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The Trusted Service Manager -
    Pivot Point in Mobile Payments
     Near Term Opportunities for Banks




                                Chip Wickenden
                                cwickenden@gmail.com


1                     28 April 2010            © 2010 Charles Wickenden cwickenden@gmail.com
NACHA Morning Announcements
•   Please turn off all cell phones or mobile devices
•   All conference attendees will have free access to PAYMENTS 2010
    conference session recordings. Attendees that registered onsite will receive
    details to access the session recordings within 10 days.
•   Should you wish to purchase a CD-ROM, a special conference rate is offered
    to all conference attendees.
•   Most of the education sessions at the conference can be counted towards
    your continuing AAP accreditation. The AAP Documentation of Attendance
    can be found in the onsite guide.
•   Please take a moment to complete session evaluations! Each evening
    attendees will receive an email link to access session evaluations that are
    offered each day. Attendees are automatically entered into a daily drawing for
    a chance to win a $50 gift card.
•   We hope to see you all next year at PAYMENTS 2011 in Austin, Texas April
    3-6, 2011
•   Thanks to all of our track sponsors throughout the conference!




2                                      28 April 2010                 © 2010 Charles Wickenden cwickenden@gmail.com
Agenda



• Definition and types of Mobile Payments

• How the Mobile Payments space is developing

• What’s changing - the Trusted Service Manager

• What banks need to do now




3                       28 April 2010       © 2010 Charles Wickenden cwickenden@gmail.com
A Working Definition for Mobile Payments




• Digital exchange of value at a point of sale

• At least one party using a mobile device, such as a
  mobile phone, smartphone or PDA

• Excludes web based purchases using a mobile device




4                        28 April 2010           © 2010 Charles Wickenden cwickenden@gmail.com
M-Pesa is a Widely Used Premium SMS Solution

                                          •      Popular mobile solution in Kenya developed by
                                                 the leading mobile network operator, Safaricom,
                                                 a Vodafone subsidiary.

                                          •      Outgrowth of an informal remittance solution
                                                 based on transferable and refundable mobile
                                                 minutes.

                                          •      Solution includes P2P, Point of Sale,
                                                 Remittance, Bill Payment, Mobile top-up, ATM
                                                 withdrawal

                                          •      Customer downloads a simple applet to pay

                                          •      Inputs receiver’s mobile phone number and
                                                 amount

                                          •      Receiver can present the SMS confirmation to
                                                 an M-Pesa agent for cash – over 10,000 agents
          ~40% of Adult Population
                                                 in Kenya



5                                28 April 2010                         © 2010 Charles Wickenden cwickenden@gmail.com
Paypal Uses WAP (Wireless Application Protocol)
Technology in its New Mobile Solution




                                                     * The iPhone uses a similar technical
                                                       stack that is proprietary to Apple

                                                                 Wireless Application Environment
    •   Extends a very popular notional payment scheme
                                                                    Wireless Session Protocol
        into the mobile space
                                                                  Wireless Transaction Protocol
    •   Primarily focused on P2P, not necessarily               Wireless Transport Layer Security
                                                                                                          WAP
        merchant acceptance                                        Wireless Datagram Protocol
    •   Also an SMS solution available                           ***Any Wireless Data Network***

6                                    28 April 2010                      © 2010 Charles Wickenden cwickenden@gmail.com
mFoundry Offers a 2-D Barcode Payment Solution

•   Merchant signs up and provisions POS scanners.

•   Consumers sign up and download applet to their mobile device

•   At the point of sale, the consumer starts the applet, a bar code appears and is
    scanned to effect payment.

•   Linked with value added services to enhance the customer experience

•   Key Value Point – No POS hardware upgrade necessary




7                                     28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
NFC is the Most Widely Recognized Mobile Payment
Initiation Method

                   •   NFC or “Near Field Communication” transaction
                       technology is based on standards developed for
                       smart cards and for contactless cards (primarily ISO
                       14443). The technology can be built into a simple
                       card, token, sticker, or integrated into a another
                       device, such as a mobile phone.

                   •   NFC uses Radio Frequency ID chips to communicate
                       the unique identifiers and other information necessary
                       to do a transaction.

