July Yoko Miyashita InfoCom Research, Inc.

Transcription

1 Lecture Document and Mobile Paym Overview July 2011 Yoko Miyashita InfoCom Research, Inc.

2 Summary Few services launched until 2009 More More than than payment payment service service trials trials were were reported, reported, but but few few services services were were commercially commercially launched launched until until around around This This is is because because a a firm firm business business model model or or eco eco system system was was not not established. established. Each Each model model has has its its own own terminal terminal architecture, architecture, and and made made few few kinds kinds of of handset handset in in the the market. market. Mobile industry is is changing around The The industry industry is is rapidly rapidly changing changing since since For For example, example, major major US US carriers carriers announced announced the the joint joint venture venture ISIS. ISIS. This This competitors competitors alliance alliance is is quite quite rare rare case. case. An An increasing increasing number number of of carriers carriers are are now now collaborate collaborate to to promote promote payment payment service. service. Smartphone Smartphone has has changed changed the the payment payment stream. stream. 2 New Era for industry has begun globally industry industry now now faces faces new new era. era. If If successful, successful, Isis Isis may may change change the the trend trend in in industry, industry, and and could could be be a a milestone milestone in in the the payment payment history. history. Japan Japan was was the the most most advanced advanced country country in in payment, payment, but but it it uses uses it s it s unique unique technology technology that that may may not not be be globally globally standardized. standardized. Another Another Galapagos Galapagos Syndrome Syndrome may may happen happen in in payment payment industry industry as as well. well.

3 Formation of ISIS by US Major Carriers Tree major US carriers announced the formation of the joint venture ISIS TM in order to promote the and smartphone based payment nationally in the United States in November Service Plan payment service Service launch in major cities in 18 months Using smartphone Alliance and Personnel Recruitment Allicance with Discover Financial, Barkley US Mr. Michel Abbott, former Executive at marketing at GE Capital Based in New York Rare Case for Operators Participant carriers are major US Carriers Total users for three carriers: 2,000 million Terminal sales: 100 million per year Sprint was suppose to participate T-Mobile 11.8% Sprint Nextel 16.8% Mobile Carriers in the US Others 9.8% Verizon 31.8% AT&T 29.7% Isis Service Image Isis involvement * Data: End of Extremely rare case for competitor carriers

4 Media Coverage Growing : Recent Media Trends During Mobile World Congress: media coverage was growing dramatically, and now is one of the prime topics in industry all over the world. Media Coverage at MWC 2011 MWC 2011 Source: Forum (Sony) 4

5 5 2.Mobile Payment Marke

6 Mobile Payment Technologies Technology Description Region Overview SMS/ USSD Existing infrastructure SMS and USSD No special terminal required with less infrastructure investment but less security Less cost, less security Emerging market (Africa, Latin America and Asia) Service rapidly expanding in emerging market as the first financial infrastructure Especially for people without bank accounts WAP or other Web based solution Internet based technology, such as WAP (Wireless Application Protocol)やHTML chtml WML Special terminals are required Developed market (Europe, US and Asia) Long history since WAP came out Mobile Internet was not popular until a few year ago Limited transaction among few users Contactless Payment (Ex. *3) Smart card technology Slide the phone within 10 centimeters of the reader Special terminals and payment infrastructure required More security, more cost Europe, North America and some developed Asian countries Japan is the most advanced country with the service launched in 2005 Many trials performed outside Japan, but very few launched commercially 6 *1:SMS: Short Message Service *2:USSD: Unrestricted Supplementary Service Data *3:: Near Field Communication

7 Mobile Payment Technologies Statistics Transaction Breakdown 16% User Breakdown North America 7% East Europe 6% WAP/ Web 4% SMS/ USSD 80% Latin America 12% EMEA* 18% * EMEA: East Europe, Middle East and Africa Asia 53% Total transaction: 0.85 billion Total users: 73 million Data: Gartner Dataquest, 2009

