1. Peer-to-Peer Mobile
Payments
Presented by: Ishraq Fatafta

2. Agenda
O Introduction.
O Mobile Payments Overview.
O Peer-to-Peer Payments
O P2P Mobile payment Model.
O P2P Mobile payment design issues.
O P2P Mobile payment value chain.
O P2P Mobile payment types.
O P2P Mobile payment evaluation.
O Conclusion.

3. Introduction
O Javelin Strategy and Research stated that
customers want more high-speed transactions
for their payments but only one in a ten is
willing to adopt Peer-to-Peer mobile
payments.
O Peer-to-Peer mobile payments are changing
the way we pay for things; interact with our
families and friends and draw more reliance
on mobile phones.
O Security, convenience and trust are the main
drivers for adopting Peer-to-Peer mobile
payments.

4. Introduction Cont.
O 25-44 years-old and consumers earning
more than $100,000 per year are the most
willing to use mobile P2P payments.
O 39% of 45-55 years-old indicated that
anytime, anywhere access to their money
was important, but only a fraction of the
group (14%) said they are likely to use
mobile P2P payments.

5. Introduction Cont.
O 55-64 years-old, who care more about
sending and receiving money quickly than
any other age group (39%), but only 11%
are likely to use mobile P2P payments.
O Among 18-23 years-old consumers, 23%
indicated that avoiding cash and checks
was their primary motivation to adopt the
service.

6. Mobile Payments Overview

7. Mobile Payments Overview
Cont.
O Any financial transaction conducted through a
mobile device in return for paying goods and
services.
O Payment schema: easy to use, useful and
provide a degree of trust.
O Earlier adoption of mobile payments suffered
from:
O Technical challenges.
O Unapproved return of investment.
O Lack of standardization and fragmented
research efforts in this field.

8. Mobile Payments Overview
Cont.
A Day in the Life of a Mobile Payments
Customer

9. Mobile Payments Overview

10. Mobile Payments Overview

11. Mobile Payments Overview
Cont.
Roles in Mobile Payment schema:
O Financial institutions.
O Mobile network providers (Carries).
O Retailers and Merchants.
O Customers.

12. Mobile Payments Overview
Financial Institutions
O Banks and Card issuers.
O Bank account is linked to customers
mobile phone number.
O Questions Raised:
O Revenue to achieve.
O Attraction of new customers or segment.

13. Mobile Payments Overview
Mobile Carriers
O Charge customers for their mobile bills.
O Own SIM, UICC handsets.
O UICC: Universal integrated circuit card
O provide security when connecting to the
mobile network by holding confidential
information in cryptographic format.
O World-Wide standard, Security properties.

14. Mobile Payments Overview
Retailers and Merchants
O Upgrade their payment systems to accept
mobile payments.
O Point of sale.

15. Mobile Payments Overview
Customers
O Large segment of mobile users.
O Payers are not welling to pay for paying.
O Value added by using mobile phones for
payment.

16. Peer-t0-Peer Model
O Not New model.
O A common every day activity.
O Western Union.
O High charging fees.
O Cheaper alternatives.

17. Peer-to-Peer Mobile payments
O A model proposed by Smart Card Alliance
with three scenarios:
1. The usage of contactless devices for
customers and POS equipment at
merchants.
2. The usage of payment applications in
NFC enabled mobile phones.
3. The usage of existing payments
applications available online.

18. Peer-to-Peer Mobile
payments, Cont.

19. Peer-to-Peer Mobile payments
Examples
O PayPal mobile: PayPal uses mobile
phones to perform payment transactions
in a form of money transfer from one
PayPal customer account to another
PayPal customer account. In addition
payments for purchases from merchants
who accept PayPal payments.
https://www.paypal.com/au/cgi-
bin/webscr?cmd=xpt/Marketing/general/Acc
ountOverview-outside

20. PayPal mobile

21. Peer-to-Peer Mobile payments
Examples
O Obopay: Obopay uses mobile phones to
transfer money from one person to another for
$0.10 per transaction fees. Due to their
partnership with Citibank, any customer who
is not an Obopay member can download
transferred money through Obopay websites
to a stored value account in Citibank using
MasterCard for 2.5% transaction fee or to
demand deposit account free of charge.
http://www2.obopay.com/merchant/go_mobile.
php.

22. Obopay

23. Asia Pacific
O Leader adapters :
O Japan and Korea.
O Mobile tigers: Market driven by smartcard
developments
O Hong Kong and Singapore.
O The Giants: Growth in the market
O China, India and Indonesia.
O Mid-market
O Thailand and Malaysia.

24. Peer-to-Peer mobile payment
design issues
O When designing the mobile payment
system, a number of consideration should
be addressed:
O Payments should be fast, and overcome
change issues in cash.
O Payments should be easy to
use, understood by different people from
different ages and technological expertise.
O Payments should be reliable, in terms of
accuracy and performance.

25. Peer-to-Peer mobile payment
design issues, Cont.
O Cost, affordable by customers and
compete other payment methods.
O Payments should be secure,
O Anonymity, tracking a particular payment is
not possible.
O Protection against theft, secured with
authentication measures and encryption
techniques .
O Protection against interruption, attacks on the
radio frequency domain.

26. Peer-to-Peer mobile payment
design issues, Cont.
O System replication, prevention against
taking a backup of the system.
O Immunity to any trial of tampering and
changing in the payment system.

