Fictional Marketing plan by students from the University of Applied Sciences.

1. Date of Publication:
October 4th 2001
Paydiant Mobile Payments
Marketing Plan
Students from:
University of Applied Sciences Amsterdam 2011

2. 1. Executive summary
2011 and 2012 are going to be a very exciting, very dynamic years when it comes to mobile payments
because it's the Wild West again, with all these players positioning in various different ways to redefine
the digital payments landscape.
To succeed in such a competitive marketplace, Paydiant needs to be customer centered. Rather than
competing on price, we belief Paydiant should focus on its competitive advantages and delivering value
to the customers better than the competitors.
In the short term, within its first year of introduction, Paydiant aims to have a 10% market share of the
United States. In the long term, Paydiant aims to gain and maintaining a market share of 30% in the
mobile payment industry. To achieve these goals, promotion activities should be build around informing
customers about the new product and convincing them of the advantages of the Paydiant product.
At first sight setting up its own ACH-based network looks very attractive as no one to share profit with
and the possibility to offer low prices to costumers and merchants. However, all the other activities of
this disintermediation of these shackles had to be replaced. The option to collaborate with a
telecommunications provider was rapidly pierced as competitor ISIS, collaborating with AT&T, Verizon
and T-mobile, have a combined market share of over 90%.
Taking all of the previous in, we conclude that partnering up with current interchange-based partners
MasterCard and Visa. Paydiant should aim to deliver quality. Its focus should be to be the most secure,
convenient, simple and exciting way of mobile payment. Let MasterCard and Visa worry about banks,
Paydiant should focus on its core business of developing software. Mobile marketing is cheap and we
believe in this way our product will sell itself.
To solve the problem where consumers are unlikely to sign when no retailers accepted payment system
and retailers will only sign up when a consumer base is present, a push strategy is most advised.
Marketing activities should be directed toward channel members to induce them to carry the product
and to promote it to final consumers.
According to our forecast an investment in Promotional Costs with the guidelines mentioned in this
marketing plan should after 3 years of its introduction result in € 220 million in revenues. On the long
term, product development is required to keep up with the environment and evolving needs of the
customers and merchants.
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3. Table of Contents
1. Executive summary .................................................................................................................................. 2
2. Problem Statement .................................................................................................................................. 5
3. External / market analysis ........................................................................................................................ 6
3.1 Market analysis & market segmentation ............................................................................................ 6
3.2 External Environment analysis ............................................................................................................ 7
3.2.1 Demographic ................................................................................................................................ 7
3.2.2 Economic ...................................................................................................................................... 8
3.2.3 Social Cultural .............................................................................................................................. 8
3.2.4 Technological ............................................................................................................................... 9
3.2.5 Political/Legal ............................................................................................................................... 9
3.3 Competitor analysis .......................................................................................................................... 10
3.3.1 Direct .......................................................................................................................................... 10
3.3.2. Indirect ...................................................................................................................................... 12
3.4 Competitive Advantage & Challenges............................................................................................... 13
4. Internal analysis ..................................................................................................................................... 14
4.1 Company ........................................................................................................................................... 14
4.2 Current Marketing Mix...................................................................................................................... 14
4.2.1 Product ....................................................................................................................................... 14
4.2.3 Price ........................................................................................................................................... 14
4.2.2 Place ........................................................................................................................................... 15
4.2.4 Promotion .................................................................................................................................. 15
4.3 Financial Performance ...................................................................................................................... 15
4.4 Personnel .......................................................................................................................................... 15
5. SWOT analysis & Confrontation matrix ................................................................................................. 16
5.1 SWOT Analysis................................................................................................................................... 16
5.2 Confrontation matrix ........................................................................................................................ 18
6. Segmentation, Target Market, Positioning ............................................................................................ 19
6.1 Customer Needs and Wants ............................................................................................................. 19
6.2 Consumer Segmentation .................................................................................................................. 19
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4. 6.2.1 Geographic ................................................................................................................................. 19
6.2.2 Demographic .............................................................................................................................. 19
6.2.3 Psychographic ............................................................................................................................ 20
6.2.4 Behavioral .................................................................................................................................. 20
6.3 Merchant segmentation ................................................................................................................... 20
6.4 Market Targeting .............................................................................................................................. 21
6.5 Positioning Map ................................................................................................................................ 22
7. Strategy .................................................................................................................................................. 24
8. Objectives............................................................................................................................................... 25
8.1 Short Term .................................................................................................................................... 25
8.2 Long Term (1+ Years) .................................................................................................................... 25
9. Marketing Mix ........................................................................................................................................ 26
9.1 Product .............................................................................................................................................. 26
9.2 Place .................................................................................................................................................. 27
9.3 Price .................................................................................................................................................. 28
9.4 Promotion ......................................................................................................................................... 29
10. Profit & Loss Statement / Budget (3 year) ............................................................................................ 31
11. Recommendations to the decision maker ............................................................................................ 32
12. Source list .............................................................................................................................................. 33
13. Appendices ............................................................................................................................................ 34
14. Peer Evaluation ........................................................................................ Error! Bookmark not defined.
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5. 2. Problem Statement
Paydiant planned to introduce a new, alternative payment system at the end of 2011. Unfortunately,
this deadline could not be achieved, and Paydiant is forced to formally launch their service in 2012. The
delay can cause severe disadvantages to Paydiant. New competitors can enter the market and decrease
Paydiant’s chance of success. Thus, various problems/issues occurred, which need to be solved in the
very near future. In the following section we will examine these challenges.
First of all, one of the most significant and basic problems Paydiant faces, is the so-called ‘Chicken and
Egg’ problem. It concerns the willingness to install the service as a merchant, and to which degree the
consumer is willing to adopt the system. Merchants only accept this method if a substantial amount of
consumer is already able to pay this way; consumers want to install the system if many merchants
provide the service.
Secondly, several direct and indirect competitors are fairly dominant in this market. Examples are Visa
and Mastercard, who run an almost oligopolistic market. How should Paydiant react to these threats?
What will be the most profitable manner to penetrate or enter this market? There are options varying
from cooperating with the large players, to building a healthy and stable company ourselves, acting
solely.
The third challenge concerns safety of Paydiants’ service. In order to gain competitive advantage and
both the interest of merchants and consumers, a safer system needs to be implemented. Consumers’
privacy is extremely important, as well as reducing fraud percentages to a minimum. So, how do we
protect our potential consumers?
Furthermore, the technology provided needs to be convenient. Consumers and merchants prefer a fast
service, which can be implemented in an instant. Transactions need to be completed in a fair amount of
time. It will increase consumer satisfaction.
At last, a long term plan needs to be created. It is important to make a precise outline; a route Paydiant
wants to pursue. What can make Paydiant a valid threat to the large competitors, and how can we gain
market share.
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6. 3. External / market analysis
3.1 Market analysis & market segmentation
Paydiant Mobile Payments not only has to deal with merchants but also will have to keep track of the
customers that eventually will use their products.
Source: “End of Credit
Card”, By Blake Ellis, CNN
News, January 24, 2011
Mobile payments are expected to hit $214 billion by 2015. Transactions made by scanning a mobile
phone at the register are forecast to reach $22 billion -- up from "practically none" last year. The mobile
payment sector continues to prove itself as a hotbed of opportunity for developers. This sector is
predicted to get a sixfold increase in mobile payment transactions globally by 2011, with 490 million
customers using their phones to move cash around. By way of comparison, the 2010 market was $162
billion.
Retail technology - particularly the integration of internet shopping with mobile phone devices - will be
the hottest trend in the U.S. retail industry in 2011. According to predictions from CNBC News Editor
Christina Cheddar Berk: “Consumers are ahead of retailers with mobile technology, so retail technology
investments in 2011 will focus on allowing customers to find what they are looking for in the way they
choose to look for it - in-store, online, or via smartphone.”1
Conscious consuming is expected to continue in U.S. retailing in 2011 due to continuing high
unemployment. Merchants are required to attracting these shoppers with discounts and allowances.
But according to the payment usage trends survey results for exhibit 1, 42,6 percent of the survey
responders indicated that their use of electronic accounts deduction have increased somewhat or
increased a lot in relation to the other payment methods.
1
Christina Cheddar Berk, CNBC.com News Editor, “Predictions 2011: Christina Cheddar Berk On Retail”,
http://www.cnbc.com/id/40255744
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7. Segmentation
Consumers
The most distinct segmentation criteria for Padient’s mobile payment products are smartphone users
and non-smartphone users since the required software is only compatible with smartphones. Where in
2008, only 20 percent of the phones were smartphones, something exclusively for the innovators, they
are nowadays owned by the early majority.
Merchants
The US retail industry includes about 1 million outlets. A separation of POS activity by retail industry is
shown below:
QSR = Quick Sale Retail
Source: Goel, Anand (2009) “Pins
Rising” Optimized Payments
Consulting, Inc.
Almost half of the retail industry’s POS activity occurs within the grocery sector, followed by petroleum
(gas stations) with 13.8 percent. The rest of the market is separated into several smaller segments. For
targeting, the market can be segmented according to the categories: Small Merchants, Large Merchants
or all segments.
3.2 External Environment analysis
3.2.1 Demographic
According to exhibit 4, in April 2011, nearly half (48.7%) of smartphone owners in the U.S. were
between the ages of 25 and 44. The 25-34 year old demographic makes up the largest segment of the
smartphone population representing 27.2% of owners. This while younger users between the ages of 13
and 24 represented nearly one fourth of all smartphone owners (23.8%). Even more significantly is the
small amount of users among 65 years and up segment with a flimsy 4.9 percent.
The demographics of smartphone ownership, Exhibit 6, show that the rate of smartphone possession
among American adults increases in correlation with the household income and education level. Only 22
percent of the servants from the lower income (less than $30,000) owned a smartphone, compared to
59 percent for the highest household income ($75,000+). Furthermore, 48 percent of the servants with
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8. at least a college degree pointed out to possess a smartphone, where for attendees without a high
school diploma this was only 18 percent.
There is a slight variation in geographic location for the demographics of smartphone ownership. 39
percent of the US Adults from Urban and Suburban areas own a smartphone, where inhabitants with
this type of phone from a Rural area are slightly less represented with 21 percent.
3.2.2 Economic
Consumers
Statistics on Nominal Consumption, exhibit 7, show that while buying power's decline is slowing it is still
moving in a negative direction. Big issue in the American economy remains the home prices. Compared
to 2009, the household buying power of American citizens has decreased with 48 billion of dollars in
2010.
Merchants
The US retail industry includes about 1 million outlets with combined annual revenue of $4 trillion. Data
in exhibit 6 on Annual Retail Trade shows that there is a moderate decline in retail sales after 2008, after
almost a decade of extensive growth. The sudden decrease can be explained by the financial crisis that
hit the U.S. consumer consumption. However, data from financial technology company HiddenLevers
shows a promising recovery of the retail sales growth with an average of 1% monthly increase.
3.2.3 Social Cultural
According to a Firethorn consumer survey, 76 percent of the consumers wish there was an alternative to
carrying around a walled stuffed with cards, money, offers, coupons etc. Date from this same survey
concluded:
 59% would like to use their phone to organize and tracking their gift card, loyalty and reward
accounts
 64% of consumers say they are interested in using their mobile phones as a shopping assistant
for price comparisons
 61% are interested in using their phone to access credit card details, balances and transactions
 Nearly two—thirds (62%) of consumers say that they are likely to download and use a free
account management application that would allow them to organize and track their financial
and shopping account information.
A study from the U.S. Federal Reserve Bank of Boston uncovered that the average American cardholder
had a total of 7.3 charge cards, incorporating an average of 1.3 debit cards, 3.7 credit cards, and 2.3
prepaid cards.
As shown in exhibit 8, 54.0 percent of the customers of this assessment of characteristics of payment
instruments have security as most important issue. A percentage of 27.6 consumers have convenience
as most important. Paydiant should adapt to these demands from the customer.
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9. 3.2.4 Technological
Despite a lack of production innovation on the general market, towards the end of the last decade,
