Mobila betalningar

2012‐11‐06
Mobile payments and mobile ticketing – solutions and actors
Wireless@KTH seminar, october 26, 2012
Associate Professor Niklas Arvidsson,
Industrial Dynamics, KTH Associate Professor Jan Markendahl
Communication systems, KTH From: Seminar May 2012 for public transportation
Mobila betalningar – kommer vi att få många olika lösningar, en enda eller ingen alls?
Niklas Arvidsson, Jan Markendahl
Kungliga Tekniska Högskolan
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2012‐11‐06
http://www.youtube.com/watch?v=BX0uckFDpS0
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Banks and mobile payments
• BART by Swedbank – a prototype test with Hemköp 2012. Mobile payments in stores via the card infrastructure. Launch in 2013?
• Swish – a joint system by the largest Swedish banks and Bankgirot. Person‐to‐person payment from account‐to‐account. Launch in late 2012.
• Mastercard’s Paypass which is a contactless card payment that is transformed into a mobile payment. Done in collaboration with banks. Launch?
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Operators and mobile payments
• SMS payments for public transportation and parking services have been used for ~5 years using en eco‐system with mobile operators, aggregators and providers of ticketing solutions
• Several mobile parking payment solutions are in use, here operators are not involved at all • Telia has launched “Mobil plånbok” as a replacement for SMS‐payments but this service will not be available after december 2012
• The Swedish operators in the joint venture
4T Sweden offers the mobile payment service
WyWallet, to be launched “now”
From Telias web page:
Information om villkorsändring och uppsägning av Telia Mobil plånbok Nu finns WyWallet, en mobil betaltjänst framtagen gemensamt av operatörerna Telia, Halebop, Tele2, Comviq, Telenor & 3
WyWallet ersätter Telia Mobil plånbok
och därför läggs tjänsten ner och ditt avtal sägs härmed upp. Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Agenda
• The question: Why do mobile payments not take off (in Europe)? • Some background
– A cashless society
– The business landscape for banks
– Card paymenst is a benchmark
• Mobile payments
– Based on the card system
– Other types of solutions
– Analysis: who are involved and who is doing what? Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Associate Professor Niklas Arvidsson
• Industrial Dynamics (Industrial Engineering and Management / INDEK) at the Royal Institute of Technology (KTH)
• Research on innovation (systems and organizations) with focus on payments
– MOBIMER and MOBISAM (Mobile payments, ticketing and information)
– The cashless society / Det kontantlösa samhället
– MBT MBT – Mobile Payments – More than Transactions / Mobila betalningar mer än bara transaktioner
– Participating researcher (POC‐test Mobile Payments in Sweden 2011)
– The Future of the Payment System / Framtidens betalsystem
• Ph.D. Stockholm School of Economics (Handelshögskolan i Stockholm)
Associate Professor Jan Markendahl
• Communications systems and Wireless@KTH. Associate Professor in “wireless infrastructure deployment and economics” • Tele‐economic Research on business models and actor cooperation for mobile payment services.
– FORCE: Foundation for NFC services (with Telia and SSE) – TSM MoM; Business models for NFC services (with G&D and SSE) – MBT MBT: Mobile Payments – Not only Transactions (Vinnova) ( Mobila betalningar mer än bara transaktioner)
– MOBIMER and MOBISAM (Mobile payments, ticketing and information)
– PhD student currently to be recruited (Handelsbanken stipend)
• PhD degree in Tele‐economics, KTH 2011 (Mobile Network operators and cooperation
‐ A tele‐economic study of Infrastructure sharing and mobile payment services)
• > 20 years in the Industry (Ericsson, Nokia, Framfab, Communicator)
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2012‐11‐06
Research and questions
• Royal Institute of Technology (KTH) and Stockholm School of Economics (SSE) analyze concepts for mobile payment and NFC services from a business perspective. • Key research questions are:
– What are the main drivers and obstacles for introduction of mobile payments?
– What kind of business models, eco‐systems and types of actor cooperation can be identified for mobile payment and NFC service concepts?
– What types of actor cooperation are successful and not ?
