The document discusses mobile payments and NFC technology from a consumer perspective. It examines case studies of NFC adoption in the Netherlands and looks at approaches to mobile proximity payments. It also discusses expectations of digital wallets and payment instruments from consumers. Additionally, it explores how mobile financial services have leapfrogged traditional banking infrastructure in Rwanda through the use of mobile phones.

1. The Consumer Side of NFC and Mobile Payments
Lafferty Global Merchant Services Council, Amsterdam NL (25 April 2013)
Dan Armstrong (dan.armstrong@takashimobile.com)

2.  Some nagging thoughts on paradigm shifts
 Re-thinking the nature of transactions and transaction
actors
 Proximity mobile payments: card emulation or not?
 3 case studies from The Netherlands to validate
consumer acceptance of NFC
 Rebooting the conversation from a consumer point-of-
view
• What do we expect from a wallet, or a payment instrument?
• Is NFC a “tech-push’ or a “consumer pull’?
• How to differentiate with NFC?
 1 case study from Rwanda, where cards and card
acceptance are virtually non-existant
Contents

3. marketplaceMCI (1994-96)

4. marketplaceMCI (1994-96)

5. 1-800-MUSiC-NOW (1996)

6. The e-commerce shake out
 Many shifting paradigms. However, once the supply
chain and logistics matched people’s awareness,
appetite and feelings of trust for e-commerce settled,
clear winning business models emerged (my personal
way of summarising):
• Efficiency (Paypal, Netflix, online photo printing,
online flight tickets/car rental/hotels, UPS/FedEx
tracking, Amazon.com)
• Products (HP, Netflix, Thomann.de, Amazon.com)
• The Long Tail ( eBay, Marktplaats, publishing on
demand … and of course Amazon.com)
• … plus of course, Monetising Clicks (Facebook, Google,
YouTube, TripAdvisor, pornography)

7. How shall we define “transaction”?
Bank Account Value
Transfer, Payments
Value Depletion,
Prepaid, Wallets,
Transportation
Loyalty, Points,
Coupons,
Transformation
Moments
Eyeballs, Trust,
Engagement, Action
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8.  50% of consumers will pay more for products they trust
 78% of consumers will look first to trusted brands when
in need of products or services
 78% of consumers are willing to give trusted brands a
chance, even if unsure of what value the product or
service will bring to them
 82% of consumers will choose to use a trusted brand’s
products or services frequently, rather than move
between brands
 83% of consumers will recommend a trusted brand to
others, often un-prompted
Trust?
Concerto Marketing Group, Vancouver BC, Canada / Ontrack Advisory, Singapore

9. … 2 fundamental types of transaction players?
Transactions are the
Channel
”I have a pipe and/or network and I want to monetise the
investments I made in creating it. I want as much to get
through that pipe and the (mobile) phones accessing it as
possible.”
Transactions via the
Channel
”I have stuff I want to do via channels. Enable bank account
control, enable payments, provide ticketing, sell ads, credit
loyalty points, etc. and I need as many (cost effective) channels
and pipes to do it.”

10. “Mobile” Banking & Payments Scope
CallCentre Banking
IVR Banking & Payments
SMS & Calling Alerts
(spending, ATM usage, fraud, etc.)
Transactions with Teller or
Agent using Mobile Devices
Mobile Banking & Payments Remote Payments &
Electronic Wallets
Mobile Contactless /
Proximity Payments
MNO “Mobile Money”
Mobile Remittances Advertising-led Models
= banks deploy = bank-led models = cooperative models
= mobile operator-led models = mobile operators deploy = third-parties deploy
= public transportation-led models
Mobile Contactless /
Proximity Payments

11. 2 Approaches to Mobile Proximity Payments
Card Emulation Bypass Card Emulation
 Phone takes the place of a
physical card to transact at a
physical merchant location
 Consumers are comfortable
with card operating models
 Standardisation and ubiquity
of acceptance points a must
for economies of scale
 Requires compatible
card/mobile acceptance
infrastructure
 Trigger remote payment with
phone (apps, other manner)
 Confirmation can be pushed to
merchant, but how to localise
the payment location without
NFC?
 Receipt can be printed at POS
 Latency in making payment
this way vs. cards
 EMV / secure PIN keypad
 Card acceptance still required