multiple companies have created new technologies. Since the founding of PayPal in 1998, several other
areas of innovation have presented itself. Paypal allowed individuals and small business that previously
had been unable to accept credit card payments from consumers for their products.
A second area of innovation is contactless payments and near-field communications (NFC) technologies.
These inventions got the ball rolling, providing several companies with the opportunity to take a shot at
their share of the market. With each day that passes, Paydiant faces the issue of competing companies
having the first launch.
3.2.5 Political/Legal
The American Consumers Union (CU) outlined a series of steps lawmakers and regulators need to take
to ensure consumers making mobile payments are protected. They stated that the Federal Reserve’s
Regulation E, which establishes the rights, liabilities, and responsibilities of parties in electronic funds
transfers and protects consumers when they use such systems, needs to be extended to mobile phone
users who charge payments to prepaid phone deposits.
That rule also should be amended to include a right to reverse disputed charges when goods or services
aren’t delivered on time, similar to protections for credit card users under the Fair Credit Billing Act.
In addition, the CU paper said, wireless carriers should be added under Regulation Z — which
implemented the Truth in Lending Act — to ensure that consumers who charge mobile payments to
wireless accounts have the same protections against unauthorized use and billing errors as consumers
who use credit cards.
Consumers Union also suggested that the new Consumer Financial Protection Bureau and states may be
able to “close the gaps” and extend existing consumer protections, regardless of whether they pay by
cash, charge or cellphone. (Wasserman (Elizabeth, 2011) “Mobile payments: Who will regulate?”)
In conclusion, the uprising of mobile payment is expected to bring up regulator measurements in the
nearby future. These measurements are required and important to monitor for paydiant as sixty-five
percent of mobile payment security stakeholders expect a substantial or enormous increase in threats
to mobile payment security. Just 10 percent think mobile security incidents will stay the same or
decrease.
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10. 3.3 Competitor analysis
3.3.1 Direct
Paydiant Google Wallet Square GoPayment
Operator/ Undecided Citibank, MasterCard, Visa, MasterCard, Inuit
Partner and Sprint Discover and
American Express
Technology Software NFC chip Hardware card NFC chip and
reader Hardware card reader
Launch 2012 2011 2011 2010
Primary Segment Undecided All Segments All Segments Small business
Unique Features Increased safety SingleTap combines Photo verification Bluetooth desktop
through multiple- coupons, loyalty cards and Rewards scanner with built-in
factor and payment method program printer for receipts
authentication of with one single tap. management
customer data.
Transaction Time N.A. N.A. 4 seconds 7 seconds
Deposit Time N.A. 1 day 1 day 2 to 3 business days.
Installation/ Free Free Free $145 for the scanner
System / Service Lower Volume
Fee Free (until 01-02-12)
Higher Volume
$12.95 monthly
Transaction Fees N.A. $0.30 per transaction + Visa: 1.21% Lower Volume
Lower Volume MasterCard: 1.16%. $0.15
2.9% Other: 2.75% Higher Volume
Higher Volume $0.30
1.9%
Discount Rate N.A. 1.59% 3.50% + $0.15 per Lower Volume
transaction 2.7 %
Higher Volume
1.7%
Fees Non- N.A. Non Non Lower Volume
qualified 3.7 %
transactions Higher Volume
2.7 %
Compatibility N.A. Only Nexus S 4G iPhone, iPad or 40 mobile handsets
Android phone
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11. Paydiant PAYware Mobile Isis
Operator/ Undecided Verifone, Google Verizon Wireless, AT&T and T-
Partner Mobile
Technology Software NFC Chip NFC chip
Launch 2012 2010 2012
Primary Segment Undecided All Segments All Segments
Unique Features Increased safety through Honors all forms of credit Can also store Debit Cards,
multiple-factor transactions including debit Reward Cards, Discount
authentication of cards Coupons, Payment Coupons,
customer data.
Tickets and Transit Passes
Transaction Time N.A. 30 seconds N.A.
Deposit Time N.A. 2 days N.A.
Installation/ Free Lower Volume (-1500) N.A.
System / Service $99 for the card reader
Fee Higher Volume (+1500)
$15/month for the payment
gateway. $29 activation fee
Transaction Fees N.A. Lower Volume (-1500) N.A.
2.75% + $0.15 per transaction
Higher Volume (+1500)
1.65% + $0.20 per transaction
Discount Rate N.A. 1.69% N.A.
Fees Non- N.A. 1.99% + $0.20 per transaction N.A.
qualified
transactions
Compatibility N.A. iPhone 3G, 3GS, and iPhone 4 HTC, LG, Motorola Mobility,
RIM, Samsung Mobile and Sony
Ericsson
There are several suppliers on the market involved with mobile money technology. However, to look at
the direct competitors we stick with the core business of Paydiant: In-store mobile payment possibility
connected to POS systems.
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12. 3.3.2. Indirect
Data for indirect competitions is from a report on 2012 Statistical Abstract from the U.S. Census Bureau.
Other forms of electronic payment include Pre-Paid Cards and gift card.
Check Cash Credit Cards Debit Cards Other
(Gift/Prepaid)
Transaction 70 51 32 32 N.A.
Time
Usage 2009 $ 12 billion $ 34 billion $ 23 billion $ 39 billion $ 1.6 billion
Use of Payment 8.2 18.4 11.2 19.0 0.8
Instruments in
a Typical
Month (2009)
Transactions $ 24.5 N.A. $ 21.6 $ 37.9 $ 6.0
2009 (billions)
Value 2009 $ 31.6 N.A. $ 1.9 $ 1.4 $ 0.1
(trillion dollars)
Average value $ 1,292 N.A. $ 89 $ 38 $ 24
per transaction
2009 (dollars)
Consumer Convenient Broad Reward Broad Carry less cash
Appeal and easy to Acceptance program, cash acceptance,
use flow timing, Carry less cash
broad
acceptance
Merchant
effective cost
N.A. N.A. 1.75% - 2.25% 1.00 % - 1.50 % 0.40 %
per transaction
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13. 3.4 Competitive Advantage & Challenges
From these tables we can conclude that Paydiant’s primary competitive advantages are the free of
installation charges for both consumers and merchants and increased safety through multiple-factor
authentication of customer data. Paydiant also separates itself from the rest in convenience; its own
software requires no new software for both sides.
Paydiant, Inc. provides various benefits to both consumers and merchants. For merchants, low
implementation costs are attractive and software can be installed on existing POS system, therefore
additional costs are minimal. In turn, consumers can easily adapt to the system, by just installing an
‘App’ on their smartphone. Furthermore, unlike indirect competitors, consumers enjoy the convenience
of not having to carry around wallets. Alternative existing payment systems require plastic cards.
With Intuit, GoPayment has the advantage of a familiar and trusted brand with funding to back up the
nationwide launch of the product. Its existing presence in acquiring, its accounting and personal finance
solutions also give them a lead at time of introduction
Google wallet had a head start with its early introduction. Retailers that already are compatible with the
Google Wallet are: Toys’R’us, Coca Cola, Foot Locker, Subway among others. On the other hand, Google
also has a problem. PayPal sued Google for hiring their personnel and using secret information when
developing the Google Wallet, creating negative tension around the brand.
Both Square and ISIS, are supported by Visa, MasterCard, American Express and Discover. This gives
both parties a head start over Paydiant, as well a tremendous amount of backing from the largest
players in all of mobile. Square is a company enables consumers to put money on your mobile phone
from your credit card through a card reader. Also possible is to pay someone to his phone with your
credit card, a whole other way of mobile payment than NFC.
Oligopoly
Market leaders Visa and MasterCard enjoyed a long time oligopoly, setting the prices higher than the
equilibrium price and controlling the market. Interchange fees have risen dramatically and almost
doubled from 2000 till 2009. Retailers are fed up and looking for a ways to break this dominance. They
want a new system, a better working and fair way of credit payment. The retailer’s customer loyalty to
Visa and MasterCard isn’t strong, creating the opportunity for Paydiant to fill this gap in the market and
gain market share rapidly.
Safety / Technology
Data from the magstripe of a credit card is easily copied to another card. PCI DSS is a technology difficult
to implement and very expensive. NFC is a safer technology because it applies to smartphones, it creates
the possibility to apply anti-virus software, pin-codes and other forms of interactive identification.
Because NFC is a hardware-based payment technology the costs are very high and it is not likely to be
adapted very quickly by retailers and consumers. Paydiant’s technology is a mobile software-based
payment system. Compared its competitors, Paydiant’s technology has lower implementation costs.
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14. 4. Internal analysis
4.1 Company
Key Facts
Company: Paydiant, Inc. Industry: Technology
CEO: Kevin Laracey Entity Type: Corporation
Founded: 2010 Location Natick , MA , USA
Vision
Successfully implement an alternative and convenient electronic payment system.
4.2 Current Marketing Mix
4.2.1 Product
Core customer value
Paydiant offers several problem solving benefits that consumers seek. The payment system provides a
more convenient method. It is an alternative payment method to carrying a wallet stuffed with cards
and other items. Also additional security is provided by multiple factor authentications.
Actual product
The Paydiant system is built around software. An electronic serial number is provided that enables
consumers to enroll with their smartphone. After the enrollment, a free Application can be downloaded.
Merchants receive software that can be transferred to their POS systems. With the help of the acquired
software, a two dimensional code can be displayed. Consumers scan the barcode with their camera on
their smartphone, using the Paydiant Application. Paydiant is going to be launched as a manufacturer’s
brand with a new brand for this newly created company.
Augmented product
The software offers additional services and benefits. Credits for loyalty programs are applied during the
transaction process. At last no additional costs are incurred by consumers.
4.2.3 Price
Pricing strategies are not announced yet by Paydiant since the go to market date is still several months
away. However, each part of the business process uses cost-based pricing to get to their prices. Below is
a visible representation of the industry standard for credit card transactions and fees.
Discount Fee Interchange Fee Transaction Fee
Card
Merchant Acquiring Bank Issuing Bank
Association
Keeps: 97,4% Keeps: 0.5% Keeps: 2%
Keeps: 0.1%
Consumer
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15. 4.2.2 Place
The Paydiant mobile payment system does not yet have physical presence in United States retail stores.
However, the system is planned to be installed on existing POS points. These points are present in
merchants’ stores, across America.
Functions of business process shackles
Card issuing banks
 Marketing functions to attract potential card holders  Bore the credit risk
 Granted credit, managed the account  Provide consumer credit and marketing
 Ensure merchants are paid data to merchants
Acquiring banks
 Merchant’s link to the card association network  Accepted fund transfers from issuing banks
 Ensures the credit card is valid and has on behalf of the merchant
sufficient available credit  Managing bank accounts and providing
merchants credit card activity statements
4.2.4 Promotion
Paydiant does not significantly use promotional tools yet to inform consumers and merchants. Little
actions have taken place since the foundation of the company in 2010. Nevertheless, they created and
placed newsworthy information in the news media through a press release in February, 2011. Through
this form of public relations they announced that North Bridge Venture Partners and General Catalyst
Partners will invest $7.6 million dollars in the Paydiant company.
4.3 Financial Performance CEO
The single piece of information that is available on Paydiant’s financial for the Kevin Laracey
Paydiant company performance is the earlier mentioned $7.6 million dollars,
which indicates their starting capital.
4.4 Personnel Director
Paydiant was co-founded by Chris Gardner, Kevin Laracey and Joe Paratore. Chris Gardner
Laracey was formerly venture partner at Sigma Partners and co-founder and
CEO of the online billing and payments company edocs. Later on he went on
to join premium SMS mobile payments provider m-Qube as vice president of
Co-Founder
products and marketing.
Joe Paratore
Gardner was Chief Marketing Officer at ExtendMedia, a digital media content
delivery and commerce platform software company. Joe Paratore was edocs’
VP of engineering and technical services. He also joined m-Qube and
subsequently Verisign after its acquisition. Since March 2011, Jed Rice, former
Deal Guy
Vice President of Corporate Development at Skyhook Wireless, was added to Jed Rice
the Paydiant team as Deal Guy.
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16. 5. SWOT analysis & Confrontation matrix
5.1 SWOT Analysis
Strengths
 Simplicity of product reduces confusion for both consumers and merchants about different
types of credit- and debit cards.
 Paydiant product easy to adopt
 Paydiant’s product Increases competition in payments
 Low implementation cost as ‘Apps’ are relatively cheap
 Are specialized in software
 Received $7.6 million dollars starting capital through investments
 Very experienced board of management with experience in telecom field of work.
Weaknesses
 Smartphone can run out of battery
 Not the possibility to go in-debt with paydiant, where consumers that can go in-debt spend
more than consumers who can’t.
 Electronic Payment Systems brought fraud and other security concerns to card users, merchant
banks, networks and card associations.
 The value of the service depends on the number and identity of users connected to the service.
 Paydiant has compared to their competitors not a lot of money to spend on marketing activities.
 Late time of entering the market compared to other products
 Company is still at starting up phase
 Uses a lot of outsourcing which makes them dependant on other parties.
Opportunities
Consumer
 Consumers increasingly use smartphones, by the end of 2011 smartphones would exceed 50%
of market share.
 Alternative to carrying around a wallet stuffed with plastic cards, money, offers, coupons etc. on
a daily basis.
 95% of America’s population carries a mobile phone
 76 percent wishes there was an alternative to carrying around a wallet stuffed with cards
 Consumer’s use of cash and paper checks decreased and increased the use of electronic
payment methods.
 Online banking using their phones becomes more used: half of the iphone and android users
and a quarter of blackberry users had done so.
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17. Merchant
 Merchants look for ways to break dominance of existing providers.
 Reduces risk of payment for merchants
 Merchants have lower payment processing costs through getting consumers to use the
merchants’ preferred tender type
 Ability for merchants to participate in the development of the mobile payment market could
reduce costs in the long run.
 Merchants can increase revenues (advertising and coupons) and reduce costs (reduction in
security breaches).
 Market Hungry for new payment options with little production innovation in the generation.
 Retailers fear increasing cost of credit- and debit cards, more rapidly than the benefits brought
to retailers.
 For merchants handling less cash reduces some theft losses
 Magnetic stripe technology very unsafe
 Ability for merchants to increase enrollment of consumers in usage of loyalty programs,
providing better consumer date and targeting information to merchants.
 Paydiant‘s product required no new software for either consumer or retailer as acquired
software could be loaded onto existing POS system.
 Merchant no longer needed to encrypt the consumer’s payment credentials when sending
transaction date on to the acquiring bank.
 Faster transaction for merchants, consequently speeding the checkout process, when a
consumer is presented with both credit card and loyalty card.
Threats
Consumer
 Not all people have Smartphone’s
 Consumers unlikely to sign when no retailers accepted payment system
 Possibility of theft and fraud, where 91% of consumers won’t shop at business from which date
was stolen makes merchants fear their reputation.
 ‘Apps’ might enable hackers to obtain personal data
Merchant
 Visa and Mastercard may designate a paydiant transaction as Card Not Present transaction
 Visa and MasterCard dominated oligopolistic market makes it difficult to penetrate market
 Retailers will only sign up when a consumer base is present
 Rules from card associations might withhold merchants to use smartphone payments.
 Visa is also experimenting with this kind of payment system
 Difficult to quantify the return on investment for the merchant.
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18. 5.2 Confrontation matrix
Opportunities Threats
Consumers Increasingly use Do not want to Magnetic stripe Not all people "Chicken-and- Hackers
of smartphones carry wallet unsafe have Smartphones Egg" problem
Software (no hardware) + 0 0 - + 0
Strengths 1 type of payment + ++ 0 - 0 -
Easy to adopt + ++ ++ - + 0
Fraud sensitive - - 0 0 -- --
Weaknesses No in-depth 0 0 0 -- - 0
Low privacy - - + - - --
++ We need to focus on simplicity and offering one type of - - We need to use mobile technology to make our product less fraud
payment because consumers don't want to walk around with a fat sensitive using to increase the popularity of our product
wallet and hundred credit cards
Opportunities Threats
Merchants Merchants Rules by No consumer
Less cash = More interest already installed card- base present
Break dominance less robberies smartphones NFC associations
Consumer statistic + 0 + 0 0 -
Faster Transactions ++ 0 + - 0 0
Strengths
Low implementation
+ ++ + -- 0 +
Costs
Low brand Awareness - + +- - -- --
Weaknesses Fraud sensitive 0 +- 0 - 0 -
No in-depth - 0 0 - 0 -
+ +, We need to focus on the low implementation costs to create a - -, Because our product is relatively new we need to promote our product
competitive advantage versus the NFC technology and credit cards in the best possible way, this to ensure that merchants will buy our
product and also to make sure that consumer will know our product and
are willing to use it, - consumer base present.
Consumer Statistic: Due to the payment process, merchants can see what the consumer buys in their shops and can therefore us use a loyalty program and
offer coupons for the consumers:

