Mobile & emerging payments (CXPA event at qvik)

MOBILE & EMERGING
PAYMENTS
CXPA @ QVIK 28.2.2018
Matias Pietilä, head of design
@mpietila#CXPAFinland

NOW WE’RE SO MUCH MORE
WE WERE MOBILE FIRST
@QVIK@MPIETILA#ixdahel
TALLINK SILJAWHIM YLE UUTISVAHTI MUSTI JA MIRRIAURINKOMATKAT

@QVIK
MONETISE 
THE CONSUMER’S
POCKET
DATA-DRIVEN
DESIGN
DELICIOUS
UX
FAST TIME-TO-
MARKET
BLEEDING EDGE
TECHNOLOGY
BEYOND  
OMNI-CHANNEL
HARNESS
ARTIFICIAL
INTELLIGENCE
EXCELLENCESENABLERS
NOW WE’RE SO MUCH MORE
WE WERE MOBILE FIRST

YLE UUTISVAHTI
+370 %
ASIAKASKOHTAAMISIA
@QVIK
TALLINK SILJA
KESKITYMME MITATTAVIIN TULOKSIIN
puolen vuoden kasvuhakkerointi-
projektin seurauksena
2.5 vuoden aikana
+60 %
KONVERSIO
AURINKOMATKAT
kaksi kuukautta uuden version
julkaisun jälkeen
8X
MOBIILIMYYNTI
SWAP.COM
verkkokauppaan
verrattuna
3X  
KONVERSIO

WHAT KIND OF ROLE DOES QVIK
HAVE HERE?
‣ We help merchants ﬁnd the best ways to do
payments in their selected channels
‣ We do design/development/consulting with
certain banks
‣ We are in talks with PSPs to help them improve
their solutions
‣ We are in talks with certain ﬁntech startups to
understand what happens
‣ We want to stay on top of PSD2 development to
be able to advise our customers
@QVIK@mpietila#CXPAFinland

PAYMENT LANDSCAPE
CREDIT CARD
TOKENISATION
MOBILE WALLETS, INCL.
APPLE PAY
PSD2 AND FUTURE
POSSIBILITIES
1 2 3

PAYMENT TIMELINE IN FINLAND
TOKENISATION
PAST
MIF/IFR
KLARNA, PIVO
MOBILE PAY,  
SIIRTO,  
MASTERPASS ETC.
APPLE PAY
PSD 2
BLOCKCHAIN
(PISP & AISP)
(XS2A)
DISAPPEARING
CASH
DISAPPEARING
CARDS
FUTURE
DISAPPEARING
DISPOSABLE
TUPAS CODES
GOOGLE PAY
PRESENT 2019
RTS INTO FORCE
PISP & AISP
XS2A
GDPR

THE SAD REALITYPaytrail, fall 2017

CREDIT CARD
TOKENISATION
WHAT IS IT?
‣ Enabling invisible payments by storing customer’s
credit card data
‣ Third party takes care of the regulated card storing
‣ Reduces friction and enables also recurring payments
WHAT SHOULD YOU TAKE INTO ACCOUNT?
‣ Technically straightforward, many operators available
‣ Don’t think about the commission level alone
‣ Tedious for the user to save their card to each service
separately (also trust issue)
TOPIC 1

PSP COMPARISON
@QVIK
Commission
Dynamic
scoring
Customisable
UX
Geographic
availability
POS
support
Role (acquirer /
prosessor)
Settlement
time
Who owns the
customer?
Adyen
Verifone
Nets
Solinor
Etc.
MAJOR DIFFERENCES
BETWEEN SERVICE PROVIDERS

THE SAD REALITY
Paytrail, fall 2017

PAYMENT LANDSCAPE
CREDIT CARD
TOKENISATION
APPLE PAY
PSD2 AND ISSUING
YOUR OWN CARDS
1 2 3

MOBILE WALLETS
WHAT IS IT?
‣ Mobile wallets take care of card storage
‣ Certain wallets also deliver contact
information to merchant: no sign-up
required => less friction
WHAT SHOULD YOU TAKE INTO ACCOUNT?
‣ A large number of operators, availability in
diﬀerent channels varies, a messy situation
for consumers
‣ The level of integration deﬁnes the UX; the
best experience tends to win
@QVIK@QVIK@mpietila#CXPAFinland
TOPIC 2

CURRENT SITUATION IN FINLAND

MOBILE PAY
WHAT IS IS ABOUT?
‣ A payment solution by Danske Bank
‣ Started as peer to peer, added support for POS payment
and online/mobile pay in 2016
‣ The app has 370000 users in Finland (9/2016)
‣ Simple UX for payment conﬁrmation
‣ Payments are charged from a credit card, stored in the
service
WHY IS IT RELEVANT?
‣ PISP kind of service, build on the existing credit card
infrastructure to secure market position before PSD2 era
‣ The payment sums are not limited by the typical 25 €
near-ﬁeld payment limit
‣ The deal with S-group is a major move @QVIK