12. Proximity Payments
OfflineCounter
Triggers
Payment
value on the card value in “the cloud’
Mobile
Authentication
Triggers
Payment
card-emulationbypasscard-emulation
Card
Authentication
Triggers
Payment

13. 3 Cases in Consumer Acceptance of Mobile as a Proximity Payment
Tool

14. Mobile NFC as Debit Card and Shopping Tool – C1000

15. Mobile NFC for Low-Value Payments in Vending

16. NFC Mobile as Retail Shopping Tool, Issued Devices & Acceptance
Point

17. What do we expect from a wallet?
 A place to store cash?
 A place to store payment
tokens?
 A place to store other tokens?
 A personal object?
 A private object?
 Something small enough to
be portable/mobile?
 … but … do we need a
physical object?

18. Then, what do we expect from a transaction device?
 Identification of myself, my
rights and capabilities,
memberships.
 Identification of myself, an
authentication tool for
payment.
 Secure, multi-factor
 Tamper-resistant/evident
 Personal and private
 Easy to use
 … but … do we need a
physical object?

19.  Consumers seem to love and trust it
• But who will pay for it’s implementation … merchants, banks, mobile operators,
handset manufacturers?
 Given the “app revolution” in so many of our markets, what
value does NFC bring to payments?
• Convenience?
• Put all cards in one apparatus? The phone-shaped wallet ..
• Addiction to mobile phones, but not to our wallets?
• Leave cards at home?
• Add value to transactions?
 Cards will remain in play for the foreseeable future, simply
increasing the issuer and acquirer costs.
 Perhaps the business case can be made on a country-by-
country level, but this is fundamentally different from steps
forward in functionality (e.g. cards, SMS, mobile data, apps,
online shopping & payment).
The Consumer’s Perspective on NFC?

20. Virtualisation benefits are clear, from the business POV ..
0
50
100
150
200
250
300
350
400
450
500
1980 1985 1990 1995 2000 2005 2010
*1million
Contacts via
devices (e.g. web
browser/internet,
mobile phone, IVR)
Total Customer Contacts
Contact via a
bank advisor,
bank branch

21.  The case is clear for our creativity to make virtualised
ecosystems work.
 But it will take a lot more creativity, usability and value
to become a real business driver.
 For banks, they also need to achieve this without
sacrificing trust, security, longer-term relationships,
and certain degree of transparency.
Virtualisation benefits are clear, from the business POV ..

22. For your consideration .. impulse purchase / spam

23. For your consideration ..

24.  Although you could still easily pay with a card when
you get to the POS …
For your consideration ..

26.  Limited smartphones
 Limited (and expensive)
mobile data
 Limited (and expensive)
fixed internet &
electricity
 Limited literacy
 Limited trust in banks
 High cost of ATM and
branch operations,
limited in-country IT
capabilities
 Limited amount of
people with official IDs
 Everyone wants a card
anyway. It’s modern.
But limited cards issued
Leap-Frogging Card Acceptance Infrastructure in Africa

27. Bank Branch: Rwanda
No power, internet connectivity

28. Bank Branch: Rwanda
Teller

29. Bank Branch: Rwanda
Waiting for teller cash withdrawals

30. Bank Branch: Rwanda
Teller

33. BPR Simbuka

34. 1. Balance Inquiry
2. Mini-Statement
3. Money Transfer (BPR Accounts)
4. iZi Cash
5. Prepaid Airtime
• MTN
• Tigo (pending)
6. Bill Payments
• RECO Prepaid Electricity
• StarTimes Africa TV
• DStv
• MTN Postpaid Bill
• Tigo Postpaid Bill (pending)
7. Merchant Payments
8. Bank Services
• Change BPR Mobile Banking PIN
• Change Language
• Order Cheque Book
9. Help
BPR USSD Mobile Banking & Payments

35. BPR Mobile Road Shows & Sign-up Success

36. BPR Mobile Road Shows & Sign-up Success

37. Thank You!
Dan Armstrong
Takashi Mobile | Financial Services
Rapenburgerplein 81
1011 VJ Amsterdam
The Netherlands
www.takashimobile.com
dan.armstrong@takashimobile.com
+31 652 085 071
skype: dd.armstrong / gtalk: dan.armstrong
René Bruinsma
Mob ile Health | BMFS
Kerklaan 52
2912CK Nieuwerkerk ad Yssel
The Netherlands
www.mobilehealth.nl
rbruinsma@mobilehealth.nl
+31 63 888 5555