Presentation of Filip Gossele at Mobile Convention Brussels 2014

1. Mobile paymentsthe link between the Big Brother TV –show and Apple Pay
FILIP GOSSELÉ-HEAD OF PRODUCT MANAGEMENT E-COMMERCE

2. agenda
Ingenico Payment Services, part of Ingenico Group
Mobile payments: What and Where
Consumer view
Merchant view
Who are the winners? Examples.
Conclusion

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onegroup/ empoweringin-store, online and mobile
Operating the widest range of terminals, and connected to more than 1,000 acquirers and banks, the Group’s smart terminals offer more than 250 payment methods.
IngenicoPayment Services turns complex financial transactions into seamless payment solutions. We leverage on historical position in Europe to set the ground for a global offer.
The global reference in mobile acceptance today operates in 14 countries, serving 100,000connected merchantsand accounting for 70% of white label mobile solutions in the USA.

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IngenicoPaymentServicesprovidesaseamlessresponsetopaymentcomplexity.Ourinnovativeofferingofe-commerce,multi-channel,financialandmarketingsolutionshelpmerchantstomanage,collectandsecurepaymentsandpreventfraudondigitaltransactions
Withmorethan160,000customersinover70countries, weservemanymarkets,varyingfromarlines,transport, hospitality,retail,luxury,toticketing,digitalgoods, telecomandelectronics.
IngenicoPaymentServicesispartoftheIngenicoGroup, thegloballeaderinseamlesspayment.

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key figures
150+ International, localand alternativepaymentmethods
150+
70countries
200+ Certified industry partners and shopping carts software connections
160,000Customers
3.5 BnTransactionsper year
20+ White-labels
200+ Acquiring partners and banks
1000Employees

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Mobile payments / what and where
•Payments using your mobile.
•In brick and mortar shops.
•In web shops, on smart phones, tablets, connected cars, laptops.

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More mobile in payments.
Mobile POS
M-Commerce

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Consumer View / easy and secure
Good: frictionless
•QR-code
•Credit Card stored at merchant/PSP
•Selective 3DS secure
•Authentication with App.
Uncool
•Card reader required
•Copy SMS from inbox to other App
•Wallets that have to be manually reloaded
Valid on computer even more on mobile.
Mobile can contribute to the solution: always nearby & connected

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Merchant view
Conversion
New solutions are embraced if they can boost sales by making the consumer journey easier.
Cost
•Integration in website and in mobile Apps
•Compatible with existing processes
•PSP
•Fraud tools
•Financial Flow: collecting
Early adopters: innovation and image.

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Back in 2000

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Big Brother 2000 / SMS-voting
TV-interaction and payment combined.
Instant success.
100% compatible devices.
No configuration required.
Immediate access to money on telecom bill or prepaid credit.
Interesting business model for all actors in value chain.
oExtra revenues on top of IVR for TV-station.
oRevenues and acceleration of SMS-service penetration.
50.000 SMS in first 15’, no announcement, 0 marketing.

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Bancontact/ MisterCashmobile app payment
Supported by Belgian banks: virtually all consumers have access
Smart phone required
Effort at start: install App, register card using PC-banking unconnected card reader. Choose and remember PIN
Effort to Pay
In Shop: scan QR with App + PIN.
Person 2 person: A starts App and creates QR. B scans and confirms with PIN.
Computer, tablet: scan QR and confirm with PIN.
Smart phone, tablet: App is opened automatically, confirm with PIN.

