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Towards cash free day
- 1. Gabriele Zuliani, MasterCard Worldwide
November 25, 2010
Towards a Cash Free Day
Delivering Innovation with Insights
©2010 MasterCard.
Proprietary and Confidential ADVANCING GROWTH. ADVANCING COMMERCE.
- 2. In 2010, we started looking more closely at the
Today we explore some of
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 2
- 3. order to understand how to better meet their
needs
Could I live How much cash
without cash? do I like to keep
in my purse?
What do I What would
& my family spend make me use
on everyday, my card more?
week, month or
year?
What are
Where do I want to everyday payment
What stresses needs & are they
use my card where its
& frustrates me currently being
not accepted or
when I want met?
welcomed ?
to pay?
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 3
- 4. We used 5 different methodologies designed
MasterCard
Advisors
Transactional
Data Analysis
Life of
4
4 country
Ethnography
360°
Study
without Cash
6 country blog
6 country POS
experience 5 country Quantitative Study
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 4
- 5. How much cash
do I like to keep
in my purse?
How much
do I usually draw
from the ATM?
How often do
I actually pay
with cash ?
What do I spend
on everyday,
week, month
or year?
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 5
- 6. Each month, an average German consumer pays
about 21x in
out of ± 32 payment transactions.
Total Nr of
payment 42 32 37 35 32
txs
3 1 3 1 3
Credit
14 16
12
5 8
Debit
23 21 24
17
12
Cash
PL DE IT NL SE
Q8. Frequency of usage of payment means last 12 months, by country Base: All
Source: TNS, Towards a Cash Free Day research, 2010
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 6
- 7. For same everyday payments, Germans use
mainly cash vs. heavy card habit Swedes
who use cash in just 40% of payment occasions
100
Parking fees Newspaper
tolls Newspaper
% low value payments (>10 )
Parking feestolls
Public transport Food/snacks/
80 day ticket Beverages/sandwiches
Public transport day
Foodsnacksbeverag
Books and ticket Books and essandwiches
magazines Parking fee/tolls magazines
Food 60
snacks
Everyday groceries
beverages sandwiches
from corner shop
10 30 50 70 90
40
Everyday groceries from Everyday groceries
supermarket from supermarket
Everyday groceries
from corner shop 20 Everyday groceries from
corner shop
Everyday groceries
from supermarket
0
% paid for in cash money
Base: 5 countries, Payment occasions yesterday,
Categories: Transportation, Groceries / household items,
Source: TNS, Towards a Cash Free Day research, 2010 Entertainment /hobbies / leisure
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 7
- 8. What is my
path from a
cash only
consumer to a
more regular
debit user?
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 8
- 9. Understanding where cardholders are on their
Cash Content Incidental Use Confidence Builds Comfort Sets In Habit is Formed
emergency
grocery & fuel plateau
grocery & fuel
clothes & shoes
(core debit territory)
socialising
draw cash from big ticket
branch or ATM health & personal care
rail & bus
impulse
Expanding merchant acceptance & continuous industries
18.4 communication are
key to migrating customers along the card adoption path
Source: MasterCard Advisors Transactional Data Analysis
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 9
- 10. What are
my everyday
payment
experiences?
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 10
- 11. What are
my everyday
payment needs?
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 11
- 12. around speed, no matter the sophistication level
of the country!
1. Speed be on my way
quickly
2. Avoid carrying cash, going to
1. Speed be on my way quickly
ATM
2. Avoid carrying cash
3. No transaction cost
3. Use my preferred payment
Very functional needs
method
Very functional needs
1. Speed be on my way quickly
2. Feel in control of my spending
3. Go with the norm, pay as
everyone does, not stand out,
not hold up the queue
1. Speed be on my way quickly Most emotional needs
2. Feel in control of my spending
3. No transaction cost or fee
1. Speed be on my way quickly
2. Feel reassured, not hold up the
queue, easy merchant
interaction
3. No transaction cost or fee
Their payment needs are less
extensive as if other things
Source: TNS, Towards a Cash Free Day research, 2010
matter more
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 12
- 13. scale groceries where what
matters most is NOT having to carry cash
Consumer Payment Needs for
Specific Everyday Payment Occasions
Emotional
Go with the norm Control
Parking Everyday groceries
Public transport day ticket Food/snacks/beverages/
Newspaper sandwiches
No transaction cost
Avoid carrying cash
or fee Large scale groceries
Fuel Fuel
Books and magazines
Speed be on my way Security
Acceptance
Functional Speedquickly
Basic condition, but not top of mind
Basic condition
Consumers do not know what they are
liable for. Very different from the
Source: TNS, Towards a Cash Free Day research, 2010 online world where security is the key
concern.
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 13
- 14. Could I live a week
without cash?
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 14
- 15. and preconceived notions
Habit!
Cash gives me power Card makes me feel liberated
Feel empty without it I don't have to go to ATM all the time
Physical incarnation of money (look,
feel, smell) Its fast and easy
Cash is comfortable, its accepted Card is easy its widely accepted
everywhere
Not accepted everywhere
Go with the norm - socially not
always accepted to pay by card More electronic payments could
mean less meaningful interaction
with merchant
last penny slips out of your hand Less need to spend
Its safe
Not safe (carrying large
amounts & pick pockets)
Card fraud
Source: TNS, Towards a Cash Free Day research, 2010
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 15
- 16. Merchants reactions have significant impact
CARDS ACCEPTED
Large shops
Large amounts
reaction
Surprise
First reluctance, after acceptance of
CARDS NOT ACCEPTED card
Smaller shops Feeling embarrassed
Small amounts
Irritation
Cash only accepted he/she
Refusing the card can do, leave shop
brought so without goods
Participants were very inventive on seeking solutions, but these were only
temporary. In everyday situations cardholders land up using the method
most insisted on by merchant or following societal norms
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 16
- 17. Do I want to
use my card where
its not accepted or
welcomed ?
