American Bar Association Committee on Consumer Financial Services Electronic Banking and Internet Delivery Subcommittee Winter Meeting Park City, Utah January 7-10, 2012 ELECTRONIC BANKING AND INTERNET DELIVERY SUBCOMMITTEE Chair: Russell Schrader, Visa, Inc., San Francisco, California Vice Chair: Veronica K. McGregor, Jones Day, San Francisco, California Presentation: Developments in Mobile Wallets The panel will discuss the latest developments in mobile walets and the related laws and regulations applicable. Speakers: Russell Schrader, Visa, Inc., San Francisco, California Veronica K. McGregor, Jones Day, San Francisco, California Ted Kitada, Wells Fargo Bank, N.A., San Francisco, California (invited) 1953733 v1 H:\My Documents\ABA Winter meeting cover sheet.doc
Digital Wallet Landscape Overview Russell Schrader Associate GC and CPO Visa Inc January 2012 Visa Inc. Confidential
What is a Digital Wallet? Secure, easily-accessible payment information that can be accessed whenever and wherever the consumer wants to transact Payment Channels Payment Methods Face to Face Mobile E Commerce Digital Wallet Gift Cards/ Transit Debit/Credit/ Prepaid Rewards Currency Visa Inc. Confidential 2
Why Digital Wallets? Replicating the speed and convenience of the payment card swipe in the online environment Harder Easier Paying with check Paying with Card Traditional Payment Card Checkout Digital Wallet Visa Inc. Confidential 3
Beyond Spending Digital wallets present an opportunity to add value for consumers throughout the commerce lifecycle before, during and after the payment transaction P2P/Money Transfer Payment Method Financial Management Coupons Comparison Shopping Tickets/ Passes Loyalty Rewards Source: Image adapted from Thin is In: The Future of Digital Wallets, Christina N. White, March 2011 Visa Inc. Confidential 4
Who Wants to Play? New entrants from multiple industries are vying to compete creating a proliferation of digital wallets Merchants Card Payment Networks Issuers Mobile Network Operators Mobile/Handset OS Providers Alternative Payment Providers Visa Inc. Confidential 5
Not All Wallets Are the Same Digital Wallets differ by how they are funded, where they can be used and how payment information is maintained Payment Method What payment instrument can be used in the wallet? Open vs. Closed Acceptance Where can you use the wallet? Credential Storage Where is payment data stored? Closed Goods paid for with only 1 source Open Goods paid for by any source Closed Wallet may be used at only 1 merchant or location Open May be used at many merchants In the Cloud Generally allows for cross channel payments On the Device Generally stored on the mobile device, primarily enabling POS usage Visa Inc. Confidential 6
Amazon one click First integrated checkout experience by offering consumers the ability to store payment information and check out using single-click Checkout with 1 click Enter email and password Confirm and Enjoy One of the early and most successful solutions Over 137 million active customers, up from 1 million in 1997 1 Began as a closed loop solution to enable faster checkout with one click payments Recently Expanded acceptance beyond Amazon.com Mobile app stores Mobile wallet capabilities for mobile commerce Extended capabilities with Amazon Flexible Payments (FPS), designed to enable developers to accept payments on directly on their websites Source: 1 Amazon website, September 2011 Visa Inc. Confidential 7
Apple itunes Wallet Closed loop Apple Store shopping app without NFC Mobile/Remote Browse inventory from the mobile app In Stock Pick up in store w/in 1 hr. Customize item if desired Order items & pay with itunes account Custom & Out of Stock Have it shipped to store for free In Store Self Checkout Automatically recognizes you are in an Apple Store. Shows relevant features Scan item barcodes to add to cart Pay with stored card from itunes account and simply exit the store with purchase, bypassing lines Apple Store app: http://itunes.apple.com/us/app/apple store/id375380948?mt=8 Apple s itunes wallet as 225M enrollees Newly released Apple Store app enables customers to shop Apple Retail stores from their ios device Mobile ordering, in store pickup In store self checkout Bypasses lines and traditional POS to speed up checkout Real time integration with store inventory, Genius Bar (customer service) First use of itunes accounts to pay for physical goods Unknown # of downloads (not currently in top 200 of its category); Released 11/8/11 Visa Inc. Confidential 8
