DIGITAL TECHNOLOGY An Evolution in the Payment Landscape

AMEX Digital Solutions

Integration with leading digital wallet platforms such as Apple Pay, Android Pay and Samsung Pay makes paying simple and convenient.

NFC/Contactless terminals at point-of-sale optimize transactions for both the consumer and the merchant.

With the addition of token services, digital wallets are even more secure.

HCE is an additional option for issuers to deploy mobile wallets.

The Anatomy of Digital Payments

Traditional Secure Element (SE) ArchitectureWhen making a transaction, communication between the owner of the secure element and the issuer is required.

Host Card Emulation (HCE) ArchitectureA secure cloud server is used to store customer account data, which is transmitted to the NFC mobile device at point- of-sale.

Payment App

Consumer selects an active card (tokenized account).

Account Data

Stored on a secure cloud server.

Account Data

Stored on device hardware or on a SIM card.

Payment App

Obtains the tokenized account data from the secure cloud.

NFC Controller

Transmits the payment information to the contactless point-of-sale terminal.

NFC Controller

Transmits the payment information to the contactless point-of-sale terminal.

Contactless Payment Terminal

Needs to be upgraded with the NFC specifications to accept

mobile payments.

Contactless Payment Terminal

Needs to be upgraded with the NFC specifications to accept mobile payments.

A Closer Look at Digital Payments: NFC Hardware (Secure Element) & Software (Host Card Emulation)

A Closer Look at Digital Payments: NFC Hardware (Secure Element) & Software (Host Card Emulation)

A Trusted Service Manager (TSM) acts as a neutral broker to securely share Account Data between the Issuer and the owner of the Secure Element.

HCE connects the mobile device directly with the Issuer’s servers to transfer Account Data securely with cryptographic keys.

Issuer Acquirer

TSM Mobile Network Operator

Remote Server

Network NetworkAcquirer Issuer

Worldwide mobile payment revenue1

$450Bn

$1T+

2015 2019

Forecasted global NFC mobile payment transactions over the next 5 years3

2020

$11.2Bn

2015

$1.8Bn

Total active wallet transaction global volume will double in the next 5 years2

$660Bn

$1.7T

Over the Next Few Years, the Number of Transactions and Revenue From Digital Payments Are Projected to Grow

1 The worldwide mobile payment revenue was $450Bn in 2015 and is expected to surpass 1Trillion in 2019. http://www.statista.com/statistics/226530/mobile-payment-transaction-volume-forecast/ 2 The expectation to have active wallets in these handsets is also high, growing from 19.9% in 2015 to 32.7% in 2020 and the total transaction volumes growing from $ 660Bn in 2015 to $1.7T in 2020. https://www.juniperresearch.com/researchstore/commerce-fintech/mobile-wallets3 The forecasted volume of NFC mobile retail payment transaction volume is expected to grow from 1.8Bn in 2015 to 11.2Bn by 2020. https://www.juniperresearch.com/researchstore/commerce-fintech/contactless-payments/segment-research/nfc-mobile-payments;-handsets-wearables

of people globally will expect to have active wallets in their handsets by 20208

32.7%

By 2017, more than 50% of global mobile handsets will be smartphones6

30% of global, total mobile wallet users will have NFC enabled handsets by 20207

More Consumers Adopt NFC Enabled Smartphones

6 Although the growth of mobile handsets globally is slight, as most markets, especially developed, are saturated with mobile handset penetration, going from 6.3Bn in 2015 to 7.2Bn in 2020, the shift to smartphones is high, expecting to grow from 34% in 2015 to more than 50% in 2017. https://www.juniperresearch.com/researchstore/commerce-fintech/mobile-wallets7 The number of NFC enabled handsets will increase from 148M to +665M by 2020 (approx 30% of total mobile wallet users). https://www.juniperresearch.com/researchstore/commerce-fintech/contactless-payments/segment-research/nfc-mobile-payments;-handsets-wearables8 The expectation to have active wallets in these handsets is also high, growing from 19.9% in 2015 to 32.7% in 2020 and the total transaction volumes growing from $ 660Bn in 2015 to $1.7T in 2020. https://www.juniperresearch.com/researchstore/commerce-fintech/mobile-wallets

NFC-ready POS terminals to be shipped globally by 20174

14M

Consumers Will Be Able to Access Digital Payment Solutions at an Increasing Number of Locations

Nearly a third of all US retail establishments will be accepting NFC mobile payments by 20195

33%

4 Global shipment of NFC-ready POS terminals are forecasted to grow from 3.9M (2012) to 14M (2017) and to represent 66% of the total POS base by 2019. http://www.nielsen.com/us/en/newswire/2012/ smartphones-the-ultimate-shopping-companion.html;https://letstalkpayments.com/around-680-b-will-spent-globally-nfc-mobile-payments-2019-says-new-report/5 It is forecast that nearly a third of all US retail establishments will be accepting NFC mobile payments by 2019. (source: https://www.javelinstrategy.com/coverage-area/mobile-wallets-and-consumer-adoption-securing-growth-through-trust)

1 The worldwide mobile payment revenue was $450Bn in 2015 and is expected to surpass 1Trillion in 2019.

http://www.statista.com/statistics/226530/mobile-payment-transaction-volume-forecast/

2 The expectation to have active wallets in these handsets is also high, growing from 19.9% in 2015 to 32.7% in 2020

and the total transaction volumes growing from $ 660Bn in 2015 to $1.7T in 2020. https://www.juniperresearch.com/

researchstore/commerce-fintech/mobile-wallets

3 The forecasted volume of NFC mobile retail payment transaction volume is expected to grow from 1.8Bn in 2015 to

11.2Bn by 2020. https://www.juniperresearch.com/researchstore/commerce-fintech/contactless-payments/segment-re-

search/nfc-mobile-payments;-handsets-wearables

4 Global shipment of NFC-ready POS terminals are forecasted to grow from 3.9M (2012) to 14M (2017) and to represent

66% of the total POS base by 2019. http://www.nielsen.com/us/en/newswire/2012/smartphones-the-ultimate-shop-

ping-companion.html;https://letstalkpayments.com/around-680-b-will-spent-globally-nfc-mobile-payments-2019-says-

new-report/

5 It is forecast that nearly a third of all US retail establishments will be accepting NFC mobile payments by 2019. (source:

https://www.javelinstrategy.com/coverage-area/mobile-wallets-and-consumer-adoption-securing-growth-through-trust)

6 Although the growth of mobile handsets globally is slight, as most markets, especially developed, are saturated with

mobile handset penetration, going from 6.3Bn in 2015 to 7.2Bn in 2020, the shift to smartphones is high, expecting to

grow from 34% in 2015 to more than 50% in 2017. https://www.juniperresearch.com/researchstore/commerce-fintech/

mobile-wallets

7 The number of NFC enabled handsets will increase from 148M to +665M by 2020 (approx 30% of total mobile wallet

users). https://www.juniperresearch.com/researchstore/commerce-fintech/contactless-payments/segment-research/

nfc-mobile-payments;-handsets-wearables

8 The expectation to have active wallets in these handsets is also high, growing from 19.9% in 2015 to 32.7% in 2020

and the total transaction volumes growing from $ 660Bn in 2015 to $1.7T in 2020. https://www.juniperresearch.com/

researchstore/commerce-fintech/mobile-wallets