                   •   Integration into a mobile phone can be done through
                       the handset manufacturer, or through a specialized
                       SD card used in an expansion slot, or integrated into
                       the SIM card itself.
                                         Some of the Standards Bodies involved in NFC:
                                         ETSI / SCP : Interface between the SIM card and the NFC chipset.
                                         GlobalPlatform : Multi-application architecture of the secure element.
                                         EMVCo : Impacts on the EMV payment applications
                                         NFC Forum : Ensure interoperability
                                         GSMA : Common global approach to using NFC technology
                                         ISO/IEC/ ECMA : Transport, NFC Interface andProtocol

8                        28 April 2010                                     © 2010 Charles Wickenden cwickenden@gmail.com
Payment Methods


    • The method of payment is not necessarily                      General Use
      linked to the means of effecting payment
                                                                    Payment Methods
    • The complexity of implementation for a                        • Franchise extends into mobile
                                                                    • Risks and cost of funds are well
      given payment method is directly related                        understood and managed
      to the level of acceptance                                    • Broad merchant acceptance




                                                                            • Franchise may go beyond
                                             Closed Loop                      mobile
                                             Notional Account               • Risk is managed based on
                                                                              program specifics
                                                                            • Program carries cost of funds
                                                                            • Merchants must subscribe


                             • Simple and Easy
    Bill Through Carrier     • Carrier holds risk & cost of funds
                             • Merchants must subscribe




9                                        28 April 2010                             © 2010 Charles Wickenden cwickenden@gmail.com
Hmmmm – Interesting Perspective




                                        BTW – You can still donate $10 to
                                        the Red Cross Haiti relief fund by
                                        sending a text to “90999”


10                      28 April 2010          © 2010 Charles Wickenden cwickenden@gmail.com
A 2007 GSMA Whitepaper Defines 9 Entities With a Stake
 in NFC Mobile Payments – The Many-to-Many Problem



                                            Acquiring              Issuing
                                              Bank                  Bank
                                                        Payment
                              Merchant                                             Consumer
                                                        Network
                                             POS                   Mobile
                                            Supplier              Operator
                                                                                    Handset
                                                                                      Mfr
                                                                  SIM/UICC
                                                                     Mfr



This means that in order for a mobile transaction to occur between a merchant and a
consumer 7 other entities need to either coordinate their actions, and have a financial
reason to act, or have their needs addressed in some other fashion. This complexity is
magnified by multiple real entities for each logical entity represented here.




11                                    28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
The Many-to-Many Problem in Developed Markets

        If the Bank market is segmented                        And the Mobile market is segmented
        like this:                                             like this:

                                                                     Mobile Network Market Share
Bank Market Share




                                  The dynamics make it almost impossible
                                  to form a critical mass of market share

        12                                     28 April 2010                      © 2010 Charles Wickenden cwickenden@gmail.com
Collaboration Between Two Participants Yields Results,
 but a Broader Solution is Required for Success

             The joint services offered through such binary relationships
             are typically governed by a Service Manager function.

                                        Mobile Network Market Share


                    Bank Market Share




     The Trusted Service Manager has been developed to identify
     the common governing entity to support market wide adoption.

13                                           28 April 2010            © 2010 Charles Wickenden cwickenden@gmail.com
The Role of a Trusted Service Manager
      - The TSM role can exist between two parties or many
                                                   Consumer

                            Services/Billing                        Telecom services


           Bank                                                                                     Carrier

                                                          Over-the-air
           Bank                                           Management                                Carrier


            Bank                               Trusted Service                                       Carrier
                       Service                    Manager                  Service
                       Negotiation &                                       Negotiation &
                       Provisioning                                        Provisioning
                                        Entity Validation, Security
                                             & Permissioning
                                                                                  Merchant               Airline
     • Intermediation between banks, carriers and
       other service providers
                                                                                       App Provider
     • Cryptographic key management

     • Application management                                                  Transaction processing is typically
                                                                               handled through traditional
                                                                               methods not through the TSM
     • Value-added services
14                                              28 April 2010                              © 2010 Charles Wickenden cwickenden@gmail.com
The European Payments Council and the GSMA are
     Collaborating on TSM Business Component Definition

