link to case study from MasterCard

Case Study: LAKS Watch
WATCH2PAY PREPAID MASTERCARD® OFFERS ON
HAND CONVENIENCE FOR ‘TAP & GO’ PAYMENT
900M
ACCORDING TO LAKS, WITH 900M WRIST-WATCHES SOLD WORLDWIDE EVERY
YEAR, WATCH2PAY BUILDS A PREPAID CARD INTO THIS MOST USED PERSONAL
ACCESSORY AND OPENS NEW DISTRIBUTION CHANNELS
EXECUTIVE SUMMARY
Background
• Austrian-based company LAKS, a wrist watch
manufacturer, has been developing and producing
contactless payment watches since 2002. LAKS has been
a MasterCard PayPass™ approved provider since 2006.
• 200,000 co-branded watches have been sold with a
Public Transport Application, and a further 50,000 co-branded watches have been sold for the
commercial sector by LAKS so far.
• In 2009 LAKS teamed up with Polish Bank Zachodni
WBK (BZ WBK) to deliver a contactless solution for the
mass market.
Challenge
• Take contactless payment to the next level of consumer
convenience.
• There is fast growth of prepaid ‘swipe and PIN’
technology. Contactless ‘Tap & Go’ at retail market and
individual consumer levels are slower by comparison to
gain acceptance.
• Combine a contactless prepaid PayPass™ payment
device with a commonly used accessory.
ADVANCING EFFICIENCY
ADVANCING COMMERCE
Solution
• MasterCard partnered with watch manufacturer LAKS
and Polish BZ WBK who act as an issuer, processor and
acquirer.
• In September 2010 LAKS, Polish BZ WBK and MasterCard
implemented the first ever prepaid card-equipped
watches for use at ‘Tap & Go’ terminals. If a contactless
‘Tap & Go’ terminal is not available, the standard prepaid
card issued with the watch can be used.
• watch2pay is a packaged solution consisting of a
PayPass™ watch with the card built into the device and
a standard MasterCard PayPass™ enabled card. Both
share the same IBAN account number and PAN.
• Pay one price for the watch and two cards – one card
in standard format and one card for the watch.
Results
• watch2pay is the first of its kind worldwide using
prepaid watches for contactless payment.
• LAKS estimate that by the end of 2011 there will be
between 75K – 160K PayPass™ enabled watches in
circulation in Poland, UK, Italy, Germany, Turkey and
the US.
NOVEMBER, 2010
Case Study: LAKS Watch
BACKGROUND
Since 2002 Austrian-based company LAKS, a wrist
watch manufacturer, has been working on combining
top-end designs with technologically advanced
products. They developed and produced 250,000
co-branded contactless payment watches for the
commercial sector and have been a MasterCard
PayPass™ approved provider since 2006.
BZ WBK and MasterCard Poland have been working
with LAKS since 2009 when the first prototype
of watches with a MasterCard PayPass™ enabled
solution were available. In September 2010, LAKS
launched watch2pay, which is available online
at www.watch2pay.com, making it universally
available for Polish citizens.
watch2pay is a packaged solution consisting of both
a PayPass™ watch with a card built into the device
and also a standard MasterCard PayPass™ enabled
card. This contactless MasterCard card has the
same IBAN account and PAN number as the chip
card for the watch. In Poland, PayPass™ can be used at several thousand
locations including McDonald’s restaurants, EMPIK
stores, Zabka shops, Kolporter newsstands, Sferis
computer lounges, Top League Football stadiums
and Shell petrol stations. If a shop does not have a
contactless ‘Tap & Go’ terminal, the LAKS watch user
can pay in the conventional way with the PayPass™ MasterCard Prepaid Card issued with the watch.
As of September 2010, approximately 83 million
MasterCard PayPass™ cards and devices have been
issued for use at approximately 265,000 merchant
locations worldwide, including new acceptance
environments such as vending, taxis and toll booths.
and acquirer but which also had an intrinsic
understanding of innovative products.
LAKS teamed up with BZ WBK and sought to come
up with an innovative solution, offering companies
a unique product to sell to their customers. They
decided to target mass market end-users who
would be interested in the next generation of
contactless PayPass™ prepaid cards with their nice-to-have add-on value – the PayPass™ watch.
SOLUTION
BZ WBK offers a wide portfolio of card products
for the market. LAKS chose this partner knowing
that it has a card fee structure in place that is
already accepted by its customers. Following this,
a technological solution was developed, which
combines the functions of time measurement and
smart card IC’s. The retail market was a key factor
in the market equation, so watch2pay ensured that
it had a new business model to offer. This has a
margin for the retailers that can be calculated into
the price of the watches, making the watch2pay an
attractive option for distributors.