PayPal Open loop point of sale wallet without NFC Receive geo targeted mobile ad, enter store In Store Transaction Flow Successful open loop online with payment credentials stored in the cloud 103m registered users, growing by 1m per month 1 Scan to receive a discount Scan product barcode and check availability at nearby locations Increasingly central to ebay s strategy to become an end to end commerce platform provider Stated aspirations to extend success on online environment to physical POS Integration of offers, comparison shopping and local search Payment at POS via aliasing (acquisition of Zong) not NFC. Mobile web commerce Pay via mobile or at POS using phone number Plans to launch point of sale transactional services with 20 major retail partners in mid 2012 Key Challenge: Merchant Acceptance and Consumer Adoption at physical POS Source: Images from PayPal press release, September, 2011. 1 PayPal website, June, 2011 Visa Inc. Confidential 9
Google Wallet Open loop point of sale wallet based on NFC Enter PIN Integrate Choose Payment Card Optimize data, advertising, offers, etc. Vision of open loop, mobile wallet, complete with payment at POS, location based and real time offers, and integration with existing Google platforms like Google+ and Google Offers Payment at POS via NFC Card credentials stored on device Partnership with Citi, MA, and Sprint to launch NFC based payments Wave phone to pay Ultimate goal is to enhance advertising revenue by using consumer payment data to optimize targeting Key Challenges: Merchant Adoption at POS MNO cooperation /adoption beyond Sprint Source: Google website Visa Inc. Confidential 10
ISIS Open loop point of sale wallet based on NFC Mobile Commerce Joint Venture between AT&T, Verizon and T Mobile NFC mobile wallet solution to enable consumers to shop, pay, receive and redeem offers on their mobile phone Mobile application with PIN access and tap & Pay functionality at contactless enabled Merchant POS Encrypted credentials on a secure element (SE) in the device, MNO controls access to the SE Vision to extend to other authentication and access control applications such as car rentals and hotel key cards Initial trials planned for Spring 2012 in 2 US Cities (Salt Lake City and Austin) with full scale launch for late 2012 Advantage: Consumer reach an promotion via large MNO installed base (216M) Key Challenges: Limited functionality beyond POS; acceptance limited to the 3 MNOs Visa Inc. Confidential 11
American Express Open loop, stored value cloud based wallet Send or receive money Consumer data mining, merchant services, offers/loyalty Dual goal of increasing service based revenue, and expanding offerings to new customer segments (under 35) Serve has been initially positioned as a stored value P2P focused solution to send money to Serve and non Serve members Balance can be topped up using any payment card or ACH Buy goods with prepaid card No separate Serve acceptance mark. Online merchant and POS channel enabled by a physical prepaid card linked to Serve account. Accepted wherever Amex is accepted. Partnerships with Foursquare, Facebook; deals redeemed through statement credits Accelerating push in mobile: partnerships with Payfone, Verizon and Sprint to drive mobile usage Source: American Express website Visa Inc. Confidential 12
MasterCard Open loop wallet Diversified series of wallet related initiatives Strategic Partnerships Google: PayPass license for the Google wallet beta Intel: Partnership combining PayPass payments with Intel s Identity Protection Technology (IPT) Gemalto: Partnership to offer NFC platform for SIM cards that will be subsequently offered to MNOs Exploring microsd credential storage option with BAC JV with Telefonica for distribution of mobile services in Latin America Developed a number of MasterCard branded apps P2P solution (MoneySend), daily deals app, locating nearby deals (Easy Savings), ability to geo tag and share deals (Priceless Picks), etc. MasterCard Labs developing payment solutions as part of a longer term vision Experience based offers through QR codes, QkR labels, NFC tags, audio, voice, or gestures Audio scanning allows transacting directly from a TV set Making progress with PayPass penetration In Canada, greater than 90% of cards are PayPass enabled and ~10% of transactions are contactless Visa Inc. Confidential 13
