mentˈpāmənt/noun1. the action or process of paying someone or something, or of being paid.

THE REVOLUTION OF PAYMENTSCONFIRM DEFINITION

• ITUNES

• AMAZON

• LINKED IN

• PAYPAL

THE REVOLUTION OF PAYMENTSDISRUPTIVE TECHNOLOGIES / DISRUPTORS

THE EVOLUTION OF NON-BANK PAYMENTSE-WALLETS

In 2014 200 e-Wallet or

Mobile Wallet

Applications

Gatekeeper Wallets

Bank Wallets

Retailer Wallets

e-Commerce

Wallets

Aggregator Wallets

Single-Feature Wallets

THE EVOLUTION OF NON-BANK PAYMENTSTHE GEORGE COSTANZA WALLET

http://www.youtube.com/watch?feature=player_detailpage&v=yoPf98i8A0g

• REVOLUTION IN FULL SWING –WEEKLY CHANGE

• HACKING OF PAYMENT DATA -TARGET

• EMV ROLLOUT

• APPLE PAY

• MERCHANT CONSUMEREXCHANGE (MCX)

THE EVOLUTION OF PAYMENTSWHAT’S NEW

• ISIS IS NOW SOFTCARD ISNO LONGER IS NOWGOOGLE WALLET

• AMAZON LOCAL REGISTER

• NFC REVIVAL? NFC TAKES LEAD

• IBEACON BLE TRACTION –OR NOT

• BITCOIN – DOWN AND UP

• NEW FRONTIER – CHANGES ALMOST DAILY

• PAYMENTS SOFTWARE VERSION “X.X” REPLACED WITH IOS8, ANDROID 1 AND KITKAT

• PAYMENTS UNIVERSE CENTER NO LONGER NY, CHICAGO OR LA – IT IS SILICON VALLEY

• BANKS NO LONGER LEADING PAYMENTS INNOVATION

• NON-BANKS LEADING – PAYPAL, GOOGLE, APPLE, RETAILERS

• TECHNOLOGY IS DRIVER – RAPID CHANGE IS NORM• EXPLOSION OF PAYMENT ALTERNATIVES IN 2015

THE REVOLUTION OF PAYMENTSWHAT’S NEW

THE REVOLUTION OF PAYMENTSANNOUNCEMENTS IN 2015

• SAMSUNG PAY

– SAMSUNG ACQUIRES LOOPAY

• MCX– CURRENT C REMAINS ON BENCH

• GOOGLE WALLET

– ACQUIRES SOFTCARD (THAT WAS ISIS)

• PAYPAL

– PAYPAL BUY PAYDIANT

THE REVOLUTION OF PAYMENTSWHAT’S NEW IN Q1-2015

• MICROSOFT PAYMENTS

– APPLIED FOR MONEY TRANSFER LICENSE (MONEY SERVICEBUSINESS)

• APPLE PAY IS DRIVING FORCE

– LEADING NEW FEATURE A MUST HAVE

– APPLE WATCH – TIME IS MONEY

• REGULATORS CATCHING UP– BSA/AML, KYC, FRAUD, SECURITY

• SAMSUNG PAY

– SAMSUNG ACQUIRES LOOPAY

• GOOGLE WALLET

– ACQUIRES SOFTCARD (THAT WAS ISIS)– NEW OPERATING SYSTEM

• PAYPAL

– PAYPAL BUY PAYDIANT

– SPUN OFF FROM EBAY

• MCX– CURRENT C REMAINS ON BENCH – AND IN PILOT

• MICROSOFT PAYMENTS

– APPLIED FOR MONEY TRANSFER LICENSE

• APPLE PAY IS DRIVING FORCE

– PAYMENT FEATURE A MUST HAVE

– APPLE WATCH – TIME IS MONEY

•1 Billion | The Number Of iOS Devices Sold

•200 K | The Number Of Vending Machines, Laundromats and Parking Kiosks Now Accepting Apple Pay•400 | The Percentage Increase In Apple Pay Use Since Whole Foods Launched It

APPLE PAY

Your wallet. Without the wallet.

APPLE PAY

Your wallet. Without the wallet.

http://www.pymnts.com/in-depth/2015/major-banks-cashing-in-on-apple-pay-potential/#.VTEc9yFViko

• FEB-15 CHASE 1MM CUSTOMER

• JAN-15 BOFA 800K CUSTOMERS

• 750 BANKS

• $100MM SPENT ON ADS

http://adage.com/article/cmo-strategy/capital-launches-apple-pay-ad-orange-bowl/296437/

• APPLE PAY IS DRIVING FORCE - CHASE

THE REVOLUTION OF PAYMENTSFORECAST BEYOND THE TIPPING POINT

THE REVOLUTION OF PAYMENTSE-WALLET COMPARISON

THE EVOLUTION OF PAYMENTSWHAT DOES THE DATA TELL US?