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Bancontact / Mister Cash : instant succes?
0%
10%
20%
30%
40%
50%
% payments
Period
Payments with BC/MC by variant
% app of allBC/MCpayments
% BC/MC Appof all payments
% BC/MC (appand non-app) of all payments
•Transactions (87% successful, 3% incomplete, 9% refused) (12 -20/11)
•Conversion: 70% on PAN > 80%URL intent–87%QR (12 –14/11)

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Our neighbours / France -Paylib
Kwixo and Buysterare dead PayLibeager to fill the gap and go beyond
Main advantages
No card details required
Created in cooperation with:
oJoiningsoon
oBackedbymajor banksin France

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Our neighbours / Germany -Yapital
Online –In Shop –Invoicepayment

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Apple pay / How it works
The shopper waves his iPhone in front of the compatible payment terminal, and then proves his identity by holding their fingertip against Touch ID, Apple's fingerprint sensor
In-store
Pay online on your iPhone with a single touch in apps. To check out, select "Apple Pay" and place your finger on Touch ID to authenticate
Online «In-app»
To get started, you can add the credit or debit card from your iTunes account to Passbook by simply entering the card security code. To add a new card on iPhone, use your iSightcamera to instantly capture your card information. No card data is stored on the device
Set-up

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Key announcements & high level impacts on the ecosystem
Availability & payments supported
•October 2014
•USA only
•iPhone 6 and iPhone 6 Plus
•Apple Watch in 2015 (payment process not described by Apple)
•220K merchant locations (1)
•In-store (NFC based) & in-app only. No browser based e-commerce communicated at this stage
•Supports credit and debit cards from Amex, MC & Visa. Initial issuers are Bank of America, Capital One Bank, Chase, Citi and Wells Fargo in the US
Payment mechanism
•Payment security
•For in-store leveraging the NFC technology
•Each card gets a unique Device Account Number, encrypted and stored in the iPhone Secure Element. No actual card number is stored or shared.
•Merchants pre-requisite
•Merchants need to work with a payment provider(2) who offers APIs that integrate Apple Pay with their payment platform
High levelimpact on the paymentecosystem
•Apple Pay built on top of the existing ecosystemand fundamentally not impacting existing roles
•For in-store payments, Apple Pay still relies on payment terminalsto validate NFC payments
•For in-app payments Apple is not acting as a PSPbut instead requires merchants to still go through their own payment provider
•Apple Pay established with the support of card networkswho also act as token service providers (3)
•Apple therefore is mainly a distribution channel
Apple Pay overview
(1)Apple keynote announcement: Macy’s, Bloomingdales, Duane Reade, Walgreens, Staples, Subway, Mcdonald’s, Whole Foods, Apple retail, Disneyland / Disneyworld. Target will integrate Pay into their app, Groupon, Uber, MLB.com, OpenTable, Apple online store, Sephora, Starbucks, Panera Bread, Instacart
(2) Paymentproviders listedto date -Authorize.Net, Chase Paymentech, CyberSource, First Data, Stripe, TSYS (3) Accordingto Mastercard executive’sinterview (Jorn Lambert)

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Apple pay / business model assumptions
Apple Pay overview
Apple seems to be acting as a secure conduit and is not taking an active role in the processing of the payment transaction.
Various sources indicate that Apple would take a cut of around 0,15%(2)of the transaction value for the service of enabling its iTunes base and building part of the security framework (secure element + IDTouch)
Apple called out the fact that it wouldn’t collect and make money out of the Apple Pay data (3)
In-store
For in-store transactions, merchants will be paying a lower card present contactrate (vs higher card present NFC rate)(1)
(1)According to Mastercardexecutive’s interview (JornLambert)
(2)This is currently speculated by Droplabs, bankinnovation, quoraall point to 15-25 bps discount on credit card, 1 to 3 bps on debit card for NFC card present rates
In-app
When making an in-app purchase, the transaction fee will the equivalent to a “card-not-present” rate (1)
Despite early rumors the secure system does not allow to dateto reduce merchant service charge for online payments

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Conclusion
Mobile devicesare radicallychanginghowwe makeand accept payments.
First initiativeshave failed, butnewsolutionsseemto getitright.
Winners willhave to convinceconsumers, merchantsand banks.
Experts suchas Ingenicofacilitatethe implementationof these solutionsand let merchantsfocus ontheirbusiness.

21. ThanksHTTP://PAYMENT-SERVICES.INGENICO.COM