Apple Pay & The New Environment for Mobile Payment Apps

Transcription

1 Apple Pay & The New Environment for Mobile Payment Apps

2 Events, Timing & Methodology I SEPT 9 Apple Press Conference SEPT CPM Data Collection SEPT 25 iphone6 In-Stores Consumer Payments Monitor Annual Survey (n=4,200) HH Financial Decision Makers Answering for HH or Self Online Survey Sample Weighted to Gov t Data Holistic Household Viewpoints 4 OCT 20 Apple Pay Live November 14 October 2015 EMV Upcoming Tracking Waves 5 Q %-? % -?? Page 2

3 7 Key Points 1. Massive exposure and high interest levels in iphone 6 and Apple Pay 39% positive PI for iphone6 43% initial positive reaction to Apple Pay 36% positive toward Apple Watch 2. Security and privacy message solves a problem for many Fingerprint and data scrub leading features followed tokenization 3. Beachhead positioning left demand for retailer rewards unaddressed Spectrum of consumer needs with regards to loyalty and payments Delivery of issuer rewards a strong positive (80% spend on rewards cards) 4. In-store apps need to deliver real-time data to the consumer 5. Huge gap between installation and usage (nearly 50%) 6. Consumer hurdles to usage Lingering NFC concerns for many Nearby locations Customer service and technical support importance of issuer leadership Transaction problems 7. The consumer need for choice and control is paramount and at risk Page 3

4 Today s Focus on Smartphone Owners 65% of households now report owning a smartphone with an average of two phones owned per household Smartphone Average of 2.1 SP s Owned 55% 44% 65% 69 Million Smartphone HHs + 11 Million HHs vs. Year Ago Pad or Tablet % 41% 87% Millennial HHs % Smartphone or Pad/Tablet 50% 63% 71% Page 4

5 Current OS Battle Lines A forceful Android response to Apple Pay could have enormous market impact. What kind of smartphone do you personally use? ( If you use more than one type, please select the one you use most often ) September 2014 Results August % 56% 53% 47% 43% 39% 40% 39% 37% 38% Total Millennials Generation X Baby Boomers Greatest Generation Android Apple Other or Don't Know Page 5

6 Smartphones for Financial Transactions Consumers more comfortable using smartphones for financial transactions driven by usage settings more private then mpos. Past-Year Use of Smartphones for Financial Transactions Make a Purchase Pay a Bill Transfer Funds 74% 49% 59% 58% 37% 40% 27% 22% 23% 9% Total Millennials Generation X Baby Boomers Greatest Generation Page 6

7 Other Smartphone Uses 63% have used their smartphone to do at least one of the following 35% 35% Scan a QR code Take advantage offer while at a specific store 25% 28% Deposit checks Order ahead at a store or restaurant 24% Link a payment method to an in-store payments app 17% Accept card payments 10% Hail a cab Page 7

8 Smartphones for In-Store Purchases The user base for smartphone POS transactions grew slightly in 2014 compared to a year ago (+2 Mil SP HHs) Estimated 2014 user base for wallet payment apps is 9 million households Have you used a smartphone app to make an in-store purchase? 20% 13% 15% 18% 7% 11% 12% 3% 6% 3% Total Millennials Generation X Baby Boomers Greatest Generation Page 8

9 Enter Apple Splash & Power 24% 10% 17% 18 Mil HHs Followed Sept 9 Extremely or Very Closely 23% 10% 26 Mil HHs 15% 24% Intend to Purchase iphone6 16 Mil 9 Mil 22% 27% 28% Other 1 Mil As Measured Sept Among Smartphone Households Page 9 10 Mil Right Away 16 Mil Contract Exp.

10 Initial Consumer Reaction Unprecedented media exposure Huge consumer response Just because it s Apple or.. All Smartphone HHs Users Users Very Positive Somewhat Positive Neutral Negative More Info 23% 21% 30% 11% 15% 30 Mil HHs 30% 26% 26% 6% 12% 15 Mil HHs 20% 18% 32% 15% 16% 13 Mil HHs? As Measured Sept Among Smartphone Households Page 10

11 Apple Pay changed the conversation Transform security from a concern to a consumer end-benefit. Personal privacy over personalized retailer rewards. NFC + Fingerprint + Secure Element + Tokenized Privacy (+ Issuer Rewards) Consumers Industry One of Several Barriers for Many Post-Target, Concerted Industry Focus on Security and EMV Consensus Less Secure than Magnetic Stripe Prevalent Idea that Mobile App Value Prop Depends on Retailer Rewards / Shopping Experience Early Wallet Adopters Likely to be NFC Card Users Merchants Low Consumer Demand Security Messaging not in the Forefront Barriers Dissolve as Compelling End Benefit Evolves Page 11

12 Why Consumers Have Been Cautious Primary Credit or Debit Card is NFC How much of a problem is each in your willingness to use a mobile payment app for instore purchases? Top 3 Box Percentages Not a Problem Major Problem 48% Used SP Payment App 17% All SP HHs Highest Problem Rating 65% Hacker gets my personal information 61% Transaction hacked while making a purchase 60% Held liable for fraud 57% Lost or stolen phone 57% Giving merchants access to personal information 46% Phone company giving personal information to gov t Lowest Problem Rating 40% Tapping my phone against a merchant terminal Page 12

13 Security Conversation Front & Center In the consumer world, confidence in payment security is a recovery job not a matter of routine reassurance Select the features that would most increase your likelihood of using a mobile wallet payments app? Fingerprint ID to open the app Scrub phone & restore on a new phone 57% 57% PIN-protection with lock-out feature 49% Text and notification Tokenization technology* 42% 41% Facial recognition Voice recognition 25% 30% * Tokenization technology that does not transmit your account information but creates an encrypted code to authorize each transactions Page 13