Visa V.me Open loop, cross channel digital wallet Consumer accesses one single wallet for ecommerce, mobile commerce, and point of sale payments Cloud based cross channel digital wallet enabling consumers to transact online, on their mobile phone, and at POS Open platform to enable development of commerce and payment management services including personal payments, virtual and real stored value, alerts etc. Driving scale and usage through strategic partner (issuer/acquirer/mno) engagement Universal acceptance mark with value added services including advanced actionable analytics, fraud and risk management and access to new channels and consumers Integrating third party services to deliver relevant and targeted offers Recognized brand with wide cross channel penetration Visa Inc. Confidential 14
Russell Schrader Chief Privacy Officer Associate General Counsel Global Enterprise Risk Visa Inc. Russell Schrader is Chief Privacy Officer and Associate General Counsel Global Enterprise Risk for Visa Inc. He is responsible for privacy and payment systems policies and issues at Visa and a principal legal liaison for Visa financial institutions attorneys on regulatory issues. Mr. Schrader is a Fellow of the American College of Consumer Financial Services Attorneys, chairman of the American Bar Association Consumer Financial Services Committee on electronic payments, co-chair of the Payment Card Institute, a member of the Board of Advisors to the Future of Privacy Forum, and a member of the International Association of Privacy Professionals. He is a director of the Council of Better Business Bureaus and a member of its Audit Committee, where he works closely in their electronic commerce and consumer trust initiatives. He is also a former member of the Federal Reserve Board s Consumer Advisory Committee. Mr. Schrader holds a J.D. from Duke University, an M.B.A. in Finance from New York University, and a B.A. from Wake Forest University. His legal articles have appeared in the Business Lawyer, Consumer Finance Law Quarterly Report, Privacy and Information Law Report, and in American Conference Institute program materials on privacy, data security, and prepaid cards. Prior to Visa, Mr. Schrader headed the National Consumer group in the Legal Department of Chase in New York City. He was responsible for legal services to the mortgage, auto, home equity, and unsecured lending businesses. He was also general counsel to one of Chase s regional banks as well as providing legal services to the Eastern Caribbean, Panama, and South American consumer banks.
Veronica K. McGregor Of Counsel Jones Day Veronica McGregor's practice focuses on payment systems, financial services, mobile banking, mobile payments and m-commerce, stored value systems, consumer lending, privacy, online business, anti-money laundering compliance, ATM and debit networks, and software and technology licensing. She has represented clients in a variety of financial services-related matters, including banks, payment system providers, wireless carriers, gaming developers, virtual property trading platforms, online and physical retailers, social networking companies, online service providers, and software application developers. Veronica has extensive experience in all aspects of the payments landscape. She has advised clients on a wide range of electronic financial services matters, including emerging payment systems, money transmission, payment cards (gift cards, credit cards, and debit cards), near field communication (NFC) mobile payment and remote payment programs, loyalty and "points" programs, unclaimed property, the payment card industry (PCI) data security standards, and the Gramm-Leach-Bliley Act. She also has experience in many types of consumer lending laws and regulation, including the Truth in Lending Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, and Real Estate Settlement Procedures Act. She has done a substantial amount of regulatory work for many innovative credit products, including credit cards exclusively for use in casinos, open-loop and closed-loop gift card programs, and a credit and debit network designed to reduce fees and data security risk. In addition, Veronica has experience with IT and technology-oriented business matters, including IT outsourcing and internet transactions. Veronica has written and spoken extensively on consumer protection matters, including the Dodd-Frank Act and the corresponding Durbin Amendment regarding debit card interchange fees. Vice Chair, Internet Delivery/Electronic Banking Subcommittee, American Bar Association (current) President, San Francisco Bank Attorneys Association (2010) Chair, Consumer Financial Services Committee, State Bar of California (2009)