Mobile Payment Opportunities in APAC

Download Mobile Payment Opportunities in APAC

Post on 20-Aug-2015




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  1. 1. Mobile Payment Opportunitiesin APAC Jayesh Easwaramony VP - ICT Practice, Frost & Sullivan
  2. 2. Key IssuesAPAC SnapshotAgendaContents Overview1 2 3
  3. 3. Rise of the smartphone and mobile internetMobile internet revolution is underway1.38 Billion New Handsets Sold in 20101.06 Billionwere camera phones 490 millionhad premium input method(Qwerty/Touch Screen/Hybrid) 298 millionwere smart phones 2 Billion Internet Users 31% 20% 49% 1.6 bn Mobile internet users 2.2 Billion with a Banking account =
  4. 4. .. Is impacting all aspects of m-financeM-Banking apps
    • Mbanking involves typical banking interactions over mobile medium like account Balance, previous transaction, payment of mobile bills,
    • Mpayments can be further broken up into the following categories
      • Account/ Wallet linked payments
        • M-commerce:
        • Bill payments
      • Proximity payment : very small amount involving contactless solution ( like NFC ) for transactions like Parking, retail.
      • May involve stored value or may be linked to a bank.
    M-money + transfers
      • Unbanked transactions : Transactions involving users who do not have a bank account.
      • Micropayment enablement
      • Money transfers
    Implementation complexityLinkage to bank accountM-payments is one part of the m-finance landscape
  5. 5. Key drivers of m-paymentsGreater collaboration is drivingthe m-payment marketMobile usage behaviourM-payments gets platformized Banks move beyond wait and watch experience vs enablementCredit cards capture of smaller ticket sizeIncreased commitment to NFC phones,Wafer basedand SD card based NFCVarious surveys show> 40% of users want to try phone as a payment mechanism
  6. 6. Evolution of mobile paymentPhases of evolutionBusiness Models/Ecosystem Technology Pre 2007 2008 - 2012 2012 -2015Triggers
    • Business models driven largely by operators with specific standards
    • Japan and South Korea
    • Less than 10% 3G penetration
    • Early exploration of the technology
    • Business models evolving strong establishment of alliances and consortiums
    • Large number of NFC based trials
    • Relative maturityof mobile wallet based approaches
    • > 30%
    • Standardized business models with clear revenue share with ecosystem players
    • Expansion and integration with traditional payment processing methods
    EmbryonicActive ExperimentationMaturing>50%
  7. 7. M-payment Business Model Operator driven modelsFI driven models3 rdparty driven modelsCollaboration Model
      • Mobileoperator independently deploysmobile payment applications
      • Apps may support a prepaid stored value model or the charges may be integrated into the customers monthly bill
      • A bank deploys mobile payment applications or devices to customers, ensures merchants have the required point-of-sale (POS)
      • Payments are processed over the existing financial networks
      • An independent peer-to-peer service provider provides secure mobile payments between customers or between customers and merchants
      • Involves collaboration among banks, mobile operators and other stakeholders in the mobile payments value chain
        • Consortium Led
        • Alliance Led
  8. 8. Operator-Centric Model: Early ventures
    • SMART Padala (Philippines)
    • Worlds first International cash remittance service through text; offered since 2004;
    • Remittances are charged a 1% commission; considerably less expensive
    • Available in more than 19 countries through its SMART Remittance Partners
    • Also offers a domestic money transfer, To en-cash, the receiver needs to go to the nearest Smart Padala Center
    SMART Remittance Partners
    • Japan
    • Proprietary technologyFelica owned jointly by Sony, NTT and Japan Railways
    • Combination of payments with loyalty discounts- with the Osaifu-Keitai service
    • Extended to application platforms in 2008
    • Over 50% of subscribers have access to Felica handsets - > 10 mn active users
    • Korea
    • Moneta services launched by SKT in 2005 as mobile wallet ~ 6 mn users
    • Launch of T-cash as proximity payment in 2009
    • Unique case of telecom operators either acquiring credit card cos (SKT)
    • HanaSK ( Hana Bank with SKT Telecom) and BC Card with Korea Telecom
  9. 9. Non-operator Model
    • Mobile Money (Malaysia)
    • Allows registered users to pay for goods and services with a 6-digit security PIN via SMS.
    • Users can place online orders without the need to disclose their credit card information
    • Users must have either a savings, current or credit card account with participating banks
    • It functions like a credit card if a shopper applies for a "Pay by Mobile Phone" credit card account (eg Hong Leong Mobile Credit Card). The user will be billed by the bank accordingly at month's end