                           Mobile Network Market Share
Bank Market Share




                    The industry is coalescing around                    EPC - GSMA Trusted Service
                    “Trusted Services Manager” as the                    Management Requirements and
                                                                         Specifications European Payments
                    title for this entity and defining roles             Council & GSMA, Jan 2010
                    and options                                          Whitepaper that defines specific functions and
                                                                         requirements for each role in the ecosystem
15                                                       28 April 2010                    © 2010 Charles Wickenden cwickenden@gmail.com
The TSM Role Becomes a Coordinating Point for the
Ecosystem, Addressing the Complexity



                                Payment
                                Network
                    Acquiring                    Issuing
                     Banks                        Banks
                                Trusted
        Merchants               Service                     Consumers
                                Manager
                      POS                        Mobile
                    Suppliers                   Operators
                                Handset
                                 Mfrs
                                                SIM/UICC
                                                  Mfrs




16                              28 April 2010                      © 2010 Charles Wickenden cwickenden@gmail.com
Developing Economies Have Fewer Dominant Players -
 Banks and Telecoms, So the TSM can Occur by Default



                         Mobile Network Market Share
     Bank Market Share




17                                            28 April 2010   © 2010 Charles Wickenden cwickenden@gmail.com
There is a Debate Forming Globally About the Form
 That a TSM Should Take in a Given Market




     Trusted Service Manager - The Key to                            Portals and Rails: Coordinating Roles
     Accelerating Mobile Payments                                    in Mobile Payments- Who Will We
     First Data Corporation, May 2009                                Trust? Sept 2009, Federal Reserve
     Whitepaper that discusses market acceleration                   Bank of Atlanta
     and the revenue opportunities in the TSM role                   Whitepaper that discusses appropriate entities
                                                                     to fulfill the TSM role

     The central question is whether a TSM should be a for-profit entity or a not-for-profit entity.
     There is no single “right answer” – it will be different based on economic, social, regulatory
     and competitive factors. There may also be multiple solutions in a given market.

18                                                   28 April 2010                         © 2010 Charles Wickenden cwickenden@gmail.com
An Idea of How the Mobile Payments Market Could Evolve


2010                 2011                 2012                  2013             2014

    TSM Deployment, Rationalization


Developed Economy Pilots, PoCs


Developing Economy Production Deployments – Telco & Bank


         Developed Economy Telco Production Deployments



               Developed Economy Bank Production Deployments



  Market Disruptors, Value Add 3rd party Provider Deployments




  19                                         28 April 2010             © 2010 Charles Wickenden cwickenden@gmail.com
As Mobile Payments Emerge, Banks Need to Anticipate
 the Challenge to Their Payments Business




                                                                              Mobile
                                                                             Payments




     While the market is adjusting to the emergence of Trusted Service Managers and banks are
     determining their relative position in that regard, there are a number of tactical steps that can be
     taken to add value and strengthen banks’ market position.


20                                            28 April 2010                     © 2010 Charles Wickenden cwickenden@gmail.com
The Intersection Between Identity from the Bank and the
 Mobile Operator’s Point of View is Critical




                                         Broader View
                                            of the
                                          Customer

                                 ber
                                                                   Ac
                          N um                                       co
                                                                        u
                      one                                                   nt
                                                                               Nu
                    Ph    Any stakeholder interested in participating
                                                                                  m
               le           in mobile payments should put together a                  be
           obi              business program to associate and                           r
       M
                            validate these two data elements. As well
                            as a foundation for mobile payments,
                            capturing this intersection provides a
Bank Identity               foundation for delivering related services        Mobile Identity
                            and maintaining market position.



21                                        28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
Key Value Points of Mobile Technology

The key to understanding mobile technology is to comprehend the power that
this unique combination feature and function delivers

Mobile Technology is:       • Networked
                               – Mobile devices are an absolute model of cloud
                                 computing delivering as much functionality as needed at
                                 the point of service
                            • Intelligent
                               – Mobile devices carry their own storage and processing
                                 capability as well as being connected to the cloud
                            • Locationally Aware
                               – Mobile phones provide locational information which can
                                 be a powerful tool for customer insight and marketing,
                                 as well as risk management
                            • Versatile
                               – At a minimum, mobile devices have keypad and voice
                                 input and screen and sound output. Cameras and
                                 expansion capability offer even more flexibility




22                               28 April 2010                     © 2010 Charles Wickenden cwickenden@gmail.com
Banks Have the Opportunity to Surround Future Mobile
 Payment Offerings with Value Now
         - Preemptively protecting the franchise in payments