14 Attitudes in Flux In this context, privacy appears to be emphasized over personalized rewards Lower Agreement Higher Agreement 19% Top 2-Box Agreement Ratings (7-Point Scale) 26% 38% 50% 50% Benefits of location services outweigh privacy concerns While shopping, I like personalized offers Electronic payments system at substantial risk Concerned over fraudster access to personal data I am willing to use enhanced security features Page 14

15 Security Breaches Adding Momentum 78% of smartphone owners feel that security breaches have accelerated and 43% have had a credit or debit card account compromised in some way. How have security breaches changed your attitudes and behavior? Top 3 Box Agreement on a 10-Point Scale 37% 39% 45% 51% Target 81% Aware Home Depot 59% icloud 28% ebay 20% 55% More reluctant to enroll in electronic payment services Page 15 Less comfortable withless comfortable with personalized location services suggestions from merchants More worried about giving personal data to merchants Changed password

16 Still The Power of Retailer Rewards Despite privacy concerns regarding retailers, the demand is substantial for retailer-driven apps that improve the shopping experience and deliver value. Overall, a suite of app solutions are needed to address spectrum of consumer needs. Which best describes the type of mobile wallet app(s) you would most like to use? 19% Payment-Only App (Issuer Rewards) 32% Shopping-Only App 28% 20% Shopping + Payment App More Than One Type of App Page 16 Consumer Opt-In Controls

17 And Real-Time Consumer Control Consumers are looking for features that put them in control of the shopping and/or payment experience in real-time before, during and after the purchase. Please select the must have features that you would like to have on your smartphone payment app? 57% View balance before and after using a debit card 56% View discounts and deals while at a specific store Dynamic application of issuer rewards 50% 47% Apply credit card rewards at the time of purchase Check in-store product pricing and availability Default Card / Default Wallet? 45% 45% Many payment and loyalty cards so you can choose Get cash back from merchant terminals 42% View credit availability before and after using a credit card 33% Order ahead and stores or restaurants to reduce waiting time Page 17

18 The Battle for Apple Pay Market Position Most* would link more than one card to Apple Pay with the current TOW card having a major advantage over cards lower in the wallet. 81% Which of your credit cards would link to Apple Pay? *Base: GP Credit or Charge Cardholders With Positive Apple Pay Usage Intent 74% 43% 27% 18% 5% Would Transfer TOW Card to Apple Pay Would Transfer 2nd Position Card Would Transfer 3rd Position Card Would Transfer 4th Position Card Would Transfer Some Other Card Would Transfer More then One Card Page 18

19 The Apple Pay Wallet Beyond Credit Cards There is also substantial room in the Apple Pay wallet for other cards or payment types. Would link a payment method other than a credit card (such as a debit card, bank account number or prepaid card) to Apple Pay? 44% No 56% Yes Base: GP Credit or Charge Cardholders With Positive Apple Pay Usage Intent Page 19

20 The Untapped Usage Reservoir The challenge ahead for Apple Pay as it was for incumbents is to convert app-installed prospects to actual users. In addition to the 9 million smartphone households using a payment app, an additional 8 million users would be added if the installed base were converted based on estimates from the pre-apple Pay environment. Ready-to use: have phone with native purchase app or downloaded/installed a mobile payments app to the phone. 24% 43% 28% 26% 23% 13% 20% 15% 10% 8% 7% 3% Total Millennials Generation X Baby Boomers Greatest Generation App Ready to Use App Used 15% Affluent HHI $125K+ or IA $250K+ 12% Non-Affluent Page 20

21 Known Executional Hurdles Still in Play Incumbents experienced consumer friction and so will Apple Pay. Ease of Set-up 61% Very Easy 35% Somewhat Easy 4% Difficult Who s in Charge? Among Ready-to-Use Non-Users Accepted in Enough Places 81% Yes 19% No View Nearby Locations for Apple Pay? Contacted Still Don t Know How to Use Contact Customer Service or Technical Support 36% No 64% Yes 23% % Users Experiencing Transaction Problems 13% 25% Some 62% None Frequent 77% Page 21

22 Driving a Change in Payment Behavior How will customer experience and service expectations be managed now and over the longer-term? How will consumers be engaged? In-store selling experience Ease of obtaining the number Is there a number on the digital card? Apple Pay Set-Up Barriers for Some Base: iphone Users Have Payment Method Linked to itunes 62% Call-in experience Use Passbook 29% Have Both 24% In-App 800 Number or Chat? Page 22

23 Penetration of Linked Payment Methods In terms of pre-existing linked payment methods, PayPal has the highest penetration, followed by Amazon. Does your household have a payment account linked to? PayPal 74% 73% 75% Amazon 45% 57% 64% itunes Google 26% 25% 23% 29% 39% 62% All Smartphone Owners ios Users Android Users Page 23

24 Who Do Consumers Trust? Most consumers look to their primary card issuer but PayPal has gained considerable ground compared to a year ago. Which of the following companies would you consider obtaining a mobile wallet app from? Any Bank (Net) 71% 72% Primary Card Issuer 65% 69% PayPal MNO (Net) 30% 37% 41% 55% 2014 (Sept.) 2013 (Aug.) Amazon Apple 33% 33% 29% 22% Page 24 Google 21% 17% Base: Own Smartphone & Likely to Try a Payments App

25 Breach Notification Consumers look to banks and card issuers to notify them in the event of a security breach. Lower Confidence If a security breach occurs, are you confident that you will be notified by.. 73% Higher Confidence 80% 40% 47% Retailer Technology Company Credit Card Issuer Bank Page 25

26 Questions and Comments Accelerated Performance Through Research Thank You! Page