19. 6. Segmentation, Target Market, Positioning
6.1 Customer Needs and Wants
Needs
Ultimately, the need of the consumers is to pay for their products at retail stores to fulfill the physical
need to in the first place consume food and obtain clothing and warmth.
Wants
Consumers that are interested in Paydiant want an alternative payment method to carrying a wallet
stuffed with cards.
Demand
The demand for consumers it a product that provides a more convenient payment method, with
additional security at no additional cost.
6.2 Consumer Segmentation
Knowing that mobile payment as a product is in the early stages of the adoption process, we believe
that Paydiant will first have to reach the innovators, who try new ideas at some risk. Below is the profile
we advise to target.
6.2.1 Geographic
We advice to focus on the cities or villages sized with over 5.000 inhabitants because in these cities
there are enough companies who are willing to adapt to the Paydiant system and also fits the profile of
smartphone ownership most. The mobile network in urban areas works better than in rural areas. This
same geographic segmentation also applies for the Merchants.
Country Region City size Density Climate
Consumer USA Whole USA 5.000 + Urban All
Suburban
6.2.2 Demographic
We target people that are between the age category 18 and 44 because this is the biggest share of U.S.
smartphone users and most likely to be ready for adopting the product. Furthermore, you are not
allowed to have a credit card under 18. Besides having an income of a minimum of $ 30.000 a year there
is not much demographic variability for the use of smartphones and paydiant.
Age Gender Education Income
Consumers 18 - 44 Male/Female High school + $ 30.000 +