                           Deliver Transaction
                               Information




                                                    Leverage the
                     Expand the
                       Device




                                                       Cloud
                                      Mobile
                                     Payments


                                      Deliver
                                  Locational Value


                   - Let’s look at some of the opportunities and ideas



23                                  28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
Leverage the Intelligence of the Device to Enhance the
 Experience
          - The device does not have to transact to interact



                            Deliver Transaction
                                Information




                                                     Leverage the
                      Expand the
                        Device




                                                        Cloud
                                       Mobile
                                      Payments


                                       Deliver
                                   Locational Value




24                                   28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
Wells and Visa are Leveraging Alerts




25                        28 April 2010   © 2010 Charles Wickenden cwickenden@gmail.com
Orange Barclaycard Mashup




26                     28 April 2010   © 2010 Charles Wickenden cwickenden@gmail.com
Leverage the Intelligence of the Device to Enhance
 the Experience
         - The device does not have to transact to interact



                                         Transaction
                                            Alerts

                      Threshold Alerts




                                                         Large Purchase
                                                           Validation
                         Spending          Mobile
                                          Payments


                                         Transaction
                                          Blocking




27                                       28 April 2010                    © 2010 Charles Wickenden cwickenden@gmail.com
Create Value from the Mobile Device’s Locational
 Awareness




                          Deliver Transaction
                              Information




                                                   Leverage the
                    Expand the
                      Device




                                                      Cloud
                                     Mobile
                                    Payments


                                     Deliver
                                 Locational Value




28                                 28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
Mobile Technology is Already Changing the Way We
 Shop

                                     Customer starts web based
  Context aware ads sent to         research on a given product,           Customer transitions from
  groups of people based on         either through browsing or by        advertising to interacting with
    matching between their               scanning a barcode               a product specialist on the
profiles and context of the ads                                                  mobile device


                                                                                              Customer continues research
                                                                                              through social media – blogs,
                                                                                                rating engines, friends and
                                                                                                         advisors

              Customer has agreed to
         locationally aware advertising
         which triggers offers based on
           lingering in a given position           Analytics

                                                 Easier to examine the item in
                                                  the store and then buy in on
                                                line? Shopping can be mixed          Retail search solution
                                                             mode.                  identifies best product
                Checkout can happen                                                 matches with locational
                anywhere – which can                                                      information
             completely change the front of
                  the store concept




29                                                  28 April 2010                             © 2010 Charles Wickenden cwickenden@gmail.com
Banks Can Use Locational Information to Improve
 Loyalty and Cross-sell




                                         Special
                                                                Due to size and
                                         rates just             complexity,
                                         for this
                                         dealership!            consumers often
                                         MyBank                 shop separately
                                                                for mortgages
                                                                and auto loans .



30                       28 April 2010                 © 2010 Charles Wickenden cwickenden@gmail.com
Mobile Technology used to Track Bank Robbers




                                        Wouldn’t it just be easier to track
                                        the robber’s cell phone?


31                      28 April 2010                     © 2010 Charles Wickenden cwickenden@gmail.com
Create Value from the Mobile Device’s Locational
 Awareness




                                       Locational Aware


                    Offers for Locations
                                         Fraud Alerts




                                                           Location Specific
                     Deliver Insight &




                                                             Couponing
                                            Mobile
                                           Payments


                                        Location Based
                                       Customer Insight




32                                         28 April 2010                       © 2010 Charles Wickenden cwickenden@gmail.com
What Value can be Delivered by Combining Consumer
 Interaction, Location and Analytics?




                         Deliver Transaction
                             Information




                                                 Leverage the
                   Expand the
                     Device




                                                    Cloud
                                     Mobile
                                    Payments


                                    Deliver
                                Locational Value




33                               28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
Shortcuts.com is a New Program to put CPG Coupons
 on a Card – Easily Translates to Other Devices




34                      28 April 2010     © 2010 Charles Wickenden cwickenden@gmail.com
Blippy – Customer Insight Turned Sideways




                                        This is an application from one of the
                                        founders of Twitter that lets your friends
                                        follow what you are buying.

                                         . . . However recent investigations have
                                        found some security flaws, even by social
                                        media standards.