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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The overall problem: Service don´t take off (in Europe), although a large number of tests and proposed solutions
• GSM Association has identified a number of reasons for this.
• Besides a lack of NFC handsets a number of business related issues are often mentioned as “roadblocks”:
• Unclear Business Models
• Lack of contactless PoS infrastructure
• Co‐operation between ecosystem players
• From an interview with a Swedish operator – ”The major problem to establish an NFC ecosystem in not a technical one but a political one, as interoperability between all the different instances needs to be ensured. Besides being technically feasible, an NFC ecosystem needs to be accepted by all parties involved and thus provides a business case for each player in this ecosystem.”
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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5
2012‐11‐06
Agenda
• The question: Why do mobile payments not take off (in Europe)? • Some background
– A cashless society
– The business landscape for banks
– Card paymenst is a benchmark
• Mobile payments
– Based on the card system
– Other types of solutions
– Analysis: who are involved and who is doing what? Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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The cashless society – some results
• The cashless society will not be true before 2030
– Riksbanken launch new bills and coins 2014 or 2015 and they will be here over 10 years
– Cross‐subsidization between payment services (card fees subsidize cash) stimulates use of cash from a consumer perspective
– Consumers’ habits die hard
– A 100 % cashless society builds on one critical condition: there is some other back‐up payment service if the electronic systems – for some reason – breaks down
• There is a triggering point (critical incident) when the cash system may collapse
– Critical failure leading to lack of trust in cash (Panaxia?)
– Reducing cash to a minimum may cause a cost‐benefit mismatch leading to intensified efforts to minimize the use of cash
– Political action / legislation
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2012‐11‐06
Different change in different parts
• Payment services
• Processing
– EU drives the aim of an integrated market for payments
– Standardization / harmonization
– Search for economies of scale
– Move toward real‐time transaction processing
– NETS, Vocalink, Swift,…
– Cash is faced with pressures to become more efficient and more ecological but also has devoted supporters that want to use cash.
– Card payments meet standardization and harmonization, and new actors (payment institutions) creating new competition.
– Mobile payments are driven by search for innovation and change. Here, we also see cross‐industry competition and integration (telecom operators, invaders).
• Clearing and settlement is often connected to each nation’s central banking system (RIX in Sweden) and therefore not changing as fast Traditional business landscape for banks
• The traditional business model
Payments
Savings/
investments
Loans
• Four large banks
– Competition (e.g. interest rates, fees/costs, products, niche offerings)…
– …and cooperation (e.g. giro‐system, clearing & settlement, ATMs, infrastructure for card payments)
• Geographically defined market = Sweden
• High customer loyalty
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2012‐11‐06
The new business landscape for banks
• The traditional business model is destroyed
Payments
Savings/
investments
Loans
• New large banks och many new niche banks
– More intense competition within niches (interest rates, fees, products) and standardization of back‐office /upstream services driven by the search for economies of scale (processing, clearing and settlement, fund management) – …as well as cooperation (infrastructure for processing, clearing and settlement, ATM, card payments, mobile payments)
• Cross‐industry competition (telecom operators, invaders)
• Geographically defined market = Nordic countries / EU
• Lower customer loyalty?
Card payments is a benchmark
Consumers
• Cash payments
Merchants
• Cash payments
– Some cards have e.g. 12 free ATM withdrawals per year, thereafter they may cost 5 SEK/withdrawal
– Other cards may charge 35 SEK per withdrawal – But the consumers perceived cost of cash is often = 0
•
Card payments
– A large company: ”cash payments are more expensive for us than card payments but they are also more difficult to calculate. They include work hours, terminals, guard and transportation services and many other things”.
•
– Annual fee: around 200‐300 SEK (debit – credit)
– Additional fees for used credit
Card payments
– A large company : ”on average around 1 SEK per transaction”
– Around 0,8‐1,5 % of the transaction amount (sometimes a fixed fee of 0,4‐1,3 SEK; sometimes a proportional rate (0,15 %) and a fixed fee (0,01 SEK)
(NB! The fees vary a lot depending on type of customer and type of card)
Card payments is standard which new payment services has to compete against (price, speed, ease, places, etc.).