20. 6.2.3 Psychographic
Because we target smartphone users, our social class target market consists of the middle-class and
above. For merchants we target them who supply to consumers from our targeted social class. As for
our costumer’s lifestyle, we believe that they are credit-card type of users. They actually spend like
there is no tomorrow and fancy digital technology like gadgets. Compulsive buying is an important
personal characteristic for our consumers. They also need to be outgoing and generous.
Social class Lifestyle Personality
Consumers Middle-class + Credit card users Compulsive buyer
Actualization through Outgoing
digital technology
Generous
6.2.4 Behavioral
Because of the quality, speed and convenience of our product paydiant should be the ‘normal way of
payment’ in a short-term notice. For now everybody will need to experience the product first, growing
to become everyday users. After this we help them to find what they really want to buy, making them to
become loyal to the use of our product. We assume our first users will be fascinated and enthusiastic by
the idea of using our technology and have a desirous will to use it.
Occasions Benefits User status User rates
Consumers Regular Quality Smartphone user Medium user/
Heavy user
Speed
Convenience
Loyalty status Readiness state Attitude towards product
Consumers Strong Desirous Enthusiastic
Positive
6.3 Merchant segmentation
Our company resources are limited. Therefore in the introduction phase of the product we cannot offer
our service to everybody. We distinguished different types of merchants and decided to concentrate on
Supermarkets, Convenient Stores and Hardware stores.
Supermarkets
Are relatively large and sell high volumes of products. Their products and brands vary, but they mostly
maintain the same products for a longer period of time. In this way, employees do not have to
alter/change barcodes often.
Page 20 of 38

