Taking Prepaid into Account

Wednesday, 17 September 2014CEESCA, Budapest

Most Important First

Prepaid is a major driving force in the near future of mobile wallets

‘a container into which valuables can be stored and retrieved using specific methods’

Prepaid is…

CLOSED LO

OP

OPEN LOOP

GIFT CARDSCASH ACCOUNTS

STORED VALUE ACCOUNTS

PRIVATE LABEL

PHYSICAL CARD

VIRTUAL CARD

Source: MasterCard / partners in prepaid

Merchants

• Means of increasing the brand loyalty of customers

• Anticipation of future purchases in exchange for store discounts

Transport and ticketing services

• Hong Kong’s Octopus prepaid travel card

• London’s Oyster Card

MNOs

• Mainly airtime• PAYG accounts

have eclipsed their pay monthly counterparts

• Prepaid mobile money initiatives

Past: Simple but Effective Tool

Enhancing existing physical products via mobile channel• Mobile reload / top up• Additional channel to improve customer value• Interactive channel to get in touch with the users

Mobile Prepaid: A Future Full of Opportunities

Enhancing existing physical products via mobile channel• Mobile reload / top up• Additional channel to improve customer value• Interactive channel to get in touch with the users

Digitisation of existing physical prepaid solutions• Replacement or endorsement of the existing solution• Host card emulation (HCE)

Mobile Prepaid: A Future Full of Opportunities

Merchant has a Winning Combo: HCE (or) Apple Pay + (Closed Loop) Prepaid

MN

O

Bank

Paym

ent S

chem

e

Enhancement of existing physical products via mobile channel• Mobile reload / top up• Additional channel to improve customer value• Interactive channel to get in touch with the users

Digitisation of existing physical prepaid solutions• Replacement or endorsement of the existing solution• HCE?

Development of new mobile-based prepaid solutions• Launching a new mobile-based prepaid solution• No need to produce physical cards anymore - is there?

Mobile Prepaid: A Future Full of Opportunities

Benefits of Mobile Prepaid

Customer Benefits

• Lower entry barriers• More control• More functionalities• Perceived feeling of

security

Business Benefits

• Lower entry barriers• Lower operational

costs• More flexibility• Business agility• Less restrictive

regulatory environment

• Different stakeholders - each of them holding a piece of the puzzle (control points)

• Each of them is vying to establish a commercially influential position in the value chain

Deadlock and market fragmentationReduced integrative potential and market adoption

Mobile Wallets 1.0: Digitising Leather Wallet

• Strengthening the brand loyalties of customers • Uniquely pleasurable shopping experience • Minimising the inconvenience of payment

Prepaid: a way to minimise payment disruption Focus on unique advantages to conventional commerce

Mobile Wallets 2.0:Reinventing Commerce

Starbucks (US, Canada, UK)

Examples: Reinventing CommerceAtB

(Norway)Apple / iTunes

(Worldwide)

• Prepaid instead of current account• Challenging the banks at their own game• Integrated cashback, reward and loyalty

schemes of high street and online retailers Prepaid as a model for personal mobile bankingProgressive banking customers and NOT underbanked

Mobile Wallets 2.0:Reinventing Banking

Examples: Reinventing Banking

T-Mobile Google Wallet Amex BluebirdMobile Money

• Mobile or not, it must be ‘loaded’• No credit, prescribe or interests facilities• Not covered by any guarantee scheme

(insolvency)• No official board of appeal (customer

complaints)• Those that do not operate on the network of a

major payment scheme, may be less frequently accepted by merchants

Limits of Prepaid (Mobile or not)

Prepaid Options for Banks• Option 1: Deploy an invisible prepaid

infrastructure in support of a new service

• Option 2: Establish a prepaid agent network and resell the products of high profile merchants

• Option 3: Use prepaid openly and actively

• Option 4: Play a supporting back-end role to new players in prepaid

Examples: Options for Banks

Option 1:Danske Bank

Option 2:PostFinance

Option 3:Use prepaid

actively & openly

Option 4:CBW Bank

?

Looking to the Future – What a Bank Should Consider

Mobey Forum predicts: Prepaid – a major driving force in the near future of mobile wallets

New forms of engagement with the merchant sector (compare to PayPal)

Start paying attention to possible disruption of current account and customer relationship

Question your own role in the ecosystem

Obstacles such as with regulation, operating procedures and legacy systems integration are no good excuse for missing the momentum

• Anne K. Shreiner American Express• Hans S. Ildstad EVRY• Thor Ragnar Klevstuen EVRY• Sarah Kocianski Monitise• Ville Sointu Ericsson• Kasper Sylvest Olsen Danske Bank• Kristian Thure Sørensen Nets• André Zölch PostFinance

Special Thanks to the Core Team!