Sources: VISA, Mastercard, SEB, Swedbank, Nordea, SHB, interviews
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2012‐11‐06
The card system (simplified)
Card issuer
Consumer
Card operator
Card acquirer
Merchants
Agenda
• The question: Why do mobile payments not take off (in Europe)? • Some background
– A cashless society
– The business landscape for banks
– Card paymenst is a benchmark
• Mobile payments
– Based on the card system
– Other types of solutions
– Analysis: who are involved and who is doing what? Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Many solutions
•
•
•
•
•
•
•
•
•
•
Contactless credit cards
”Pay‐Buy‐mobile” (GSMA) Izettle
Payair
Seamless
Payex Mobil
Telia mobil plånbok
Premium SMS
Bank SMS
Wywallet
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Aspects to consider
• What actors are involved
• Who is doing what?
– Who has customer relations?
– Who has relations with merchants, public transporration companies?
• Who manages revenus streams?
• How is the solution designed ?
– How to access the money (accounts) of the consumer?
– How to manage the revenus streams?
– Is it a completely new solution or based on existing solutions?
• Are there obvious problems? –
–
–
–
Fees
Relations
Agreements
Investments Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Kortsystemet (lite förenklat) Kortutgivare
Konsument
Kortoperatör
Inlösande bank
Handlare, Café,
tjänsteföretag, etc
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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VISA paywave (contactless VISA card) Kortutgivare
Konsument
New cards
And new PoS
Terminals
Kortoperatör
Inlösande bank
Handlare, Café,
tjänsteföretag, etc
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Kortsystemet Kortutgivare
Konsument
Kortoperatör
Inlösande bank
Handlare, Café,
tjänsteföretag, etc
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Pay‐Buy‐Mobile Ecosystem for NFC services (GSM Association) New actors
Trusted service
manager
Mobile
Mobil
operatörer
operators
Kortutgivare
Konsument
”Ecosystem”
based on cards
Kortoperatör
Inlösande bank
Handlare, Café,
tjänsteföretag, etc
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Pay‐Buy‐Mobile Ecosystem for NFC services (GSM Association) Nya aktörer
kommer in i kedjan
TSM ska ”managera”
Trusted service NFC tjänster
Manager
(TSM)
manager
Kortutgivare
NFC phones
New SIM cards
Mobile
Mobil
operatörer
operators
Konsument
VISA card as ”App”
Security in SIM cards
New PoS Terminals
Kortoperatör
Inlösande bank
Handlare, Café,
tjänsteföretag, etc
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Exemple: Fees
Pilot on Irish university
Trusted service
manager
Mobile
Mobil
operatörer
operators
Kortutgivare
Konsument
30 kr
Kortoperatör
Inlösande bank
Café
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Exemple: Fees
Pilot on Irish university
Trusted service
manager
Mobile
Mobil
operatörer
operators
2 kr
Kortutgivare
Konsument
32 kr
30 kr
Kortoperatör
2 kr
Inlösande bank
Café
28 kr
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Other services based on the card system
Payair (”the card
in the cloud”)
Izettle
Wallet
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2012‐11‐06
The card system (simplified)
Card issuer
Consumer
Card operator
Card acquirer
Merchants
Radically different solutions
Mobile wallets
Seamless ‐ SEQR
Direkta överföringar konto‐till‐
konto utan att använda kort‐
systemet. Köparens bank
Konsumenter
‐ PayEx Mobil
‐ Telia Mobile wallet
‐ WyWallet
?
Seamless
Säljarens bank
Butiker, handel,
Transporter mm.