35                      28 April 2010                         © 2010 Charles Wickenden cwickenden@gmail.com
Bundle.com Examines Comparative Spending Data – and
 There’s iPhone App




36                     28 April 2010      © 2010 Charles Wickenden cwickenden@gmail.com
Mint.com Helps Consumers Manage Spending Too –
 and There’s an App . . .




37                     28 April 2010     © 2010 Charles Wickenden cwickenden@gmail.com
What Value can be Delivered by Combining Consumer
 Interaction, Location and Analytics?




                              Tools for Financial
                                Management

                  Focused Spending




                                                       Couponing
                                                       Interactive
                      Socially          Mobile
                                       Payments


                                     Shopping Lists
                                       & Budgets




38                                     28 April 2010                 © 2010 Charles Wickenden cwickenden@gmail.com
Smart Phones are Expandable – How Can That Change
 the Equation?




                         Deliver Transaction
                             Information




                                                 Leverage the
                   Expand the
                     Device




                                                    Cloud
                                     Mobile
                                    Payments


                                    Deliver
                                Locational Value




39                               28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
Devices That Combine Mobile Technology and
 Merchant Acceptance Have Debuted Recently



     iPhone credit card swipe war heats up




           - This has the potential to change the merchant landscape
           significantly from a customer profile, risk and acquiring perspective



40                                   28 April 2010               © 2010 Charles Wickenden cwickenden@gmail.com
Tyfone – Ingenious NFC Workaround




 Tyfone creates value by providing a turnkey infrastructure
 (software on the phone, middleware platform, and a memory
 card based token for the secure element/contactless
 payments/NFC). Tyfone’s patented technology combines a
 smart card chip (secure element), an NFC chip, and a
 miniature antenna provisioned to a memory card that works in
 any standard memory card slot. This comprehensive solution
 enables device independence in an issuer-centric model
 allowing the issuer to control both the channel and customer.



41                                                 28 April 2010   © 2010 Charles Wickenden cwickenden@gmail.com
Biometric Authentication


 At a minimum, any mobile phone can do
 some level of biometric voice authentication.
                 •   All Phones have a microphone
                                                                                                Voice match
                 •   Smartphones have cameras
                 •   Fingerprint readers can be added



               Handset                   Handset                  Validation
                                                                   Server
                 Biometric                  Biometric
                   Applet                     Applet                 Result
              Requests Speech            Requests Speech                                     Facial recognition
                             Result
                                                                    Matches?
                 Matches?
     Input                                                            Y/N
                   Y/N
                                      Input


                  Stored                                             Stored
                 Bio print                                          Bio print

             Self contained                         Network based
                                                                                                 Fingerprint
42                                                28 April 2010                 © 2010 Charles Wickenden cwickenden@gmail.com
Smart Phones are Expandable – How can That Change
 the Equation?




                                    Mobile Card
                                    Acceptance

                  Authentication




                                                     Work-Around
                    Biometric




                                                       For NFC
                                      Mobile
                                     Payments


                                   Shopping Lists
                                     & Budgets




43                                   28 April 2010                 © 2010 Charles Wickenden cwickenden@gmail.com
A Further Suggestion for Your Reading List




                                         One of the best articles that looks
                                         at the broad view of where money
                                         and the world of payments is
                                         headed




44                       28 April 2010                  © 2010 Charles Wickenden cwickenden@gmail.com
Thank You




                             Chip Wickenden
                             cwickenden@gmail.com
                             Office: 1-904-387-0106
                             Mobile: 1-904-422-1321
                             http://www.linkedin.com/in/chipwickenden


45           28 April 2010            © 2010 Charles Wickenden cwickenden@gmail.com

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Chip Wickenden Trusted Service Manager Pivot Point In Mobile Payments Final