8 What is? What is? Abbreviation of Near Field Communication. One of the wireless technologies that Philips and Sony developed together in order to connect phone and other equipment in short range. It is ratified by ISO as ISO/IEC IS on December Technology Focus: Standalization: Data Speed: Wireless data communication targeted less than 10 cm in 13.56MHz Supporting both card and reader mode Possible to communicate among multiple devices ISO (IP1), ISO21481 (IP2) ECMA 340 (IP1), ECMA352 (IP2) ETSI TS (IP1), ETSI TS (IP2) ~848kbit/sec Spec Comparison History and Future Source: NXP Forum Philips and Sony invent 2004 Forum established 2005 First usability studies and trials become prominent First commercial phone available 2006 Forum reaches 100+ members field trials and first close system deployments in all regions 2007 First commercial service launched 2008 Commercial roll outs in all regions

9 Works in Three Modes works in the following with phone. in Mobile Environment 1 Card Emulation Enables devices to act like contactless infrastructure Ex. - enabled phones used for payment and transit 2 Peer-to-Peer Enables devices to communicate with one another Works with existing contactless infrastructure Ex. Connecting -enabled laptops and printers or sharing photos between a camera and TV 2 Reader/ Writer Enables devices to interact with RF tags. Ex. Includes - enabled phones used to read smart posters Only the mode 1 mode based services is available in Japan, even the payment is so popular compared to the other countries Source: Forum 9

10 Major Players in Industry Players in Mobile Payment Market Main Players Establishment of The Forum Liaison with External Organizations 10 Various players in the payment market. Mobile business: Telecom carriers, handset vendors, component manufacturers, semiconductor manufacturers, IC card relating companies, SD card makers, etc. Financial services institutions: banks, credit card companies, etc. Public transport: train and bus service operators, etc. Main players are credit card companies, carriers, and handset vendors. Carries and handset vendors more actively involve in. Core players are NXP (formerly Philips), the inventor; Nokia and other handset vendors, major carriers in the USA and Europe such as Vodafone and Orange, and credit card companies such as Visa and Master. The Forum are working together with major industry organizations. ions. The Forum was formed in March 2004 leading by Philips (currently NXP Semiconductors), Nokia, and Sony. Its missions are as follows: Develop standards-based specifications that define a modular architecture and interoperability parameters for devices and protocols. Encourage the development of products using the Forum specifications. Work to ensure that products claiming capabilities comply with the Forum specifications. Educate consumers and enterprises globally about (enhance the market). Members are telecom carriers, handset vendors, chipset manufacturers, application providers, telecom equipment vendors, payment service companies, etc (about 130 companies in total). As can be applied to other near communication wireless technologies, the Forum liaison with Bluetooth SIG, Wi-Fi Alliance, Wireless USB Association. is recommended by the industry organization of communication carriers and GSM association.

11 Forum and Members Established in March 2004 by Sony, Phillips and Nokia, Forum proceed standardization, development and service promotion as industry organization. Sponsor Members (13 members) Principal Members (13 members) Associate Members GSM Association, Yokosuka Research Park (YRP), Electronic Technology Center, etc. (23 members) Non-Profit Members Atmel, Infineon, JCB, Hitachi, SK Telecom, Intel, Murata, Panasonic, Sprint Nextel, China Mobile, PayPal, RIM, Gemlto, Sasken, Ericsson, etc. (62 members) Implementer Members Oberthur, Coolpad, Adamsoft TMC(Tongfang Microelectronics Company), Class International Device Fidelity, etc. (16 members) 11 Source: Forum, as of December, 2010

