A discussion about the mobile payments industry in the US and the problems it has faced in achieving broad market penetration.

1. Cracking Ubiquitous Payments What the heck happened to mobile payments?

2. My (Rough) Agenda Scope of the discussion Credit card industry overview Mobile phone industry overview Implications for mobile payment businesses How those models have played out Why it ain’t working Why it works elsewhere Staggeringly brilliant insights and takeaways

3. SMS + e-commerce Technologically feasible since 1995! SMS, part of GSM protocol, approved in 1985 First text message in history sent in 1992 The message: “Merry Christmas” Later messages less cheerful

4. RFID + cell phone saturation Real market since 1997

6. So what happened?

7. Scope of the discussion Mobile Payments: Not Really All That Rare

8. 1997!

9. 10% ~ 2% ~ 1% ?

10. So now we ask: what happened in the US? And what was different about Asia, and now Europe?

11. We need to understand the two pertinent markets Credit Cards vs. Mobile Phones

13. The US credit card industry … by which I mean “cards with magnetic stripes you pay for stuff with”* *I’m not going to argue with you about actual credit

14. “Invented” in 1888 Eddy Bellamy: Interesting dude

15. Used in the 20’s as a gas card Reached ubiquity by the late ’50s

16. Many moving parts

17. Value chain is split across function

18. Card Networks The alphas of the group

19. Retail banks Split beta duties with merchant banks

20. Merchant banks Like retail banks on the merchant side

21. Payment gateways The nerds who make it work* * and consequently are overlooked and undervalued

22. Merchants Getting the short end of the stick since the ‘70s

23. Consumers Getting the short end of the stick since day 1

25. The US mobile industry … by which I mean “phones you can carry around”

26. Launched in 1983 Analogue network

27. 2G (all digital) in 1991 GSM: set the stage for scalable networks

28. Telecommunications Act of 1996 13,550% growth once interoperability enabled

29. Side effect: massive consolidation Today, only three nationwide networks

30. Nice simple value chain

31. Right? Content Providers App Stores Standards Boards 3rd Party Services Software Vendors

32. Right, guys? Content Providers App Stores Standards Boards FCC! 3rd Party Services Software Vendors

33. Handset Manufacturers Increasing power in high-demand markets

34. Carrier networks Pretty much run the commodity handset manufacturers and the poor consumer

35. App stores Successfully maneuvered out of carrier control

36. SMS gateways More nerds, beholden to carriers

37. Consumers *Still* getting the short end of the stick

39. Technology Solutions Like technology alone ever solved a problem…

40. 1. SMS powered Digital wallet or carrier billing

41. 2. Mobile internet powered Free from direct carrier intervention

42. 3. Hardware powered Awesome, but require cooperation

43. Four distinct business models

44. Bank’s Involvement High High Low Carrier’s Involvement Low

45. Banks vs. Telecoms vs. Hardware vs. Software Telecoms losing the fight

46. Security vs. Ease of Use i.e., banks vs. independents

47. What needs to happen? Collaboration on a massive scale

48. The Road to Collaboration Leverage mobile standardization Leverage bank security Leverage independent innovation centers

49. Will it work? Theoretically…

50. La Caixa, Movistar, Visa Perfect coordination between the players Utilizing NFC! Under way now

51. So what about the US?

52. Thanks guys!