21. Convenient stores
Convenient stores are relatively small and always located near urban residential areas. They usually are
open 24/7 and they sell products that have a high turn-over. Their product line is stable so they don’t
have to adjust the barcodes often. This all makes our service attractive for convenient stores visa versa.
Digital hardware stores
To implement our product we approach the innovators of the adoption curve. We believe we can find
them in stores that sell products equal to our products. Since we are a digital innovating company,
merchants who sell mobile phones, computer, games and software will easily reach our target group.
Also the suppliers of the products in this store will be interested in cooperating faster than usual.
6.4 Market Targeting
Paydiant is a new business with a new product. Therefore we cannot analyze data on current segment
sales, growth rates and expected profitability. We have a large target group from which we target on
one certain important characteristic: smartphone users. Therefore, we advise Paydiant to use a
concentrated marketing strategy. By focusing on this particular segment, Paydiant can specialize and
achieve a stronger market position because of greater knowledge of consumer needs.
Various other companies want to introduce mobile payment services. Most of our competitors use a
niche or concentrated marketing strategy, using an undifferentiated strategy would thus be very risk full
and ineffective. That is why we believe that by using a concentrated marketing strategy we can achieve
a strong market position and generate a large share of this market in the future.
Page 21 of 38

22. 6.5 Positioning Map
We advise to position Paydiant as “more for the same”. At a comparable price we offer increased
security system that is simple and easy to adopt. Product quality and in-store service are off great
importance.
Merchants
Paydiant is the only mobile payment service that doesn’t require additional hardware. Therefore we
position ourselves as a service with low implementation costs. GoPayment requires both card readers
and NFC installations and is the most expensive for merchants. In this market interactive marketing is
the key to stimulate consumers to buy more products. Developing software is our core business; this
makes us together with google on the long term most competitive for innovating useful products.
Positioning Map (Merchants)
10
9
8
Implementation Costs
7
Paydiant
(Scale 1- 10)
6
5 Google Wallet
4 Sqaure
3 GoPayment
2
PAYware
1
0 ISIS
0 2 4 6 8 10
Buying Stimulation
(Scale 1 - 10)
Consumers
Mobile payment is a new issue in the market, therefore it is necessary to be very convenient and easy to
adopt. This means simple technology that works smoothly on your smartphone. We believe the NFC
chip will cause a lot of headache to consumers; this gives us a competitive advantage. Just install the app
and you are ready to go. What might be the most important issue to mobile payment users is safety.
New technology gives fraudsters new opportunities. Our software development experience gives us the
edge over competitors like ISIS.
Page 22 of 38

23. Positioning Map (Consumers)
10
9
8
7
Paydiant
(Scale 1- 10)
6
Simplicity
5 Google Wallet
4 Square
3 GoPayment
2 PAYware
1
ISIS
0
0 2 4 6 8 10
Safety
(Scale 1 - 10)
In conclusion, in order to reach the customers and show them the competitors’ advantage of the new
Paydiant product, the highlight for the marketing strategy should be on:
 System build around software, easy to adapt, free app and loaded onto existing POS systems.
 Added value merchants: faster in-store transactions and lower payment processing costs
through getting consumers to use the merchants’ preferred tender type and reduce cost in the
long run.
 Increased security though multiple-factor authentication of customer data.
Positioning Statement
“To innovative smartphone users between 18 and 44 years who want an alternative payment
“ method to carrying a wallet stuffed, Paydiant is a convenient mobile payment method, with ”
additional security at no additional cost. “
Page 23 of 38