KLARNA
WHAT IS IS ABOUT?
‣ A Swedish startup that provides the users with two major
benefits:
‣ Easy, mobile-optimised payment flow
‣ Possibility to pay later or with an instalment plan
‣ Traditional credit card payment available, too
WHY IS IT RELEVANT?
‣ The average order value of Klarna customers tends to be
significantly larger than traditional credit card (up to 200%)
‣ The conversion of Klarna users tends to be higher (Adlibris
has reported 80% higher)
‣ Because Klarna makes their profit on instalment plans, the
transaction costs tend to be minimal (we have seen even
zero-commission deals)
@QVIK

PIVO
WHAT IS IS ABOUT?
‣ A mobile payment solution, available for OP
bank clients
‣ Payments are based on virtual Visa Debit/
Credit cards
‣ Also a tool for following and planning your
consumption
WHY IS IT RELEVANT?
‣ Works at any cash register that supports near
ﬁeld payments (Android)
‣ Could become a PISP/AISP kind of platform
‣ Opening up towards non OP-customers @QVIK

MOBIILIMAKSU
WHAT IS IS ABOUT?
‣ A mobile payment solution, oﬀered by Finnish
telcos
‣ Billing automatically as a part of mobile phone
subscription
WHY IS IT RELEVANT?
‣ No friction, no registrations
‣ Suitable for sums smaller than 1€
‣ High commissions (list price 15%)
‣ Max payment value 60 €
‣ Won’t work with people who have company
subscriptions (only 20% of the market) @QVIK

APPLE PAY
WHAT IS IS ABOUT?
‣ A payment solution by Apple
‣ Started as POS payment, online/mobile
pay in 2016
‣ Only works in Apple universe: iPhone,
Apple Watch, Safari browser (!)
WHY IS IT RELEVANT?
‣ Deeply integrated and great UX for
aﬄuent iOS users
@QVIK

SIIRTO
WHAT IS IT ABOUT?
‣ A peer to peer money transfer service in
Finland, operated by Automatia
‣ Currently supported by Nordea, OP and
S-pankki
‣ Not yet as polished as Mobile Pay
WHY IS IT RELEVANT?
‣ Instant, no middleman
‣ Big merchants about to start using this
for digital payments
@QVIK

AKTIA WALLET
WHAT IS IS ABOUT?
‣ Former Elisa Lompakko, developed
further by Aktia
‣ A collection of multiple services, like
virtual credit cards, P2P payments etc.
WHY IS IT RELEVANT?
‣ Available for customers of any bank
‣ Could be on its way towards more generic
PISP role
@QVIK

MASTERPASS
WHAT IS IS ABOUT?
‣ Mobile wallet by MasterCard
‣ Stores your credit card and shipping info
to simplify payment
WHY IS IT RELEVANT?
‣ Easy to integrate, will be pushed heavily
by MC
‣ Operated by banks
‣ Provides more value than just payments
@QVIK

APPLE PAY BENEFITS
@QVIK
PHYSICAL
WORLD
DIGITAL
CHANNELS
CONSUMER MERCHANT &
ISSUER
1 2
3 4

1 CUSTOMER BENEFIT
IN PHYSICAL WORLD
‣ Payment without card
‣ Tight integration with the device/OS: no need
to open anything
‣ Near ﬁeld payment without 25€ limit
‣ Safety and feeling of safety
‣ No need to remember PIN codes
‣ Safer than normal card: the number is not
passed for the merchant
@QVIK
1 2
3 4

VIDEO:
PHYSICAL
PAYMENT

2 MERCHANT AND
ISSUER BENEFIT IN
PHYSICAL WORLD
‣ Works directly (hardware + software)
‣ Give customers their preferred way of
payment
‣ Faster transactions at POS (no PIN codes)
‣ Smaller fraud risk (issuer pays a small
commission for Apple)
@QVIK
1 2
3 4

While the deals struck between Apple and the
banks are confidential, the tech group receives
about 15 cents per $100 transaction in the US,
while in the UK it gets “significantly less” — only
a few pence per £100 transaction — according
to banking insiders. Apple declined to
comment.
https://www.ft.com/content/
02287f44-2a3d-11e5-8613-e7aedbb7bdb7
HOW LARGE IS THE COMMISSION?

3 CUSTOMER BENEFIT
IN DIGITAL CHANNELS
‣ Eﬀortless payment that works the same
way, every time
‣ No need to register
‣ No need to enter payment info during
onboarding
‣ No need for any extra app
@QVIK
1 2
3 4

PAYMENT
INSIDE AN APP

4 MERCHANT BENEFIT
IN DIGITAL CHANNELS
‣ Apple takes care of credit card
tokenisations
‣ High conversion rates
‣ Anonymous payments (Apple returns
customer contact data after payment)
‣ Easy to integrate
@QVIK
1 2
3 4

HOW MUCH WILL IT COST
FOR THE MERCHANT?
@QVIK
PHYSICAL WORLD
‣ Nothing! (No extra to standard card payment)
‣ Issues commission isn’t public infor
(Rumours: US = 0,15 %, Europe one tenth of
this)
DIGITAL CHANNELS
‣ Negotiated separately with Apple
‣ Based on our knowledge, fully competitive
compared to credit card tokenisation