MasterCard PayPass™ is a contactless payment
feature that provides consumers with a fast and
convenient alternative to cash for their everyday
small purchases. PayPass™ technology can be easily
added to any MasterCard or Maestro card. To make
a payment, consumers simply tap their PayPass™
enabled card or device (such as a watch with a
payment tag) on a special reader, hand their card
over to a clerk or swipe the card, eliminating the
need to fumble for cash. Signatures are not required
for PayPass™ purchases under 50 PLN, meaning
faster processing of customers’ transactions and
also providing better record-keeping than cash.
watch2pay
project is another
example confirming
that we are an
innovative bank
who stands out
from competitors
thanks to
implementing
new, very often
pioneering card
solutions. One
of the solutions
provides an option
to make contactless
payments using
PayPass prepaid
card-enabled
watches. Such
payments are
extremely
convenient and
easy for customers
especially when
making low-value
transactions. Blazej Mika,
Director,
Bank Zachodni WBK S.A.
CHALLENGE
The biggest challenge for LAKS was getting hard data
on the prepaid market in order to make an informed
decision about who it would be best to partner with. Banks, issuers, BIN sponsors and e-money license
holders did not want to give away confidential data
about their processors and card products.
MasterCard Poland was able to identify a banking
partner for LAKS - Bank Zachodni WBK - which
not only combined the roles of issuer, processor
ADVANCING EFFICIENCY
ADVANCING COMMERCE
NOVEMBER, 2010
Case Study: LAKS Watch
Contactless payments made with MasterCard
PayPass™ technology can be made at 265,000
merchant acceptance locations globally. In Poland,
LAKS equipped PayPass™ technology-enabled
watches can be used at several thousand locations
such as: McDonald’s restaurants, EMPIK stores,
abka shops, CoffeeHeaven, Kolporter newsstands,
Sferis computer lounges, Top League Football
stadiums and Shell petrol stations.
If a shop does not have a contactless terminal,
the ‘Tap & Pay’ watch user may pay with the
MasterCard PayPass™ Prepaid Card issued
with the watch. watch2pay is ideal for payment
environments where speed is essential, such as
quick serve restaurants, gas stations, drug stores,
vending machines, movie theatres, transit and
sports arenas.
As of September 2010, approximately 83 million
MasterCard PayPass™ cards and devices have been
issued for use at approximately 265,000 merchant
locations worldwide, including new acceptance
environments such as vending, taxis and toll booths.
RESULTS
LAKS estimate that by the end of 2011 there will be
between 75K – 160K PayPass™ enabled watches in
circulation in Poland, UK, Italy, Germany, Turkey and
the US.
CONCLUSION
watch2pay combines contactless payment
convenience with a handy accessory, bringing
innovative financial solutions to the next level.
Polish citizens are now able to purchase the
MasterCard PayPass™ enabled watch and card
on the watch2pay website, as well as at various
retail locations. A structure to develop this retail
opportunity across Europe is currently being put
in place, supported by an intensive programme of
other marketing activity, such as corporate mailing.
Currently there are 36 countries where PayPass™
has been launched, all of which constitute the
target market for watch2pay. Co-branding
agreements for Germany, Italy and the UK are
already in place with more countries to follow suit in 2011 and beyond.
The MasterCard PayPass™ solution continues
to grow, with the introduction of new points of
acceptance, such as stadiums and festivals, and
the design of new contactless payment devices,
such as watches and mobile phones. With the
launch of watch2pay in September 2010 – the first
of its kind worldwide – consumers are now able
to make purchases at multiple locations using the
prepaid card-equipped watches. Prepaid PayPass™
contactless technology was implemented in Poland in
2007, making the country one of the most innovative
payment markets in Europe. In addition to Continental European market leader
Poland, there are a number of PayPass™ trials and
rollouts currently underway in 36 countries, including
Australia, Brazil, Canada, China, the Czech Republic,
France, Hungary, Germany, Indonesia, Italy, Japan,
Korea, Lebanon, Taiwan, Thailand, Turkey, the United
Arab Emirates, India, the United Kingdom and the
United States.
FOR MORE INFORMATION, PLEASE CONTACT YOUR MASTERCARD ACCOUNT REPRESENTATIVE
WWW.MASTERCARD.COM/UK/PREPAID
ADVANCING EFFICIENCY
©2010 MasterCard. Proprietary and Confidential
ADVANCING COMMERCE
NOVEMBER, 2010