12 Trials Cases Using over the World Region/ Country Participants Period Application New York/ US More than 150 service trial have been reported in globally. Chicago, Salt lake/ US Chicago, New York, Major cities/ US Citi Group, Master Card. Cingular Wireless, Nokia, New York City Jan. to Apr., 2006 Discover Card, Motorola Jan, 2007~ HSBC, Master Card, Vivo Tech Jan. to Aug Dallas, US Seven Eleven, Nokia, MasterCard Nov. 2006~ San Francisco, The US Sprint, San Francisco s BART, First Data, Jack in the Box, Samsung Jan. to May Mobile contactless payment, transit, ticketing Mobile contactless payment, transit, account transfer Mobile contactless payment, OTA * Service Mobile contactless payment, transit, OTA * service Mobile contactless payment, transit, Public transportation ticketing Seattle/ The US U.S. Bank, MasterCard, Nokia, McDonald, Jack in the Box, Regal Cinemas, Seven Eleven, University of Gonzaga, etc. Half a year from Jan Mobile contactless payment, transit London/ UK Barkley Card Visa, Transport for London(Oyster), O2, Nokia, Innovation Nov. 2007~ Mobile contactless payment, transit, ticketing Istanbul/ Turkey Turkcell, Garanti Bank, Venyon, E-Kart, Giesecke & Devrient Jan. 2008~ Mobile contactless payment, transit, ticketing Chang Hai/ China Major three banks, Nokia, NXP,Payzy, China Unionpay Research Jan. 2008~ Mobile contactless payment Taipei/ Taiwan CHT International, Taipei Smart Card Corp, BenQ Beginning of 2008~ Public transportation ticketing 12 * OTA: Over the Air

13 Case Study Vodafone and Deutsche Bahn AG Trial Service Vodafone, a telecom operator in Germany, and Deutsche Bahn AG introduced Touch & Travel, the ticketing service in March The trial service has started and now is still on going. The ticketing service in Germany is unique and different from that in Japan. The Service Merits 13 Service Detail Saving the ticket information on customer s phone by passing over Touchpoint when customer get on and off. Fees will be charged from user s bank account monthly. Technology Feature This service s RFID supporting achieves better cost performance than adopting contact-less IC card to each devices. As user passes his/her phone over the Touchpoint, application is activated and connected to the Internet to save the ticket information Application Delivery The ticketing application is embedded in SIM card and inserted to Motorola s supporting device at this trial but it can be embedded in either SIM card or device itself. German Transportation System In Germany, there is no particular gate for transport services, but ticket inspectors often check whether or not customers have appropriate tickets. Users of this ticketing service must show their ticket information on the phone to ticket inspectors. Various services are available at reasonable cost RFID tag with supporting is not expensive but it has more potential to develop new services: music and video downloading from posters, discount coupon, etc. tag enables a device such as phone to communicate for itself. Thus, new services using this feature are now under development. Downloading a ticket by passing a phone over the touchpoint. Photo:

14 Terminal Architecture and Business Model Each business model has each architecture to make handset. 1Secure Element in SIM Core Players Primary operators, such SIM as Orange, and Vodafone. 14 Baseband Secure Element Baseband Application Business Model Mobile operators promote this model, since SIM is controlled by operators 2Secure Element in Terminal SIM Secure Element Core Players Primary handset vendors, such as Nokia and Samsung Business Model Handset Vendors promote this model, so they provide their own service and reduce terminal churn 3Secure Element in SD Card Core Players SD Card vendors, such as SIM San Disk Baseband Business Model SD cards can make all the Secure terminals Capable, if it Element has the slot. Vendors can SD Card create new and big market by promoting 4Secure Element in Data Card Baseband Application Secure Element Core Players Data card vendors Business Model Data card can make all the terminals Capable, if it has the slot. Vendors can create new and big market by promoting

15 Terminals: Until 2009 Only a few terminals were available until around 2009, with the major handset vendor had a few classic type. 対 応 端 末 Nokia 6131 Nokia: Motorola: SLVR L7 IA 870 Samsung: D500 Onyx 700 SPH-250 S Description One of the most frequently used terminals for service trials. Start shipping in July g, 1.3 million pixel camera FM radio, PTT(Push To Talk) Targeted to the middle range users Sony Ericsson: HB07 HB08 BenQ: T80 M700

16 Service Late Launch Many services were supposed to launch aroun were launched. Original Industry Schedule 年 Terminals Standalization Market Status Smart card ECMA ISO Mobile handset Prototype Commercial handset available terminal mass production Forum ETSI Bluetooth SGI/Wi-Fi Allicance Contactless smart card penetrate Trials Commercial REALLITY REALLITY Eco System Confirmed Service Before Standalization Eco System Confirmed First launch Market matures 16 Source: Originally made by Nokia.

