THE 50,000’!PRIMER ON !MOBILE PAYMENTS!KRIS ZANULDIN!@kzanul!

WHAT IS MOBILE PAYMENTS?!Mobile Payments means different things to different people but it’s all rapidly converging!

Online Payments! In-store Payments!What Is it?!Using your mobile to shop and pay online!

Key Capabilities!One-click checkouts !3-D secure!

Why Is It Important?!Mobile is a rapidly growing share of online commerce traffic!

CONVERGENCE!

What Is it?!Using your mobile to pay instore, usually at a physical point of sale!

Key Capabilities!NFC / SE!QR / Bar CodesCheck-in / Bluetooth!

Why Is It Important?!Value add functionality can be added to the mobile experience vs. traditional plastic!

Magstripe with Mobile!In-Store Over Cloud!NFC Rails!

Card not present payments that are processed in the cloud via an in-store initiation method (e.g. QR/Bar Code, Bluetooth/Check-in)Examples: PayPal Wallet, Square Wallet, Starbucks!

Card present payments that leverage or emulate traditional mag-stripe technology on or in conjunction with mobile to take advantage of wide acceptance!!Examples: Loop, Coin!

Card present payments leveraging contactless technology and secure elements either through embedded, SIM/UICC Card or in the cloud.!!Examples: ISIS, RBC Secure Cloud, Suretap!

IN-STORE MOBILE PAYMENTS IS A RAPIDLY EVOLVING BUT FRAGMENTED SPACE!Solutions have to balance customer disruption, merchant disruption, security, convenience and cost. !

NFC!

4!

Leveraging the same contactless technology as plastic cards, NFC enables a mobile to emulate a plastic contactless card.!

Pros!•  Minimizes merchant

disruption by leveraging existing contactless terminals!

•  Card Present EMV transaction with similar security to a Contactless Chip Card!

•  “Tap to pay” is a familiar behavior that is easily explained to customers!

Cons!•  “Perso”-ing a mobile device

or cloud with secure credentials for NFC is complicated and expensive.!

•  Apple devices to-date do not have NFC. Requires a sleeve/MicroSD add-on.!

•  Lifecycle management and maintenance of credentials on the device adds additional cost and complexity.!

Key Terms!•  TSM: Trusted Service Managers

that help distribute secure data between the service providers and secure element owners.!

•  Secure Element: Tamper proof, standalone element on the phone (or cloud) that contains payment credentials. Can be owned by Mobile Operators, OEM Manufacturers or Issuers (Cloud)!

NFC Example: ISIS

5

•  NFC wallet consortium of AT&T, T-Mobile and Verizon in the US.!

•  Secure Element on the SIM.!

•  AMEX, Serve and Chase payment cards can be added to the wallet.!

•  Allows offers and loyalty cards to also be loaded to the wallet.!

IN-STORE THROUGH THE CLOUD!

6!

Payments are initiated in-store through the mobile but payment credentials are stored and retrieved on the cloud which in turn will communicate with the merchant POS!

Pros!•  Easier lifecycle management

and setup with credentials stored on the cloud vs. NFC.!

•  Depending on the initiation method – can enable a “hands free” payment experience!

•  Apple devices can utilize almost all of these initiation methods.!

Cons!•  Disruptive for merchants

to adopt due to POS integration requirements.!

•  Card not present payment which risks higher fraud rates.!

•  Checkout experience can be less intuitive and more difficult to explain vs. “tap to pay”.!

Key Terms!•  Cloud Payments: Storing and

accessing payment credentials in real time on the web.!

•  Bluetooth LE: Low power wireless technology that exists on most smartphones. Highly flexible when used in conjunction with applications for proximity detection and low size data transfer.!

QR /Barcode!!Bluetooth!/Check In!

Initiation Method!

IN-STORE CLOUD EXAMPLE: PAYPAL WALLET!

Customer “checks-in” to merchant via PayPal app OR app automatically checks-in Customer with PayPal Beacon proximity detection (requires customer opt-in)!

At the POS, Merchant confirms Customer and confirms order. Payment is made over the cloud. !

Customer receives receipt over email or SMS.!

BEACONS + CLOUD = INTERESTING OPPORTUNITY!Bluetooth LE (Smart) beacons allow applications to create rules and experiences that are triggered based on highly accurate proximity detection. These use cases can be flexible and used for marketing, servicing and payments.!

MAKING MAG-STRIPE COOL!

9  

Alternate payment methods are emerging that try to circumvent the disruptions of newer technology be leveraging traditional mag-stripe. Big short-term benefits but long term questions. !

(Initial) Pros!•  Widescale acceptance of mag-stripe

terminals and does not require any additional merchant-side investment or disruption.!

•  Easy and intuitive customer experiences (swipe with Coin) or (tap with Loop).!

(Initial) Cons!•  Outside of the US – most markets are

EMV. Terminal behavior when encountering a mag-swipe could lead to negative customer experiences.!

•  Security concerns on mag-stripe as most of the industry has moved to EMV and chip.!

LOOP! COIN!

THE FUTURE VALUE OF MOBILE PAYMENTS IS NOT THE PAYMENT ITSELF (MY OPINION)!

PURCHASE!

LOYALTY!MARKETING &

SERVICE!

Mobile payments needs to extend its reach to include pre-purchase, purchase and post-purchase use cases in a single experience.!

THANK YOU!!