    • In addition, it can also function as a debit card if it is tied to the users savings or current account. The amount will be deducted from the users account upon successful transaction
  10. 10. Collaboration Model
    • mChek (India)
    • Links users mobile phones to their Visa/MasterCard credit or debit card
    • Users can pay for their mobile bills, flight tickets, insurance premiums, movie tickets, utility bill payments, and so on
    • More than 250,000 users with 60,000 transacting customers
    • Processed over $2.1 million (100 Million Rupees) of mobile payments since its launch in September 2007
    • Service now live in India with Bharti Airtel, Tata Indicom and Tata Docomo, and in Sri Lanka with Dialog Telekom
    • Achieved the Payment Card Industry's Data Security Standards 1.2 - a standard to curb debit and credit card fraud
    • Certified by Western Union as a Mobile Money Transfer Vendor
  11. 11. Collaboration Models
    • Barclays with Orange
    • Shoppers will be able to make small payments using mobile phones if they have Barclays, Orange and Samsung Tocco Lite phone
    • Initially, Mobile payments upto 15 pounds at 50,000 retail outlets
    • Quick Tap payments let users debit 100 pounds from Barclays and payments will be processed by Mastercard
    • Quick Tap payments can be done by SIM Card and amounts above 15 pounds will have PIN numbers for additional security
    • ISIS JV
    • Created by the 3 operators AT&T , Verizon Wireless ; Sprint being wooed
    • NFC based solution
    • ISIS wants to create a mobile wallet by 2012 and wants Google and Apple to partner with them
  12. 12. Key IssuesAPAC SnapshotAgendaContents Overview1 2 3
  13. 13. Asia Pacific Revenue Forecasts Source: Frost & Sullivan Mobile Payment Market: Revenue Forecasts (Asia Pacific), 2006-2015 Note: These revenuesdenote revenues accrued to operators only
  14. 14. Asia Pacific Revenue Snapshot *Size of bubbles compare revenue size Source: Frost & Sullivan Mobile Payment Market: Revenue Market Snapshot (Asia Pacific), 2010 Note: These revenuesdenote revenues accrued to operators only
  15. 15. Mobile Payment Channels
    • NFC to exhibit most growth
    • SMS will continue to remain as the dominant mobile payment channel
    • WAP/Browser-based payments will remain to be a small contributor
    Source: Frost & Sullivan
  16. 16. Key IssuesAPAC SnapshotAgendaContents Overview1 2 3
  17. 17. Complex value chainOperatorsPurchase MediaTechnology Provider Payment Gateway Fulfillment Direct Debit / Credit Stored Value Card (Prepaid) Direct Mobile Deduction Specific M-Commerce SitesApplications Website access on Mobile Gateway providers
    • MChek
    • Obopay
    • PayTM
    Mobile Payment Platform Providers
    • VISA
    IVR Service Providers Mobile Payment Fulfillers
    • Mchek
    • Obopay
    Financial institutionsOthers
    • Complexity of value chain needs a co-opetitive models
      • Customer ownership operator clinging on
      • Payment infrastructure remote vs proximity
      • End to end SLA, liability, risk, security and privacy management TSM?
      • Co- branding vs revenue sharing banks see marginal gains
      • Merchants still unsure
      • P2P models interesting for mobile wallet but not for proximity
  18. 18. Replication is tough the case of m-pesaKenyaTanzaniaAdoption Market share of MNOAgent networkPlatformOthersRun-away success~ 7 mn usersLimited success< 1 mn usersSafaricom 79% Vodacom 79% Re-use of existing airtime dealers Different- single shop agents SIM ToolkitUSSD Higher GDPPresence of national IDHigher pop density Lower GDPAbsence of national IDLower pop density
  19. 19. Integrated security and risk managementCustomer EducationMobile Security Compliance Forensics and Event Management End to end managementApplication-centric Security
  20. 20. Conclusion
    • M-payment delivers value to all players in the ecosystem
    • However consumers will be slow to adopt ; cash and stored value card have strong value propositions
    • Technology is not the answer , understanding the customer is
    • Strong co-operation between cross-industry players is essential
    • Contactless payment a reality; NFC to drive the next wave of growth
    • Location assisted + loyalty to assist m-payments
    • Proactive government for standardization and enablement
    • Innovation in business models for unbanked and emerging markets
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  22. 22. Contact Details
    • Jayesh Easwaramony
    • Jayesh has over 10 years of strategy consulting and business planning expertise with large conglomerates and MNCs within the APAC region. He has a wealth of experience in the TMT sector(Telecom, Traditional Media, New Media, IT Services and BPO). He is a thought leader in the above sectors and regularly presents at various forums and events. He is also sought by print and news media for his opinions on industry developments.
    • For any other enquiries, email us:
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