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2012‐11‐06
SMS payments
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Premium SMS – general Konsumenter
Banker och Kreditkorts
företag Mobiltjänste
företag
Mobil operatörer
Tjänsteföretag, Kollektivtrafik, Parkeringsbolag
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Premium SMS – Parking in Uppsala Konsument EasyPark
MBLOX
Mobil operatörer
Parkeringsbolag
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Premium SMS – Parking in Västerås Konsument
Unwire
Mobil operatörer
Västerås kommun
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Premium SMS – Public transportation, Stockholm Konsument
Unwire
Mobil operatörer
SL Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Bank SMS in Denmark
Konsument
Banker
Nets
Mobil operatörer
Tjänsteföretag Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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2012‐11‐06
Klarna in Sweden/Västerås Konsument
Klarna
Unwire
Mobil operatörer
Tjänsteföretag Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Niklas Arvidsson och Jan Markendahl Mobila betalningar 9 maj 2012 19
2012‐11‐06
Niklas Arvidsson och Jan Markendahl Mobila betalningar 9 maj 2012 Niklas Arvidsson och Jan Markendahl Mobila betalningar 9 maj 2012 20
2012‐11‐06
Aspects to consider
• What actors are involved
• Who is doing what?
– Who has customer relations?
– Who has relations with merchants, public transporration companies?
• Who manages revenus streams?
• How is the solution designed ?
– How to access the money (accounts) of the consumer?
– How to manage the revenus streams?
– Is it a completely new solution or based on existing solutions?
• Are there obvious problems? –
–
–
–
Fees
Relations
Agreements
Investments Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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What about fee levels?
CASE 1: MOBILE PAYMENTS BASED ON CARDS
•
CASE 2: MOBILE PAYMENTS NOT BASED ON CARDS
First there is the card system and its fees
VISA EMV CHIP card (debit) – around 0,15 % of transaction amount plus 0,015 €
– VISA EMV chip credit) around 0,5 % of transaction fee
(Based on information from their web site)
–
•
New infrastructure with new fee level and solutions. Generally based on an account at the operator and closed loop transactions.
–
•
Then there are fees related to each new actor as for instance Izettle
–
–
Izettle = 1,50 SEK + 2,75 % of transaction amount (Mastercard, Visa and Diners Club)
Izettle = 1,50 SEK + 3,75 % of transaction amount (AmEx)
“SEQR breaks the card companies monopoly and in the process saves you 50% in transaction fees & interchange fees, without requiring any expensive equipment or complicated implementation”. (http://www.seamless.se/)
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2012‐11‐06
Efficiency and renewal
Making today’s system more efficient
•
Cash handling
- Let each payment service bear it’s own costs – including consumers as well as actors working with cash handling
- Invest in projects aiming at ”cash cycle re‐engineering” (make cash handling lean)
Renewal for tomorrow’s system
•
Create projects on person‐to‐person (P2P) payments via the mobile or some other electronic device since this is crucial for network and learning effects
•
Develop mobile payments that do not rest upon the infrastructure for card payments
– Transfer of money directly between accounts (e.g. person‐to‐person payments)
•
Card payments
- Realize PSD and SEPA in order to increase •
international competition and thereby making the systems more efficient
- Develop new and more efficient cards (Dip & Go; contactless cards)
•
Mobile payments
- If relevant (UK), use contactless cards as a first step towards mobile payments
- Develop services that rest upon the current infrastructure for card payments
•
Develop services for groups that are strong cash users today and perhaps also do not have the best prerequisites to start using mobile payments (elderly, rural areas, unbanked). These will be demanding customer and the ones who succeed in making them users of mobile payment services will have good opportunities to develop attractive mass‐market services (Remember that this is a trust business).
Create value‐added services that can make the mobile more than just a tool for payments. Make it a channel for customer communication and management (CRM, offerings, campaigns, discounts, rebates, dialogue, actual supply, etc.)
Efficiency and renewal
Continued efforts to make the current business and technology ideas around payments more efficient
Search for tomorrow’s business and technology ideas for payments
Incremental / stable innovation
Radical / disruptive innovation
Design services on infrastructure for cards
Design services on new infrastructure
‐
Account‐to‐account
‐ Closed loops
Arvidsson & Mannervik. 2009. The Innovation Platform – Enabling Balance Between Growth and Renewal. VINNOVA, VR 2009: 25.
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2012‐11‐06
”Not only transactions”
• The mobile phone can be used as a market channel
Before you buy something
The purchase When you have bought something
time
The ”moment of the payment”
the transaction
• A lot can be done before and after the transaction
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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Tack!
NIKLAS & JAN
Int. Cashless Society Roundtable, April 2012 Markendahl, Andersson and Mattsson
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