24. 7. Strategy
As corporate level strategy launch of Paydiant and to ensure the long-term survival of Paydiant we
advise to partner up with existing interchange-based partners partners Mastercard and Visa. The
business-level strategy to build a profitable relationship with our target group, the smartphone users in
the age category 18-44, is based upon the marketing concept of delivering the desired satisfactions
better than competitors do.
Consumers and merchants will consider several comforts issues before adapting to this new type of
payment instead of the traditional ways. First of all, discomfort for consumers will include having to
purchase new software or even a new phone to make use of this technology. Secondly, safety for
consumers will play a major role in the decision to change to this new payment method. Finally, for
merchants it has to be of additional value before parting ways with traditional methods.
In the early phase Paydiant needs to direct its funding and marketing activities on the five stages of the
adoption process (Awareness, Interest, Evaluation, Trial and Adoption) to get the innovators to use their
products. Complicated here is the so called “chicken and egg” problem where consumers are unlikely to
sign when no retailers accepted payment system where retailers will only sign up when a consumer base
is present.
Our resolution to help consumers move through these stages and solve the issue on functional-strategic
level would be by investing in effectively approaching our target market and putting the product in their
hands to experience the advantages of Paydiant for themselves, where the focus is on the advantages.
Merchants should be informed on the benefits of Paydiant’s product to consumers: faster in-store
transactions and lower payment processing costs through getting consumers to use the merchants’
preferred tender type that reduce cost in the long run.
At the time of the launch in 2012, four of Paydiant’s direct competitors have already made their
entrance to the market. To succeed in such a competitive marketplace, Paydiant needs to be customer
centered. Rather than competing on price, we belief Paydiant should focus on its competitive
advantages and delivering value to the customers better than the competitors in order to persuade both
current users and non-users to go make use of the Paydiant product.
Other than customers, marketing intermediaries also play an important role for Paydiant. Merchants are
not only functioning as client but also the face and link between for the customers and Paydiant. They
provide service to customers and are the quality of this service depends on who provides them and
when, where and how. To ensure the quality of service variability, educating merchant employees and
interactive marketing is required.
Another marketing intermediary is the acquiring bank. Not only function they as base for transferring
money but also perform functions as ensuring the credit card is valid and has sufficient available credit
or share marketing data.
On the long term, product development is required to keep up with the environment and evolving
needs of the customers and merchants.
Page 24 of 38

25. 8. Objectives
All the strategies are designed to achieve certain SMART formulated short- and long term objectives. All
of the goals set fall under the wing of the company’s strategy.
8.1 Short Term
1. Reach break-even within 12 months of Paydiant’s introduction
2. Paydiant aims to have a 10% market share of the United States market in one year time.
3. The Paydiant product has a maximum estimated fraud costs of 0,01% over one year
4. Have 250.000 Paydiant application downloads by the end of next year
8.2 Long Term (1+ Years)
1. Gaining and maintaining a market share of 30% in the mobile payment industry within 3 years.
2. Doubling our investments by March 2015
3. Maximum estimated fraud costs of 0.005% in 3 years
4. Have 1 million Paydiant application downloads in the third year of introduction
5. Reach a minimum of 50 million users in three years
6. In three year have 100.000 merchants offering the Paydiant mobile payment possibility.
Page 25 of 38

26. 9. Marketing Mix
9.1 Product
Despite several alternatives already available on the market at the time of the introduction, Paydiant
will be an unsought product for the majority of the consumers. When the product life cycle of Paydiant
reaches the growth stage, the product will become more of a shopping product.
Core Customer Value
The core product remains as the payment system that provides a more convenient method. It is an
alternative payment method to carrying a wallet stuffed with cards and other items.
Actual Product
Quality
As we focus on the best quality rather than price, delivering high conformance quality is of great
importance to fulfill the demands of the customers. When consumers rely on the product, they cannot
come across any defects that withhold them from doing grocery shopping or other purchases. As a
software company we specialize in developing the required software, for that reason Paydiant requires
a top notch performance quality over less specialized companies.
Style and Design & Packaging
User interface convenience of the application is of great importance. The innovators might be able to
figure it out, but to be accepted by the rest of the majority on the long term simplicity of design is
required. To attract these innovators, design can be the eye-catcher. As the app is fully electronic, no
material is used on packaging.
Brand
Paydiant should be launched as a manufacturer’s brand, carrying the paydiant name and logo. This way,
Paydiant can start building on nationwide brand awareness
Augmented Product
The software offers additional services and benefits. Credits for loyalty programs are applied during the
transaction process. Furthermore, it speeds the transaction time in favor of both merchants and
consumers. At last no additional costs are incurred by consumers for all of this.
Page 26 of 38

27. 9.2 Place
For Paydiant’s distribution they forge an indirect marketing channel with multiple intermediaries. Their
contractual vertical marketing system has all channel members coordinate their activities and manage
conflicts through contractual agreements as all fees are established for merchants and consumers in
advance.
Business Model
Consumer
Issuing Card Aquiring
Paydiant Merchant
Bank Association Bank
As Paydiant targets merchants that are sharing and supporting our costumer’s profile, Paydiant uses
selective distribution to select the merchants who are willing to carry the Paydiant software on their
POS system.
Backwards
Primary backwards parties in the distribution system are the card associations MasterCard and Visa.
Proper negotiations with the card associations are required on pricing and service to ensure stability.
Forwards
The application for consumers should be intensively distributed on free and paid app stores. According
to exhibit 10, these are some examples of the most used app stores in the United States:
Android Market BlackBerry App World Android App Market Place
market.android.com appworld.blackberry.com/webstore android.t-mobile.com/android-apps
Samsung Apps Aple App Store Verizon Application Store
samsungapps.com apple.com/iphone/apps-for-iphone ediastore.verizonwireless.com
Ovi App store Sprint Software Store AT&T AppCenter
store.ovi.com softwarestore.sprint.com mediamall.wireless.att.com
This way, not only will innovators first become aware of the product, obtain more information and
eventually download the free app but also early adapters start reading into the possibilities of the app
before adopting it.
Page 27 of 38

28. 9.3 Price
As the market is somewhat under oligopolistic competition it is important to be alert to competitor’s
strategies and moves. Despite the high level of technological knowledge required to enter the market,
there is still fierce competition out there trying to obtain a large share of the market in the introduction
phase of the product. For that reason, Paydiant should use a competitor-based pricing.
Despite aiming for the innovators in the earlier stage, we aim to move to the early adaptors quickly. For
that reason, during the introduction stage we advice to use market penetration pricing in order to
penetrate the market quickly and deeply, attract a large number of buyers quickly and win a large
market share. The increase in sales volume should eventually result in falling cost, allowing the company
to cut its price even further. Below is a visible representation of the pricing and fees.
Consumer receives
Consumers pays
goods or services
amount to bank
from merchants
Consumer
Issuing Card Aquiring
Paydiant Merchant
Bank Association Bank
Interchange Fee Profit Paydiant Transaction Fee Discount Fee
1.80% 0.05 % 1.19% 1.59%
An example of a purchase of $100 made in goods or services from merchant:
Consumer Receives $100 in goods or Paydiant Pays acquiring bank $97.70 less
services from merchant $1.16 transaction fee = $96.54
Consumer Pays $100 to issuing bank Acquiring Bank Pays merchant $96.54 less $1.53
discount fee = $96.01
Issuing Bank Pays card association $100 less Merchant Loses $100 in goods and receives
$1.80 = $98.20 $96.01 in payment = cost of $3.99
Card Pays Paydiant $98.20 less $0.50
Association profit for paydiant = $97.70
Page 28 of 38