What reaction
do I get ?
What stresses &
frustrates me
when I want to
pay ?
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 17
- 18. Merchants in Munich & Turin had most card
unfriendly attitude, refusing card acceptance,
even at indicated minimum spend
Rotterdam
100% card acceptance Gothenburg
100% No restriction for Expressed preference for card 1%
card transactions Refused card offered 1%
Minimum amount 4%
Card transaction surcharged 1%
Manchester
No terminal 6%
Minimum amount 3% Warsaw
Card transaction surcharged 2% for card transactions
100% card acceptance
100% No restriction
Munich Turin
No terminal 25%
Expressed preference for cash 8%
Refused card offered 6%
Refused card offered 15%
Minimum amount 7%
Minimum amount 19%
Italians and Germans had highest cash usage at 75% and 71% respectively
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 18
- 19. What do consumers want ?
Payment solutions that can
simplify and facilitate their day to
day lives
For the industry & all its
stakeholders, its about delivering
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 19
- 20. Personal Finance 1 Tollroads
10
Management
2 Parking
9 3 Transit
Internet
banking & security
Identification 4 LVP solutions / e-purse
8
Card
7
Retailer Loyalty 5 e-Com
6
Multiple
Credit and
Debit cards
ADVANCING BANK
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. COMMERCE. Proprietary and Confidential Page 20
- 21. one card!
Relevance
Mass Small
Youth Loyalty Families Mass Affluent 50+
affluent Business
Small ticket items
Eg. tolls, parking,
Improve
coffee etc. Remove barriers Increase appeal
convenience
Everyday Convenience Control
Convenience
necessities Making debit faster, easier Giving consumers ways
eg. groceries, and universally accepted of managing their money
petrol etc. Increase across channels more effectively Increase
relevance relevance
Large necessities
eg.bills, rent, Security Relevance
insurances etc. Improving all aspects of Tailoring payment solutions
payment security from to the needs of different
Improve
Large indulgences prevention to recovery consumer segments
convenience
eg. electronics,
holidays etc.
Enhance security
Improve control
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 21
- 22. Expanding Debit cards into Low Value Payments
Debit cards accepted on
Italian, French, Croatian,
and Polish Tollways since
2009
1
Tollroads
Parking (garage and on-
street) debit card solution 2 Parking
now available
First transit PayPass 3 Transit
contactless transit
solution introduced in
Turkey (Asya Bank) 4
e-purse
National e-purse
migration plans to
Maestro/MC PayPass
implementing
BANK
©2010 MasterCard. Page 22
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential
- 23. MasterCard Low Value Payments strategy is
developed around 3 pillars addressing the
core needs of all stakeholders
Need to drive profitability Mixed view on the cost of cash
Increase POS use Think of cards as just more costs
Develop acceptance for new Acquirers Retailers Believe card transactions are
card sectors slower than cash
Believe LVP transactions are Perceive cash as free
loss making
Issuers Consumers Expect ubiquitous acceptance
Free-cash trap
Believe card transactions are
ATM to POS migration slower than cash
requires time and investments
1. New Technology & 2. Lower Cost 3. Marketing &
Solutions Model Awareness
Increase speed and Lower end-to-end Change Consumers / Retailers
acceptance transaction cost attitude towards cash vs. debit
There is no one-solution in the LVP space, but a combination of solutions
that must fit each stakeholder and offer an improvement over cash
©2010 MasterCard.
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 23
- 24. MasterCard view of the opportunity for Low
Value Payments
The key LVP objectives:
Transaction
Debit LVP
Today Opportunity
Increase card usage by:
Value
extending the acceptance of
debit cards at
Existing New Merchant categories
Facilitating card
Merchants A
payments at existing
Supermarkets debit card accepting
ATV Petrol merchants
Taxis, Doctors, Butchery,
Groceries Bakery
Current Fast-Food Expanding to new
Break-even Movies B B
Point
acceptance channels by
leveraging the latest
Future technologies
Break-even
Point
A Provide an attractive
solution for all stakeholders
that is a faster, more secure,
more convenient and a more
economic equivalent to cash
Acceptance Locations and bring the barrier down
©2010 MasterCard.
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 24
- 25. Migration from e-purse to mobile/contactless
A cost-effective way out of the cash trap
and long-term vision for Low Value Payments
Mobile Integrated NFC
PayPass
PayPass
Mobile tag
Mobile
Info
EMV chip
EMV Chip with PayPass
Front-End Technology Magstripe
Dip & Go
No CVM
(customer experience)
Pre-Load/ Online/offline/ Auto top-up
Structural Online only e-purse chip pre-auth. e-purse
(Back-end)
©2010 MasterCard. Page 25
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential
- 26. One card to unlock the door to simpler cash free
©2010 MasterCard. December 2, 2010
ADVANCING GROWTH. ADVANCING COMMERCE. Proprietary and Confidential Page 26