17 17 3. Faces New Era

18 Faces New Era: 1Carrier industry has 図 表 been 4:スマートフォンOS rapidly changing 主 要 陣 営 における since 2010, 対 応 especially の 計 画 作 成 中 since the latter half of the year. Case Carrier Other Participants Overview Note ISIS (USA) Major 3 carriers: AT&T Verizon Wireless T-Mobile Discover Barclaycard etc. Announced the establishment of the joint venture for payment service in November Start services within 18 months. Build an open system to promote payment service. Unique case by alliance among competitors Cityzi (France) Major 3 carriers: Orange SFR Bouygues Telecom BNP Paribas, Societe Generale, University of Nice Supported by the government Started in Nice from May Using secure SIM card Cityzi for payment and discounting at stores and on trains. Collaboration with banks, stores, public transport services under the government s support. Extended trial for commercialization in all country Touch & Travel (Germany) Vodafone (O2 and T- Mobile joined later) Deutsche Bahn AG Vendors such as G&D (SIM card) and NXP Launched between Berlin and Potsdam in March Purchase tickets by passing phone over the touchpoint at station. Charged monthly. Kicked off by Vodafone and major carriers joined later 18 Show Touch (Korea) KT (SK Telecom joined later) Banks with T- Money (credit card) Seven Eleven Solacia (Smart Card, Laboratory, Gemalto, etc.) Commercial service started from October Mobile payment and coupon service are available. Distribution service, gas station, and banks also participate. will be supported by 47% of phones in first commercial service in Korea

19 Faces New Era: 2Market Structure Business Core Companies Actions Cards/ Financial service Visa, Citibank, MasterCard Credit card companies step further than phone companies in contactless payment service with their world-wide commercial service. The biggest competitor to carriers. Ex: Master Card s PayPass is the most popular and has been issued more than 7,000. Visa s paywave, Citibank s Pay Sticker and other new services follow. Mobile industry catch up? Carriers Major carriers in regions (mainly in developed countries such as USA, Europe and Asia) Carriers work together, and GSM association has established specifications in order to promote payment. SIM card expanded its capability. Mega SIM with flash memory allows carriers more flexibility to design. Enhance alliance Infrastru -cture Vendors Major infrastructure vendors such as Alcatel-Lucent and Ericsson Infra-vendors involve in more actively. Major vendors enthusiastically introduce payment systems and packaged products designed for carriers. Alcatel-Lucent released the payment service package, Mobile Wallet Service (MWS), for Carriers. Ericsson also released PIX. These service packages can reduce initial cost to launch payment service. Infrastructure vendors become more active Handset vendors 19 Smartphone related vendors (Google, Apple, Samsung, etc.) The small volume of support devices has been the biggest bottle neck. From 2010, choices of smartphone OS/platform become various and this is a potential factor to the change of its market environment. Smartphone brought various changes on its business structure. * See the next slide.

20 Google Apple RIM Smartphone Reshapes Industry 1. Rapid growth of Smartphone reduces the lack of terminals The small volume of support devices has been the biggest bottleneck in promoting the payment service. As smartphone adds to the specification of its OS/platform, manufacturers can design their original support devices. Symbian (Nokia) Attitude to support The latest version of Android (v.2.3) Gingerbread supports. Google stated offering payment service aggressively specialists have been employed; new support devices are expected. iphone5 is expected to support. Announced new smartphone in May Positive about market The latest OS Symbian 3 and later OS versions will support. (Nokia said their existing model, C3, supports.) 2. Smartphone OS vendors become new competitors. If innovative applications based on are available at each application store, technology will be more popular. Smartphone OS providers are eager to be part of market by creating their own services. Nexus S 20 New powerful competitors accelerate the market restructures. Entry of smartphone OS vendors change the political balance in the market.