29. 9.4 Promotion
To execute our strategy and communicate customer value and build customer relationships we have
constructed a clear and effective promotion mix. With a relatively small marketing budget, compared to
the competitors owned by telecom giants, Paydiant has to be creative and effective to reach customers.
To solve the problem where consumers are unlikely to sign when no retailers accepted payment system
and retailers will only sign up when a consumer base is present, a push strategy is most advised.
Marketing activities should be directed toward channel members to induce them to carry the product
and to promote it to final consumers.
Public Relations
By using press relations, we want media specialized in technology news to place information to attract
attention to the product and explain and convince our target market on the safety advantages of using
Paydiant. Innovators will browse on these websites and consider them as righteous and become
informed before adopting the product. Examples include Wired.com, Computerworld, Cnet.com and
eWeek.com.
Moreover, a Press release should be sent out on the announcement of the product launch to attract the
attention of the media. The press release should be mailed, faxed, or e-mailed to newspapers,
magazines, radio stations, or television stations.
Advertising
The advertising objective of this promotion mix is informative and persuasive advertising for our target
group, innovative smartphone users in the age category 18-44. First of all, informative advertising to
both merchants and consumers is used to introduce the new product and brand plus explaining how the
products works. Persuasive advertising should bring out the message to persuade customers to use the
product and current users to switch to Paydiant.
The media selected with their responding number of total average paid circulation are the magazines:
Popular Science (1,319,602), PCMagazine (750,000), Wired Magazine (798,020), PC World (745,000) and
Nuts and Volts (720,000). Through these magazines we reach a estimate of 3,5 million users with a
relative low cost. We air a campaign for the launch of the Paydiant product to the U.S. market.
Sales Promotion
To accompany the strategy of putting the product in their hands to experience the advantages of
Paydiant for themselves, personal selling both producer and retailers is required. With the use of Point-
of-Purchase (POP) Promotions, such as demonstrations that take place at the point of sales inside the
retail stores should inform and persuade the customers. By letting the consumers experience the
convenience and possibilities of the Paydiant product.
Page 29 of 38

30. Personal Selling
Through a territorial sales force structure, each salesperson is assigned to an exclusive area. By satisfying
sales people through training and compensation we encourage sales people to work hard and work
toward sales force goals. In the retail stores, we advise sales people present to demonstrate the product
to customers, equal to the sales promotion. Consumers can get in touch with Paydiant sales people and
get all their questions answered.
Direct Marketing
Mobile Marketing
Our primary marketing activities will go out to mobile marketing as this is most effective in reaching our
target market.
Click through rates for banner ads are notoriously poor, but by innovative use and meeting the
convenience and interest of the smartphone users mobile banners work better. After capturing their
attention on “Buy the next Call of Duty with your phone with our free app”, users would then be led to a
Paydiant mobile site providing more information about what they were looking for.
Furthermore, by advertising at existing apps and emphasizing on the free use of a new app should
persuade customers on using the Paydiant product. Finally, QR Tagging, which turn your phone into a
bar code scanner, should be presented in participating retail stores. The handset would then load up the
Paydiant site.
Social Media
Another part of the promotion mix to reach the innovators in the introduction phase is the use of Social
media. Social media interfaces such as Facebook and Twitter should contribute to creating awareness of
the product and explain its use to prospect users.
Page 30 of 38

31. 10. Profit & Loss Statement / Budget (3 year)
Budget is set according to the affordable method. A percentage that remains of the starting capital after
all the company and research and development cost have been deducted.
Revenue
To realize a budget we started with the expected value of the market of NFC (32%) mobile payments in
2015 (3 years), as this comes closest to our category of mobile payment. This is $ 92.3 billion. We
Multiplied this number with our objective as market share in 2015(20%) and then with our share in the
transactions (0.05%) = $ 230.7 million. In 2012 our goal was only a market share of 5% and NFC accounts
for only 15% of mobile payments leaving us with $ 28.8 million.
In the Magazines
To realize the costs to be in a national magazine we took advise from Xander Becket, he tells us that it
will cost from $ 5.000 to $ 25.000 per issue. We calculated 20.000 times 52 weeks, what would be 1 time
a week comes to $ 1,040 million a year.
Public Relations
Mike Nicolich, from the NIU Alumni Board, tells us that to hire a PR agency this will costs us from $
50.000 to $ 200.000. For the best quality one time per quarter this will costs us $800.000 per year.
Personal Selling
According to KnowThis.com personal selling costs average $300 dollar per acquisition. For 250 working
days, 2 acquisitions a day and 50 employers our costs come out at $750.000 per year. We don’t reduce
the intensity during the first three years because we want to double our market share every year.
Year 1 Year 2 Year 3
Starting Capital € 7.800.000,00
Revenues € 28.840.000,00 € 76.906.666,67 € 230.720.000,00
Press relations € 800.000,00 € 1.600.000,00 € 3.200.000,00
Magazines € 1.040.000,00 € 2.080.000,00 € 4.160.000,00
Personal Selling € 750.000,00 € 1.500.000,00 € 3.000.000,00
Total Promotional Costs € 2.590.000,00 € 5.180.000,00 € 10.360.000,00
Total Revenues € 28.840.000,00 € 71.726.666,67 € 220.360.000,00
Explanation
We want to double our market share every year. Therefore, Paydiant should double the marketing
intensity every year for the first 3 years. This is the reason why every year all costs are doubled.
Page 31 of 38

32. 11. Recommendations to the decision maker
This marketing plan provides a number of issues Paydiant is facing with the introduction of the new
Paydiant products to mobile payment market. Based upon our research and findings we came to the
following recommendations:
 To ensure the long-term survival of Paydiant we advise to partner up with existing interchange-
based partners MasterCard and Visa which would grand Paydiant with brand awareness and
attract merchants if it reduces transaction fees on payments. This way, Paydiant can stick to its
core business of developing software and leave the monetary issues in others their expertise.
 Paydiant is still in the business analysis stage. When the product concept passes the business
test it moves into product development, which require a large investment. With the indirect
competitors somewhat reaching the maturity phase, Paydiant is going to be launched into the
introduction phase. Introduction takes time and much of the marketing effort should be put
into introducing the product to the market to create awareness.
 To solve the problem where consumers are unlikely to sign when no retailers accepted payment
system and retailers will only sign up when a consumer base is present, a push strategy is most
advised. Marketing activities should be directed toward channel members to induce them to
carry the product and to promote it to final consumers.
 At the time of the launch in 2012, four of Paydiant’s direct competitors have already made their
entrance to the market. To succeed in such a competitive marketplace, Paydiant needs to be
customer centered. Rather than competing on price, we belief Paydiant should focus on its
competitive advantages and delivering value to the customers better than the competitors.
 Make effective use of alternative methods to promotion than expensive advertising. Primary
marketing activities should go out to mobile marketing as this is most effective in reaching the
target market.
 Exploit the competitive advantage of increased security though multiple-factor authentication of
customer data. Through advertising and public relations, putting emphasis on the increased
safety will speed up the adoption process for consumers.
 On the long term, product development is required to keep up with the environment and
evolving needs of the customers and merchants.
Page 32 of 38

