Reinventing mobile payments

Prepaid closed loop mobile payments schemes

Miha Culiberg Warsaw, 31.10.2013Business development director

We are the largest transaction automation vendor in S.E.E. / C.E.E.

25+ years of Experience in the Transaction Automation and Systems Integration area

Partners to the leading vendors in the industry The most integrated portfolio of services, through

500+ engineers and 90+ service centers in 15 countries

Client portfolio includes almost all of the leading financial institutions as well as some of the largest retail, petrol and telco players in the region.

Our footprint spans 15 markets

We are a multinational technology firm, operating in S.E.E. / C.E.E.

We provide 8 families of products, services, and solutions

Flexible and effective organization

Printec corporate profile

ATM

Network

Value Added

Solutions

EFT/PoS

Network

Value Added

Solutions

Self Service

Kiosks &

Branch

Automation

E-Payments

& Banking

Software

Retail &

Emerging

Industries

Telecom

Solutions

Information

Security

Solutions &

Services

Enterprise

Solutions

Printec is a privately held company, 100% owned by its Chairman & CEO

High-caliber professional management team

Matrix organization, promotes effective monitoring and communication

Transfer of knowledge and effort/load through global staffing practices and centers of excellence

Established corporate governance procedures

Ukraine

Slovakia

Czech Republic

Slov eniaCroatia

BosniaHerz. Serbia

Romania Moldova

Bulgaria

FYROM

Alba nia

Greece

Cyprus

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Reaching the customer in mobile payments

Mobile payments? Do they need to be mobile?

MNO’s as a payment providers

Closed loop mobile payment scheme vs. open loop

Whom do we need first: end users or merchants

How to reach the customers

Key success factors

Mobile payment is an alternative payment method.Instead of paying with cash, check, or credit cards, aconsumer can use a mobile phone to pay for a widerange of services and digital or hard goods.Source: mobile payments on Freebase, licensed under CC-BY

Juniper Research has a simple definition of a mobilepayment as “payment for goods or services with a mobiledevice such as a phone, Personal Digital Assistant (PDA),or other such device.

One definition is talking about the access channel theother about alternative payment method

Mobile payments? Do they need to be mobile?

Mobile payments as an alternative payment method in Africa

Example:M-Pesa (M for mobile, pesa is Swahili for money) is a mobile-phone based money transferand microfinancing service for Safaricom and Vodacom, the largest mobile networkoperators in Kenya and Tanzania. Currently the most developed mobile payment systemin the world, M-Pesa allows users with a national ID card or passport to deposit,withdraw, and transfer money easily with a mobile device. Source: Wikipedia

BUT, most of us are living in Europe not Africa

Financial services and access to credit/debit/prepaid cards, bank accounts are more than available

In Europe mobile payments are just another payment access channel

Example: Apple, iTunes

Mobile payments are nothing more and nothing less then e-payments

Mobile financial services – mobile banking or e-banking on a mobile?

Example: Personal experience from CEE markets

Mobile payments? Do they need to be mobile?

Again we are not living in Africa

In Europe MNO‘s are facing strong entry barriers, due to:– Regulatory issues– Maturity of the market– Strong competition from banks

MNO‘s in Europe are more or less infrastructure providers in a collaboration mobile payment scheme

MNO‘s generate revenues from their core business

MNO‘s are going into Mobile financial services BUT then they usually become a financial institutionExample: Telenor Group & Telenor Serbia

Mobile payments are all about the business not the technology

MNO’s as a payment providers

Closed loop mobile payment scheme vs. open loop

Gartner defines mobile payment as transactionsconducted using a mobile phone and paymentinstruments that include:– Banking instruments such as cash, bank account or

debit/credit card, and– Stored value accounts (SVAs) such as transport card, gift

card, Paypal or mobile wallet

Open-loop cards: A general purpose card carrying theVisa, MasterCard logo that can be used anywhere thosecards are accepted.

Closed-loop cards: A card or account that can be usedat a select store or group of stores

Whom do we need first: end users or merchants

Mass adoption of mobile payments requires mass adoption bymerchants and consumers - no middleman is required

Merchants & consumers – condition sine qua non for atransaction to take place

Banks, processors, MNO‘s are optional in the transactional chain

Large merchants are reinventing themselves keen to enter newprepaid/postpaid schemes

Closed-loop systems give value to the to parties in the paymentprocess that count the - most merchants and consumers

Mobile payments are just a technological upgrade andadditional access channel

Closed loop prepaid cards from a Merchant perspective

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CUSTOMER LOYALTY

MARKETING

COST SAVINGS

Closed loop prepaid cards from a Merchant perspective

– Simplifying the purchase user experience by offering their own system– Seamlessly integrating loyalty and payments schemes– Regaining ownership of their own customers– Extending payments scheme to cross merchant payments and loyalty schemes

(e.g. Retail+Petrol+Telco)

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CUSTOMER LOYALTY

SOURCE: ROAD TO INCLUSION A look at the Financially Underserved and Excluded across Europe Awhite paper prepared by Ipsos MORI for MasterCard Worldwide 16th September 2013 where thequantitative intercepts consisted of n=631 interviews split over 6 markets: Poland, Italy, UK, Russia,Spain and France in July 2013

Closed loop prepaid cards from a Merchant perspective

– Closed loop systems minimize transaction costs by avoiding processing fees– Cash in advance, no credit line, predictable income– Utilizing existing EFT POS infrastructure without additional investments– Minimizing cost associated with issuing of loyalty cards– Additional savings by replacing card with a mobile

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COST SAVINGS

Closed loop prepaid cards from a Merchant perspective

– Closed loop system gives merchants the ultimate access to consumer data trackingtheir habits and spending's in order to provide them with targeted offers

– Extending branding into customized statements, plastics, point-of-sale materials, etc.– Marketing through the SMS/WEB channel

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TARGETED MARKETING

SOURCE: ROAD TO INCLUSION A look at the Financially Underserved and Excluded across Europe Awhite paper prepared by Ipsos MORI for MasterCard Worldwide 16th September 2013 where thequantitative intercepts consisted of n=631 interviews split over 6 markets: Poland, Italy, UK, Russia,Spain and France in July 2013

How to reach the customers?

What do different types of merchants (Retailers, Petrol, MNO‘s) have in common?– Significant customer base– Strong brand and brand awareness– Wide network of stores/petrol stations

Daily face to face interaction – Cash in for the prepaid - at the stores, – Direct Debit enrolment - at the stores – Direct marketing for prepaid cards - at the check out– Simplified enrolment for the prepaid - at the check out

Loyalty incentives for the closed loop mobile payment system users (due to reduced transaction costs)

Bundling loyalty and payment schemes Payment flexibility (prepaid, postpaid, card, mobile, NFC,

QR code)

Key success factors

Merchants need to recognize the value of the closed loop schemes

Consumer needs to recognize the value of loyalty and prepaid cards

Mobile needs to be just additional access channel in addition to a prepaid card

Subscription should be simple and straight forward

Technology should enable the utilization of existing POS infrastructure