Mobile Payments and e-fulfillment opportunities and challenges: case studies

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1 Mobile Payments and e-fulfillment opportunities and challenges: case studies Iqbal AliKhan Strategy & Business Development Executive, IBM Growth Markets 2014 IBM Corporation

2 Mobile money is not what will happen, but is here now! 255 mobile money services are now live across 89 countries Development of interoperable solutions Registered mobile money accounts globally grew to reach just under 300 million in 2014 only represent 8% of mobile connections 16 countries where there are more mobile money accounts than bank accounts active mobile money accounts stand at 103 million as of December services now have more than one million active accounts Regulators are establishing more enabling regulatory frameworks for the provision of mobile money services domestic P2P transfers and airtime top-ups continue to dominate fastest growth in 2014 occurred in bulk disbursements, bill and merchant payments steep increase in the number of international remittances via mobile than half the average cost to send money globally 2 Source: IBM Analysis, GSMA 2014, State of the Industry Report

3 Main Actors New Entrants are disrupting the payment business with mobile technology 3

4 mpayments & Value Bundles 4

5 MOBILE PAYMENTS FORECAST TO HIT $1 TRILLION BY 2017 WITH APAC LEADING THE WAY Asia/Pacific markets will contribute to this growth greatly as mobile commerce (or mcommerce) transactions with remote payments take off across the region. IDC believes that the strongest growth for mpayments will be driven in part by rising levels of mcommerce as emerging nations come online for the first time and witness an internet boom via smartphones. Furthermore, the limited state of credit/debit card adoption in Asia/Pacific will force potential mpayments behavior to shift to using bank account linked mobile wallets. 5

6 E-fulfilment systems An e-fulllment system is designed to meet the high order volume and stringent customer service requirements of global business-to-consumer e-commerce. The system converts the traditional warehouse into a multi-channel e-fulllment center. In the e-commerce environment, some of the toughest decisions must be made on little or no hard information. 6

7 Challenge Solution Few merchants have cracked the code; these have built the network and are driving mobile transactions by solving everyday problems through e-fulfillment The tech is easy, finding the right business model is hard, Mobile payments means building an entire marketplace; needs to grow both the user base and the merchant network. A classic chicken-or-egg problem, which makes it a particularly hard challenge. 1 Targeting transactional friction, rather than competing with existing forms of payment Structure incentives aimed at making users comfortable with mobile transactions 80% revenue from value added services, 10% from advertising e-finance function used 40m times in Chine New Year to exchange "red packets, 21m taxi rides on mobile app in less than a month Tencent / Facebook [US$; 13] Mkt cap $1.2tn / 209.7bn [ 14] Revenue 9.9bn / 7.9bn Net income- 2.5bn / 1.5bn Biggest mobile payment processor in the world; 800m accounts used in over $780 bn worth of transactions in the year ended June 30, 2014 Established confidence by paying merchant at T+3 days, allowing consumers to be satisfied with product Use consumers data and analytics to educate merchants Accepting Bitcoins as payment for coffee 10.3 m active loyalty member > $1.1 bn loaded on Starbucks card / quarter Processing over 8m mobile payments per week nabbed 90% of $1.6bn spent in US stores via smartphones in 2013 Bangladesh company focused on mass market mobile financial services is the fastest growing provider With 17m users it expects to close the year with 20m, it holds 80% of the mobile financial users market share 2.5m daily transactions valued at $1 bn per month 7 Source: IBM Analysis, [1] SnapScan Co-Founder Kobus Ehlers IBM Analysis, company annual reports The State of mobile payments 2015, CIO Spotlight on bkash, Jadara Capital Partners

8 Global Car company leveraging e-fulfilment system to drive additional revenue Offering tackled all the Main obstacle to be involved in ecommerce Car company was tackling how to use the excess cash it had on hand Decided to offer the excess fund to customers across the globe to buy their cars Rather than set-up their own ecommerce organization they decided to engage a global technology company to manage the process The technology company managed Gateway to payments access to over 180 payment methods in 70 countries Enabling distribution of services across the globe Enabling a low risk exposure for the company Their account receivables process The reconciliation process Providing data analytics on performance and 8