27. Peer-to-Peer mobile payment
value chain
O Peer-to-Peer value chain is a chain of
activities the P2P service provider perform
in which at each activity, a value is gained.
O Value gained by service provider in form
of:
O fees for downloading and licensing the
payment system by customers and
merchants.
O marketing revenue from merchants and
issuers targeting customers and users of
the system can be collected.

28. Peer-to-Peer mobile payment
value chain, Cont.

29. Peer-to-Peer payments types
O P2P payments can take a lot of forms
including Money transfer, account
transfer, international remittance, inter-
personal commerce, sharing a
meal, purchase of tickets, sharing
rent, giving money to a student or family
member, paying for events, making a
donation and making payments for
auction purchases.

30. Peer-to-Peer payments
types, Cont.
1. Domestic fund transfer
O family members and friends are spread out
across the country.
O attractive to families and teenagers who
cannot own a credit card. Immediate
transfer of money in emergency
situations, allocating teen
allowances, paying for school
trips, sending fund to college child, buying
books.

31. Domestic fund transfer
Cont.
O Traditional Fund transfer process includes the
following parties:
O Originator: the initiator of the fund transfer.
O Beneficiary: the party that is credited or gets
paid as a result of fund transfer.
O Originator’s financial institution: the financial
institution that receives the transfer instructions
from the initiator.
O Beneficiary’s financial institution: the financial
institution that credit or pay the beneficiary
party.

32. Domestic fund transfer
Cont.
O Mobile based fund transfer eliminates the
need for all of these parties every time
fund needs to be transferred. By having
an account with a P2P mobile payment
system, both parties can transfer and
receive funds directly to their mobile
accounts.

33. Peer-to-Peer payments
types, Cont.
2. International remittance and unbanked
people
O When a fund is transferred from one
location to another between countries.
O typically generated by migrant workers
abroad sending money to their families in
their home countries using different
currencies.

34. International remittance and
unbanked people Cont.
O Mobile phones conducting Peer-to-Peer
transactions, transferring money and
remittance, financial institutions can
benefit from this to reach more and more
people especially in the developing world
who don’t have any bank account.
O International remittance transferred forms:
O Mobile to cash
O Cash to mobile
O Mobile to mobile

35. International remittance and
unbanked people Cont.
O Various parties are involved in the money
transfer system:
O Mobile Operators
O Financial institutions
O Peer-to-Peer mobile payment system
provider
O Customers

36. International remittance and
unbanked people Cont.
Strength Weaknesses
Large well-defined market Requires local and global
knowledge.
Opportunities Threats
Lack of financial alternatives Competitive barriers by for
for the unbanked in existing leaders like Western
developing and emerging Union and MoneyGram
markets.

37. Peer-to-Peer mobile payment
model evaluation
O POS issues should be handled such as
supporting a large number of POSs
merchants to accommodate
customers, ensuring that these
transactions are convenient, the same for
NFC. In addition, convincing
banks, merchants and customers with the
liability of this model and the ability to
resolve dispute issues and charge backs.

38. Peer-to-Peer mobile payment
model evaluation Cont.
Advantages Disadvantages
Bank Potential partnership with Customer’s
either P2P service provider transactions are
or Mobile operators. invisible.
Revenue from processing Lost opportunity if
fees. the service provider
Expand the reach for more chose other banks.
customers.
Mobile operator Potential partnership with Customer services
either P2P service provider needed.
or banks. Lost opportunity if
Possible increase in the service provider
volume of data transactions. dose not
partnership with
mobile operators.

39. Advantages Disadvantages
Peer-to-Peer Revenue from High initial costs.
Service Provider downloading and Potential risks of
licensing fees. theft and fraud.
Marketing revenue. Not widely used to
date.
Merchant Reduction in processing Potential risk of
costs for debit and credit. fraud.
Faster collection of Fees paid for P2P
payments. service providers
Potential increase in even for small
purchases. purchases.
Customer Reduction in fees cost Potential fees
for international charged by the P2P
remittance and money service provider.
transfer.
Inexpensive fees for
downloading the
payment system.

40. Customer and merchant
relationship
O When P2P payments occurs between
both customers and merchants, the
payment processing can be handled by
either the P2P mobile payment service
provider or by the mobile operator itself
with collaboration with financial
institutions.

41. Customer and merchant
relationship Cont.
Advantages Disadvantages
P2P mobile Enable customers to pay Disrupt the user
payment for their purchases experience.
service regardless to the mobile Reduction in the brand
provider operator to which they awareness of these
subscribe for at any P2P payment systems.
time.
Mobile P2P payments on the Interoperability
operators fly. between different
mobile operators is not
highly enforced and
hence limits P2P
payments to those
using same operator.

42. Conclusion
O Researches show increased interest in
mobile Peer-to-Peer payments in the
developing countries more than
developed countries.
O Security and reliability issues are the main
concern in mobile payments where
convenience and speed are main factors
in motivating the adoption of Peer-to-Peer
mobile payments.

43. Conclusion Cont.
O People are showing interest in P2P mobile
payments for its availability at anytime and
anywhere and the low fees associated with
transferring money.
O Main sectors that will benefit from this technology
are unbanked people who lack bank accounts, in
addition to immigrants who wish to transfer
remittance to their families and friends.
O More serious steps should be taken specially from
financial institution who have their own closed loop
of mobile P2P payments before wireless carriers
take over P2P mobile payments.