  • 1. The Trusted Service Manager - Pivot Point in Mobile Payments Near Term Opportunities for Banks Chip Wickenden cwickenden@gmail.com 1 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 2. NACHA Morning Announcements • Please turn off all cell phones or mobile devices • All conference attendees will have free access to PAYMENTS 2010 conference session recordings. Attendees that registered onsite will receive details to access the session recordings within 10 days. • Should you wish to purchase a CD-ROM, a special conference rate is offered to all conference attendees. • Most of the education sessions at the conference can be counted towards your continuing AAP accreditation. The AAP Documentation of Attendance can be found in the onsite guide. • Please take a moment to complete session evaluations! Each evening attendees will receive an email link to access session evaluations that are offered each day. Attendees are automatically entered into a daily drawing for a chance to win a $50 gift card. • We hope to see you all next year at PAYMENTS 2011 in Austin, Texas April 3-6, 2011 • Thanks to all of our track sponsors throughout the conference! 2 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 3. Agenda • Definition and types of Mobile Payments • How the Mobile Payments space is developing • What’s changing - the Trusted Service Manager • What banks need to do now 3 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 4. A Working Definition for Mobile Payments • Digital exchange of value at a point of sale • At least one party using a mobile device, such as a mobile phone, smartphone or PDA • Excludes web based purchases using a mobile device 4 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 5. M-Pesa is a Widely Used Premium SMS Solution • Popular mobile solution in Kenya developed by the leading mobile network operator, Safaricom, a Vodafone subsidiary. • Outgrowth of an informal remittance solution based on transferable and refundable mobile minutes. • Solution includes P2P, Point of Sale, Remittance, Bill Payment, Mobile top-up, ATM withdrawal • Customer downloads a simple applet to pay • Inputs receiver’s mobile phone number and amount • Receiver can present the SMS confirmation to an M-Pesa agent for cash – over 10,000 agents ~40% of Adult Population in Kenya 5 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 6. Paypal Uses WAP (Wireless Application Protocol) Technology in its New Mobile Solution * The iPhone uses a similar technical stack that is proprietary to Apple Wireless Application Environment • Extends a very popular notional payment scheme Wireless Session Protocol into the mobile space Wireless Transaction Protocol • Primarily focused on P2P, not necessarily Wireless Transport Layer Security WAP merchant acceptance Wireless Datagram Protocol • Also an SMS solution available ***Any Wireless Data Network*** 6 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 7. mFoundry Offers a 2-D Barcode Payment Solution • Merchant signs up and provisions POS scanners. • Consumers sign up and download applet to their mobile device • At the point of sale, the consumer starts the applet, a bar code appears and is scanned to effect payment. • Linked with value added services to enhance the customer experience • Key Value Point – No POS hardware upgrade necessary 7 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 8. NFC is the Most Widely Recognized Mobile Payment Initiation Method • NFC or “Near Field Communication” transaction technology is based on standards developed for smart cards and for contactless cards (primarily ISO 14443). The technology can be built into a simple card, token, sticker, or integrated into a another device, such as a mobile phone. • NFC uses Radio Frequency ID chips to communicate the unique identifiers and other information necessary to do a transaction. • Integration into a mobile phone can be done through the handset manufacturer, or through a specialized SD card used in an expansion slot, or integrated into the SIM card itself. Some of the Standards Bodies involved in NFC: ETSI / SCP : Interface between the SIM card and the NFC chipset. GlobalPlatform : Multi-application architecture of the secure element. EMVCo : Impacts on the EMV payment applications NFC Forum : Ensure interoperability GSMA : Common global approach to using NFC technology ISO/IEC/ ECMA : Transport, NFC Interface andProtocol 8 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 9. Payment Methods • The method of payment is not necessarily General Use linked to the means of effecting payment Payment Methods • The complexity of implementation for a • Franchise extends into mobile • Risks and cost of funds are well given payment method is directly related understood and managed to the level of acceptance • Broad merchant acceptance • Franchise may go beyond Closed Loop mobile Notional Account • Risk is managed based on program specifics • Program carries cost of funds • Merchants must subscribe • Simple and Easy Bill Through Carrier • Carrier holds risk & cost of funds • Merchants must subscribe 9 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 10. Hmmmm – Interesting Perspective BTW – You can still donate $10 to the Red Cross Haiti relief fund by sending a text to “90999” 10 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 11. A 2007 GSMA Whitepaper Defines 9 Entities With a Stake in NFC Mobile Payments – The Many-to-Many Problem Acquiring Issuing Bank Bank Payment Merchant Consumer Network POS Mobile Supplier Operator Handset Mfr SIM/UICC Mfr This means that in order for a mobile transaction to occur between a merchant and a consumer 7 other entities need to either coordinate their actions, and have a financial reason to act, or have their needs addressed in some other fashion. This complexity is magnified by multiple real entities for each logical entity represented here. 11 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 12. The Many-to-Many Problem in Developed Markets If the Bank market is segmented And the Mobile market is segmented like this: like this: Mobile Network Market Share Bank Market Share The dynamics make it almost impossible to form a critical mass of market share 12 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 13. Collaboration Between Two Participants Yields Results, but a Broader Solution is Required for Success The joint services offered through such binary relationships are typically governed by a Service Manager function. Mobile Network Market Share Bank Market Share The Trusted Service Manager has been developed to identify the common governing entity to support market wide adoption. 