Sanchia Gonsalves, Chelsea Gyarmathy, Patience Henry,Jaechun Kim, Atul Prakash, Mahesh Toppae

Mobile Payments and Coupons

Hype CycleConsumer Services and Mobile Applications,

2012

How do mobile payments work?TechnologyService providersTarget market

Understanding Mobile Payments

Current encryption methods for Mobile Payments:Encryption at the sourceEncryption on mobile device

Future developments:New standards (Ex: Error handing and control)

New protocols

Security and Encryption

Promising steps for user acceptance:Central cues

Information and service qualityPeripheral cues

System quality, reputation, structural assurance

User Acceptance

Mobile Coupons: What is a mobile coupon?

• Same type of coupons as paper• Accessed on mobile phones

Mobile Coupons: How to use a mobile coupon

1. Send code 2. Customer Receive

3. Scan 4. Redeem

Mobile Coupons: Why use a mobile coupon?

Mobile Coupons: Why use a mobile coupon?

% of sample who would consider redeeming coupons via mobile

Males and younger users have the highest degree of interest.

Source: AOL-Universal McCann, 2009 (n=1,800 US smartphone users)

OPPORTUNITY & REWARD

Ability to accept card payments for small merchants

Benefits and Costs

China US1.8

1.85

1.9

1.95

2

2.05

2.1

2.15

2.2

2.25

2.3

2.23

1.95

Cards per person

Cards per peson

China US0

500

1000

1500

2000

2500

358.59

2156.46

POS per 100,000

POS/100,000

BenefitsMinimal changes to consumer behaviorTrack customers’ trends

CostsZero cost of application and card readerTransaction fees

Benefits and Costs

Estimates using survey data from farmers’ markets

A ~ 7% increase in revenue by the most conservative estimate

A Quantitative Picture

Benefits  

Increased annual revenue $4,680

Costs  

Cost of application (0)

Cost of card reader (0)

Annual transaction fees ($1,313)

Annual Revenue Increase $3,367

What is at risk?Personal information stored on credit or debit

card

Security Risks

Why is secure mobile acceptance important?Limited security safeguards on mobile devicesUnclear boundaries of security responsibilityRequired protection by PCI DSS whether

printed, processed, transmitted, or storedSupports customer confidence

Security Risks

Off-the-shelf payment acceptance solution -- partner with a provider of a validated P2PE solutionApproved card reader providedProvider responsible for ensuring compliance

with PCI Security Standards CouncilP2PE Instruction Manual provided, including

P2PE Self-assessment Questionnaire

Mobile Payment Acceptance Solutions

Build own mobile acceptance solutionUsed approved POI device

Must include encryption to secure cardholder data acceptance

Can use approved PIN entry device or approved secure card reader

Comply with PCI Data Security StandardMerchant policies and proceduresContractual agreements with P2PE solution

providersPhysical protection of payment assetsP2PE Instruction Manual

Mobile Payment Acceptance Solutions

PCI Security Standards Council Study

80% of identified compromises of cardholder data involve “Level 4” merchantsSmall restaurants, e-commerce merchants, flea

markets

Targeted Companies

Emerging Markets - IntroductionNewer technologySquare

One of the companies offering the serviceLimited merchants implementing

Due to security issues

Existing Markets – Big PlayersSome companies using this technology:

Starbucks Chick-fil-A

Emerging Markets - Map

Emerging Markets – Industry SectorApparel and accessories

Art dealers and gallery Art, design, and photographyBeauty and barberBusiness servicesCharity and social servicesComputer servicesContractingFood and specialty retailIndividual useLandscaping and

horticultural

Medical and health servicesMembership organizationMusic and entertainmentPersonal, professional, and

recreational servicesRepair and related servicesGeneral retailSchools and educational

servicesTaxis and limosVeterinary

Emerging Markets - FutureFamily shopsCoffee places (Mugwalls)Fast-food places (McDonald’s) International markets (India or China)

Non-profits and fundraising effortsSmall businessesLarge businesses

Case Examples

Encrypted card readersMobile coupons to target customersPositive cost-benefit analysisMitigated security riskSuccessful implementation in other industries

Conclusion

Thank you for your time!

Questions?