33. 12. Source list
Aite Group (2001) “How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and
Methods, 2010-2013”, October 27, 2010
http://www.aitegroup.com/Reports/ReportDetail.aspx?recordItemID=715
Becket, Xander (2009) "The Cost of Advertising Nationally Broken Down by Medium"
webpagefx.com/blog/business-advice/the-cost-of-advertising-nationally-broken-down-by-medium/
Ellis, Blake. “End of Credit Card”, January 24, 2011. From :
http://money.cnn.com/2011/01/24/pf/end_of_credit_cards/index.htm
“Google and Visa Team Up on Mobile Payments”, Sudan Vision 2011, September 24, 2011
http://news.sudanvisiondaily.com/details.html?rsnpid=199644
Kim, Ryan (2011) “Square Drops Transaction Fee as Payment Battle Heats Up”, GigaOM, February 22,
2011
http://gigaom.com/2011/02/22/square-drops-transaction-fee-as-payment-battle-heats-up/
MacManus, Richard (2011) Top Trends of 2011: Mobile Payments, Read Write Web, July 28, 2011
http://www.readwriteweb.com/archives/mobile_payments_2011.php
McGlaun, Shane(2010) “AT&T, T-Mobile, Verizon Wireless Showcase Isis Mobile Payment System “
http://www.dailytech.com/ATT+TMobile+Verizon+Wireless+Showcase+Isis+Mobile+Payment+System/a
rticle20152.htm
Nikolich, Mike, (2010) “What Does It Cost? How to Budget Your PR Program by the Numbers”
http://www.tannedfeet.com/IR899.htm
“The trillion-dollar question: Who will power your mobile wallet?”, CNN Money, July 19, 2011
http://tech.fortune.cnn.com/2011/07/19/the-trillion-dollar-question-who-will-power-your-mobile-
wallet/
“US SmartPhone Users By Age: Comparison Chart”, Online Marketing Trends, June 20, 2011
http://www.onlinemarketing-trends.com/2011/06/internet-users-across-globe-per-100.html
Wasserman, Elizabeth; “Mobile payments: Who will regulate?”
http://dyn.politico.com/members/forums/thread.cfm?catid=1&subcatid=70&threadid=5333283
Page 33 of 38

34. 13. Appendices
Exhibit 1 - Payment Usage Trends Survey (Percent of Responders)
Decreased Increased Decreased Increased
Somewhat or Somewhat Somewhat or Somewhat
Decreased a or Decreased a or
Lot Increased Lot Increased a
a Lot Lot
Actual Expected
(2005-2008) (2009-2011)
Cash 43 % 16 % Cash 32.3 % 13.4 %
Checks 51.6 % 8.3 % Checks 39 % 8.3 %
Debit Cards 17.3 % 49.5 % Debit Cards 11 % 34.9 %
Credit Cards 28.5 % 34.2 % Credit Cards 26.3 % 20.2 %
Prepaid Cards 28.7 % 14.1 % Prepaid Cards 28.9 % 10.8 %
Electronic Account 14 % 42.6 % Electronic Account 15.2 % 26.8 %
Deduation Deduation
Online Bill 10.3 % 60.6 % Online Bill Payments 8.8 % 47.3 %
Payments
Source: “2008 survey of consumer payment choice, Federal Reserve Bank of Boston version of April 2010
Exhibit 2 - Annual Retail Trade Survey—2009:
Retail Sales
3.350.000
3.150.000
2.950.000
2.750.000
2.550.000
Retail Sales
2.350.000
2.150.000
1.950.000
1.750.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Date Source: “Annual Retail Trade Survey—2009”, U.S. Census Bureau, USA
Page 34 of 38

35. Exhibit 3 - Ten Largest Credit Card Exhibit 4 - % Composition of U.S. Smartphone Owners by Age
Issuers (Year end 2008)
Card Issuer Market Share
JPMorgan Chase 21 %
Bank of America 19 %
Citi 12 %
American Express 10 %
Capital One 7%
Discover 6%
Wells Fargo 4%
HSBC 3% Source: “US SmartPhone Users By Age: Comparison Chart”, Online
Marketing Trends, June 20, 2011
U.S. Bank 2%
USAA Savings 2%
Source: “Credit Cards: Rising Interchange Fees have increased costs for
88% merchants, but options reducing, fees pose challenges,” U.S. Government
Accountability Office (GAO), November 2009
Exhibit 5 - US Mobile phone subscribers, By Type of Device
100
90
80
70
60
50
40
30
20
10
0
Q2 - Q3 - Q4 - Q1 - Q2 - Q3 - Q4 - Q1 - Q2 - Q3 - Q4 - Q1 - Q2 - Q3 -
2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011
Feature Phone Smart phone
Source: “Smartphones to Overtake Feature Phones in U.S. by 2011,” Telecompaper World, March 29, 2010
Page 35 of 38

36. Exhibit 6 - The demographics of smartphone ownership
% of US adults within each group who own a Smartphone
Gender Education Level
Men 39 No High School Diploma 18
Woman 31 High School Grad 27
Some College 38
College 48
Household Income
Less than 30,000 22 Geographic Location
30,000 – 49,000 40 Urban 38
50,000-74,999 38 Suburban 38
75,000+ 59 Rural 21
Source: “Smartphone Adoption and Usage”, Aaron Smith, Pew Research Center's Internet & American Life Project, July 11,
2011
Exhibit 7 - Nominal Consumption
Source: “The U.S. Consumer Is Still Losing Spending Power And Yet They're Buying More And More”, Business Insider, Inc.,
http://www.businessinsider.com/deutsche-bank-spending-power-2011-3
Page 36 of 38

37. Exhibit 8 - Assessment of characteristics of payment instruments
Source: "Survey of Consumer Payment Choice" Version of April 2011, Federal Reserve Bank of Boston.
Exhibit 9 - Adoption of Payment Instruments
Exhibit 10 - Most Used App Stores
Source: 2011 The Nielsen
Company.
Page 37 of 38

38. Exhibit 11 - Comparison Table Options
Option 1: Partner with player Option2: Create Paydiant own Option3:Partner with
in existing interchange-based ACH-based network telecommunications provider like
world Verizon or Sprint
Advantages
 Name brands and access to  Could set own pricing below  Use brand awareness and
merchants through existing both credit and debit name, saving valuable
relationships. networks to increase marketing and advertising
 Popular for merchants merchant adoption dollars
looking for lower cost  Take share from interchange-  Combine payment bill with
payment options and based players phone bill
consumers who use debit  Highest revenue potential to  Extensive customer lists and
cards more frequently than paydiant consumer payment
credit cards  Capture most of the credentials, reducing
 Gain advantage in capturing revenues versus fighting for a acquisition and payment
share of the mobile market smaller share of a debit guarantee system costs
 Reduce fears that credit network’s existing revenues  Credit risks may be reduced,
card incumbents would given consumer fear of a telco
develop a mobile payment stopping cellular service as a
technology standard result of past due payments
 Merchants interested if  Expand Paydiant’s customer
increase leverage and base to include “unbanked”
reduce the rates they pay consumers
on credit card transactions  Establish pricing below rates
charged by debit networks,
Tradeoff
 Established pricing with
merchants 1.0% to 1.5% per  Very expensive  negotiate revenue share with
transaction and any share  Need to pay for an anti-fraud telco partners, which would
to Paydiant would eat into and payment guarantee most likely result in a higher
payment network’s existing system that interchange- rate charged to the merchants
margins based players already have in  Relative size of telco could
 Afraid of losing their place make for a risky partnership,
depository customers where telco demand
(credit cards) extremely favorable terms
 “bill shock” when consumer’s
phone bills suddenly increase
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