• Rapid and seismic changes – much more to come

• Technology• Multiple competing platforms and solutions• Banks, Retailers, Telecom, Tech Industries

vying for foothold• No clear winner yet

• Retailers are heavily engaged and vested interest

• Banks are following – but now engaged

• Safety & Security are considerations to all

THE EVOLUTION OF NON-BANK PAYMENTSE-WALLETS

NFC – EmbeddedApple, Softcard,

Google

Cloud vs Device QR CodeMCX

Hybrid

THE EVOLUTION OF PAYMENTSAPPLE PAY – THE LEADING FRONT

• Apple owned

• NFC tech embedded in iPhone6

• Only works on iOS8 and new phone

• Banks Participating

• Retailers Participating

How does it work?

http://www.bloomberg.com/video/popout/4S9n3TNbQA6vW_~xMyGaqg/21.13/

http://techcrunch.com/2014/09/09/heres-apple-pay-in-action/

Quick Market Reaction

• High Level Process Flow

THE REVOLUTION OF PAYMENTSAPPLE PAY – THE LEADING FRONT

Participating Banks

• .15% Apply Pay Fee

• 1-2% is the norm

• 750+ BANKS NOW

Participating Merchants

• 220,000 Locations

• 9 Million Locations

• <10%

• Cost: $300-500

• Walmart using MCX

• Is Timing Better For NFC?

• Compatible Apps

THE REVOLUTION OF PAYMENTSMERCHANT CUSTOMER EXCHANGE (MCX)

• Merchant owned

• 110,000 locations

• Pilot in 2014, rollout 2015 (WAITING)

• Software download

• Works on iPhone and Android devices

• QR Code Based

THE REVOLUTION OF PAYMENTSMERCHANT CUSTOMER EXCHANGE (MCX)

• Coupons and Offers

• Loyalty

• Easy of Payments

• Security

THE REVOLUTION OF PAYMENTSAMAZON LOCAL REGISTER

http://localregister.amazon.com/

How does it work?

THE REVOLUTION OF PAYMENTSSOFTCARD

• Telecom Joint Venture

• AT&T, Verizon, T-Mobile

• NFC Based

• Works on iPhone and Android devices – app comes pre-loaded on 30 devices

• Changed Name from ISIS

THE EVOLUTION OF PAYMENTSSOFTCARD

How does it work?

https://www.youtube.com/watch?v=tH5RWt6HdKk&feature=player_embedded#t=0

Announced partnership with Subway this week – 26,000 locations

THE REVOLUTION OF PAYMENTSBEACON TECHNOLOGY

https://www.paypal.com/webapps/mpp/beacon

THE REVOLUTION OF PAYMENTSPAYPAL POSITIONING

• Merchant Solutions

• Consumer Solutions

• Financial Hub

• eBay

THE REVOLUTION OF PAYMENTSPAYPAL POSITIONING

• Safety

• Security

THE EVOLUTION OF PAYMENTSIMPACTS TO BANKS

• Disintermediation

• Revenue loss

• Still most trusted

• Checking account remains financial hub

• Burdened by regulation and scrutiny

• Innovate and invest?

• Partner and private label?

THE EVOLUTION OF PAYMENTSIMPACTS TO BUSINESS

• Risk model changes

• Investment increases

• Technology disruptors can impact business

• Opportunities for cost savings

• Opportunities for revenue increase

• Opportunities for customer relationship building

THE EVOLUTION OF PAYMENTSIMPACTS TO CONSUMERS

• Enhanced convenience

• Increased security but with new risks

• Opportunities for savings

• Loss of privacy

• App-mania

• Identify theft

• Confusion & excitement

THE EVOLUTION OF PAYMENTSREGULATION

• Multiple regulators

• Overlapping reviews and conflicting enforcement

• New laws phased in and untested

• Catch up mode

• AML

• CFPB

THE EVOLUTION OF PAYMENTSISSUES AND POTENTIAL ROADBLOCKS

• Security• Fraud losses• Identity theft• Privacy concerns

• Technology• Multiple platforms competing• No clear winner yet• Consumer/Business confusion

• Safety• Non-bank accounts• Criminal activity

• Regulation

THE EVOLUTION OF PAYMENTSWHERE TO FROM HERE?

• CFPB and Other Regulation of Mobile Wallets, Non-Bank payment participants WILL INCREASE

• Apple Pay will CONTINUE TO have a major impact payments

• Google will continue to make a variety of significant bets in payments vertical

• Retailers will implement variety of payment receptors and focus on security, loyalty and up-sell

• Bank’s will continue to follow, but more aggressively participate to avoid continued disintermediation

THE EVOLUTION OF PAYMENTSCOMMENTS & QUESTIONS

www.therwcgroup.com

THANK YOU

THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS

View of Most Current Data on Payments Revolution and Mobile Wallets

THE EVOLUTION OF PAYMENTSSTATISTICAL INSIGHTS