WHAT DOES IT TAKE?
@QVIK
PHYSICAL WORLD
‣ NFC capability for POS system
‣ No extra contracts
DIGITAL CHANNELS
‣ Compatible PSP (DIBS is likely not
supported at the moment)
‣ Typically one-week development project

WHAT ABOUT
ANDROID?
‣ Google Pay (ex Android Pay) expected to
be launched soon in the Nordics
‣ Other mobile wallets already available on
Android
‣ Physical channel: Pivo, Nordea Pay
‣ Digital channel: Pivo, Mobile Pay,
Masterpass

ADYEN
BRAINTREE
MPGS
STRIPE
WORLDPAY
(VERIFONE)
(NETS)
APPLE PAY COMPATIBLE PSPS?
@QVIK
https://developer.apple.com/apple-pay/

CREATE MORE OPENNESS AND
FOSTER COMPETITION BY
INCREASING REGULATION
PURPOSE OF PAYMENT SERVICE DIRECTIVE 2
@QVIK@mpietila#psd2qvik
(IT SOUNDS SO BIZARRE IT JUST MIGHT WORK)

NOW!
(SINCE JANUARY 2018)
WHEN WILL IT HAPPEN?

NOW!
(SINCE LAST SATURDAY)
WHEN WILL IT HAPPEN?
LIKELY IN SEPTEMBER 2019
(18 MONTHS AFTER RTS IS PUBLISHED IN THE OFFICIAL JOURNAL)

WHAT DOES IT ENABLE?
@QVIK@mpietila#CXPAFINLAND
PAYMENT INITIATION
SERVICE PROVIDERS
(PISP)
may initiate payment
transactions directly from
customer’s account (X2A)
THIRD PARTY PAYMENT
SERVICE PROVIDERS
(TPP) EMERGE
once banks are required to
open their APIs.
ACCOUNT
INFORMATION SERVICE
PROVIDERS (AISP)
can aggregate and enrich
banking data from various
bank accounts
1 2 3

PSD2 AND LEVEL PLAYING FIELD

XS2A XS2A

TPP AISP
XS2A XS2A

EXPERIENCE
Payment
Scheme
PISP
Third-party payment initiation
An updated payment model including a Payment Initiation Service
Provider (PISP)
PRESENT FLOW
FUTURE FLOW
PSD2 AND OPEN BANKING FORCES BANKS TO OPEN UP PAY
PARTIES
Customer’s
Bank
Merchant’s
Bank
Customer Merchant
Third-party account access
An updated interaction model including an Account Information
Service Provider (AISP)
NT FLOW
RE FLOW
UP PAYMENTS, ACCOUNT AND PRODUCT DATA TO THIRD
Customer
Customer’s
Bank
Customer’s
Bank
Customer’s
Bank
AISPAPI
Copyright © 2017 Accenture. All rights reserved
Source: Satu Pulkkinen, Accenture

PSD2: CONSUMER
PROTECTION
WHAT IS IS ABOUT?
‣ PSD 2 will require two-factor authentication for
online payments
‣ Unconditional chargeback right for direct debits
is introduced to consumers (details still unclear)
WHY IS IT RELEVANT?
‣ Payment process will become more complex
than currently
‣ It becomes essential to provide the users with
eﬀortless two-factor authentication services
@QVIK

LEVEL 1
✓ TOKENISED PAYMENT CARD IN THE APP
LEVEL 2
✓ MOBILE WALLET INTEGRATION (APPLE PAY)
LEVEL 3
✓ INDIVIDUAL FINANCE OPERATOR (CF. PSD2)
EXAMPLE: ST1 VS.LEVELS OF PAYMENT

RECAP: PAYMENT LANDSCAPE
CREDIT CARD
TOKENISATION
APPLE PAY
PSD2 AND FUTURE
POSSIBILITIES
1 2 3

LET’S CREATE IT TOGETHER
www.qvik.com
matias@qvik.ﬁ
+358 5050 60 201

TRENDS FOR THE FUTURE?
WHAT’S NEXT
@QVIK
QUESTIONS

S-PANKKI + MOBILE PAY

GOOGLE PAY SCHEDULE?

MAJOR PSP SUPPORT FOR APPLE PAY
(ONLINE IS THE BEEF FOR AP, ANYWAY)

APPLE PAY PENETRATION
DEVELOPMENT IN FINLAND

OMNI-CHANNEL & USING PAYMENT
CARD AS A LOYALTY TOKEN

WILL SIIRTO GET OF THE GROUND?
P2P? B2C?

WILL WE SEE ANYTHING PSD2
RELATED PAYMENTS DEVELOPMENT
DURING THE TRANSITION PERIOD?

PSD2 REQUIREMENTS’ EFFECT ON
PAYMENT USABILITY?

Mobile & emerging payments (CXPA event at qvik)

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