13 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 14. The Role of a Trusted Service Manager - The TSM role can exist between two parties or many Consumer Services/Billing Telecom services Bank Carrier Over-the-air Bank Management Carrier Bank Trusted Service Carrier Service Manager Service Negotiation & Negotiation & Provisioning Provisioning Entity Validation, Security & Permissioning Merchant Airline • Intermediation between banks, carriers and other service providers App Provider • Cryptographic key management • Application management Transaction processing is typically handled through traditional methods not through the TSM • Value-added services 14 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 15. The European Payments Council and the GSMA are Collaborating on TSM Business Component Definition Mobile Network Market Share Bank Market Share The industry is coalescing around EPC - GSMA Trusted Service “Trusted Services Manager” as the Management Requirements and Specifications European Payments title for this entity and defining roles Council & GSMA, Jan 2010 and options Whitepaper that defines specific functions and requirements for each role in the ecosystem 15 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 16. The TSM Role Becomes a Coordinating Point for the Ecosystem, Addressing the Complexity Payment Network Acquiring Issuing Banks Banks Trusted Merchants Service Consumers Manager POS Mobile Suppliers Operators Handset Mfrs SIM/UICC Mfrs 16 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 17. Developing Economies Have Fewer Dominant Players - Banks and Telecoms, So the TSM can Occur by Default Mobile Network Market Share Bank Market Share 17 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 18. There is a Debate Forming Globally About the Form That a TSM Should Take in a Given Market Trusted Service Manager - The Key to Portals and Rails: Coordinating Roles Accelerating Mobile Payments in Mobile Payments- Who Will We First Data Corporation, May 2009 Trust? Sept 2009, Federal Reserve Whitepaper that discusses market acceleration Bank of Atlanta and the revenue opportunities in the TSM role Whitepaper that discusses appropriate entities to fulfill the TSM role The central question is whether a TSM should be a for-profit entity or a not-for-profit entity. There is no single “right answer” – it will be different based on economic, social, regulatory and competitive factors. There may also be multiple solutions in a given market. 18 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 19. An Idea of How the Mobile Payments Market Could Evolve 2010 2011 2012 2013 2014 TSM Deployment, Rationalization Developed Economy Pilots, PoCs Developing Economy Production Deployments – Telco & Bank Developed Economy Telco Production Deployments Developed Economy Bank Production Deployments Market Disruptors, Value Add 3rd party Provider Deployments 19 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 20. As Mobile Payments Emerge, Banks Need to Anticipate the Challenge to Their Payments Business Mobile Payments While the market is adjusting to the emergence of Trusted Service Managers and banks are determining their relative position in that regard, there are a number of tactical steps that can be taken to add value and strengthen banks’ market position. 20 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 21. The Intersection Between Identity from the Bank and the Mobile Operator’s Point of View is Critical Broader View of the Customer ber Ac N um co u one nt Nu Ph Any stakeholder interested in participating m le in mobile payments should put together a be obi business program to associate and r M validate these two data elements. As well as a foundation for mobile payments, capturing this intersection provides a Bank Identity foundation for delivering related services Mobile Identity and maintaining market position. 21 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 22. Key Value Points of Mobile Technology The key to understanding mobile technology is to comprehend the power that this unique combination feature and function delivers Mobile Technology is: • Networked – Mobile devices are an absolute model of cloud computing delivering as much functionality as needed at the point of service • Intelligent – Mobile devices carry their own storage and processing capability as well as being connected to the cloud • Locationally Aware – Mobile phones provide locational information which can be a powerful tool for customer insight and marketing, as well as risk management • Versatile – At a minimum, mobile devices have keypad and voice input and screen and sound output. Cameras and expansion capability offer even more flexibility 22 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 23. Banks Have the Opportunity to Surround Future Mobile Payment Offerings with Value Now - Preemptively protecting the franchise in payments Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value - Let’s look at some of the opportunities and ideas 23 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 24. Leverage the Intelligence of the Device to Enhance the Experience - The device does