21 Reference PR Points The first smartphone based on Google s Android v.2.3 Gingerbread OS and preloaded with capabilities. Super AMOLED display enables users to enjoy its brightness, and compact size suitable for taking with. PR Points The first supporting smartphone by Google and Samsung. (Near Field Communication)offers contact-less data exchange, payment, and tag reading. Nexus S will be available in the USA distributed by T-Mobile and in the UK distributed by T-Mobile, Vodafone, Orange, 3, and O2. 21 Nexus S Samsung Nexus S Announce Date/ Release Date Network Dimensions/ Weight Display Camera Stand-by Time Talk Time Battery Price December 2010/ December 2010 W-CDMA/HSPA/ GSM Quad-Band/EDGE/Wi-Fi mm/ g Super AMOLED 16M colors, 4.0 inches, Touch screen, pixels 500 MP, Auto focus, LED flash 713 hours (GSM) 428 hours (W-CDMA) 14 hours (GSM) 6 hours 40 minutes (W-CDMA) Li-Ion 1500 mah $ 529 ( 43,000)for Unlocked $ 199 ( 16,000)* 2 year-contract Features Google s Android v.2.3 Gingerbread OS 1GHz CPU Hummingbird Multimedia player including 3D and HD Cameras for front and rear panels 16GB memory,, 3-axis gyro sensor, VoIP/SIP

22 Current Mobile Payment Market Significant market activity seen, both from internet players and bank backed initiatives 22 Source: Telefonica

23 23 4. Conclusion and Discussion

24 Conclusion Until 2009 After Various players developed service and Smartphone brought a big change into the carried many trials services, but: market. Difficulty in building Win-Win business model. Expect many devices available Delay in the establishment of service and Expect the success of popular applications device specifications. Changed the political landscape Lack of support devices Promoted carriers alliance Even if trials were successful, few services Mobile industry needs to catch up with the credit card were commercially launched. companies in more advanced services. New Era of payment service industry now steps into new era, and could make huge market and profit if it works successfully. Isis will be a big milestone in payment industry if it is successful. Developing countries will be the next huge target for where many people even without even bank account. Galapagos" Japan and its position FeliCa has been struggling for the business oversea, since it was not globally standardized. Standardization is one of the crucial element when we develop the technologies and services to have market outside the country. 24

25 Reference The Latest News of ISIS ISIS gave up its own network deployment. In May 2011, ISIS announced to abandon the plan of building its own network and will instead work with credit card companies such as Visa and MasterCard. Shift from closed network to open network Build a completely open and comprehensive system for common eco system. Working together with existing network holders such as Visa and MasterCard to share customer account information. Liaison with more financial service institutions including 4000 of small/middle businesses as well as major companies Collaborate with competitors (Google, Apple, Sprint) Build a wallet system used as a credit/debit card, royalty card, coupon, ticket, transit pass, etc as well as a transaction method for Point of Sale. Conduct test marketing for payment service and ticket system in Salt Lake City, Utah by the beginning of 2012 and in more some areas in Payment service terminals supporting for merchant VeriFone, the biggest payment service supplier in the USA, will employ for all of its future terminal devices (for replace). 25 Reasons Merchants unwillingness to the introduction of a new system. Necessity of an open system in order to respond to interests from financial service institutions. Enforcement of Dodd-Frank Wall Street Reform and Consumer Protection Act (July 2010). FRS required raising the rate of processing charge (70-80%) on debit card transactions between merchants and consumers. Difficulties in price setting for the processing charge of ISIS and providing incentives to merchants. Anxiety from concerned people to too much competitor systems. Merit of scale from open system. Values from existing transactions of Visa and MasterCard.

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