not have to transact to interact Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value 24 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 25. Wells and Visa are Leveraging Alerts 25 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 26. Orange Barclaycard Mashup 26 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 27. Leverage the Intelligence of the Device to Enhance the Experience - The device does not have to transact to interact Transaction Alerts Threshold Alerts Large Purchase Validation Spending Mobile Payments Transaction Blocking 27 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 28. Create Value from the Mobile Device’s Locational Awareness Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value 28 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 29. Mobile Technology is Already Changing the Way We Shop Customer starts web based Context aware ads sent to research on a given product, Customer transitions from groups of people based on either through browsing or by advertising to interacting with matching between their scanning a barcode a product specialist on the profiles and context of the ads mobile device Customer continues research through social media – blogs, rating engines, friends and advisors Customer has agreed to locationally aware advertising which triggers offers based on lingering in a given position Analytics Easier to examine the item in the store and then buy in on line? Shopping can be mixed Retail search solution mode. identifies best product Checkout can happen matches with locational anywhere – which can information completely change the front of the store concept 29 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 30. Banks Can Use Locational Information to Improve Loyalty and Cross-sell Special Due to size and rates just complexity, for this dealership! consumers often MyBank shop separately for mortgages and auto loans . 30 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 31. Mobile Technology used to Track Bank Robbers Wouldn’t it just be easier to track the robber’s cell phone? 31 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 32. Create Value from the Mobile Device’s Locational Awareness Locational Aware Offers for Locations Fraud Alerts Location Specific Deliver Insight & Couponing Mobile Payments Location Based Customer Insight 32 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 33. What Value can be Delivered by Combining Consumer Interaction, Location and Analytics? Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value 33 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 34. Shortcuts.com is a New Program to put CPG Coupons on a Card – Easily Translates to Other Devices 34 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 35. Blippy – Customer Insight Turned Sideways This is an application from one of the founders of Twitter that lets your friends follow what you are buying. . . . However recent investigations have found some security flaws, even by social media standards. 35 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 36. Bundle.com Examines Comparative Spending Data – and There’s iPhone App 36 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 37. Mint.com Helps Consumers Manage Spending Too – and There’s an App . . . 37 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 38. What Value can be Delivered by Combining Consumer Interaction, Location and Analytics? Tools for Financial Management Focused Spending Couponing Interactive Socially Mobile Payments Shopping Lists & Budgets 38 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 39. Smart Phones are Expandable – How Can That Change the Equation? Deliver Transaction Information Leverage the Expand the Device Cloud Mobile Payments Deliver Locational Value 39 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 40. Devices That Combine Mobile Technology and Merchant Acceptance Have Debuted Recently iPhone credit card swipe war heats up - This has the potential to change the merchant landscape significantly from a customer profile, risk and acquiring perspective 40 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 41. Tyfone – Ingenious NFC Workaround Tyfone creates value by providing a turnkey infrastructure (software on the phone, middleware platform, and a memory card based token for the secure element/contactless payments/NFC). Tyfone’s patented technology combines a smart card chip (secure element), an NFC chip, and a miniature antenna provisioned to a memory card that works in any standard memory card slot. This comprehensive solution enables device independence in an issuer-centric model allowing the issuer to control both the channel and customer. 41 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 42. Biometric Authentication At a minimum, any mobile phone can do some level of biometric voice authentication. • All Phones have a microphone Voice match • Smartphones have cameras • Fingerprint readers can be added Handset Handset Validation Server Biometric Biometric Applet Applet Result Requests Speech Requests Speech Facial recognition Result Matches? Matches? Input Y/N Y/N Input Stored Stored Bio print Bio print Self contained Network based Fingerprint 42 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 43. Smart Phones are Expandable – How can That Change the Equation? Mobile Card Acceptance Authentication Work-Around Biometric For NFC Mobile Payments Shopping Lists & Budgets 43 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 44. A Further Suggestion for Your Reading List One of the best articles that looks at the broad view of where money and the world of payments is headed 44 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com
  • 45. Thank You Chip Wickenden cwickenden@gmail.com Office: 1-904-387-0106 Mobile: 1-904-422-1321 http://www.linkedin.com/in/chipwickenden 45 28 April 2010 © 2010 Charles Wickenden cwickenden@gmail.com