Innovations In Payments
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INNOVATION IN PAYMENTS: How Data, the Cloud, Mobile Devices & Smart Card Technology Will Drive Innovation David S. Evans November 4, 2008
Payments are in for some rough times
The payments industry has underperformed
Credit card lenders are sure to suffer more
In grim times, it always gets better
Income has steadily risen, despite bumps in the road
It always looks terrifying at the bottom
Strength comes from weathering storms
So, innovate for the long run
The future of payments innovation
Change is in the air, but will it really occur?
The elusive cashless society…
Check use declines, and eCommerce grows
The pervasive magnetic stripe card
“Please rank the following aspects of your payment experience by the level of importance to you” Can sign the receipt
24%
30%
26%
Can enter a PIN
25%
28%
25%
Information is kept secure
Offers convenience by being fast Offers convenience by not confusing me Can pay with anything I want
68%
35%
31%
24%
38%
42%
42%
“When I am paying at the checkout I wish I could pay…” (by ranked level of importance) 13%
By using my mobile phone
13%
By using a card with multiple functions (debit, credit, extended payment)
17% 11%
By tapping/waving my card instead of swiping
11% 15%
12%
14%
16%
24%
27%
26%
20%
By typing into the PIN pad without having to swipe
12%
22%
18%
Without pulling out a plastic card
12%
21%
21%
9%
Without signing a receipt
16%
52%
24%
Consumers pretty much like it the way it is
20%
26%
27%
18%
27%
35%
33%
29%
29%
25%
Innovation for the sake of innovation doesn’t work
Into the 6th revolution in payments…
Change today focuses on the form factor
Change It’s in the data. It’s in the cloud. It’s in your hand.
Where to look for the revolution
In the U.S. alone, signature authorized transactions represent:
Over 1 billion Cards in circulation
Over 6 million
Change It’s in the data.
Merchant locations
It’s in the cloud.
Over 44 billion
It’s in your hand.
Transactions each year
Massive amounts of cardholder data
87% of online consumers agree that less than a quarter of ads they see online are relevant to their wants and needs.
Change It’s in the data. It’s in the cloud. It’s in your hand.
People actually like ads that are relevant to them
Change It’s in the data. It’s in the cloud. It’s in your hand.
Innovation is moving to the cloud
Change Merchant Loyalty Database
Paymen t Provider
IPCommerce Software Integration
Integrated Reporting & Settlement to Merchant
Leverage Front-End Processors
Front-End Host
Back-End Host
Front-End Host
Back-End Host
Front-End Host
Back-End Host
Transactio n Data
It’s in the data. It’s in the cloud. It’s in your hand.
A platform for payments in the cloud
Change It’s in the data. It’s in the cloud. It’s in your hand.
The ubiquitous mobile phone
SOUTH KOREA MOBILE BROADBAND
BANGLADESH M-COMMERCE
KENYA COFFEE TRADING
peru mobile payments & microfinance
Philippines p2p sms payments
Mobile payments around the world
Mashup #1
Mashup #2
Mashup #3
Innovation from the chip: Where could it fit?
Mag stripes and smart cards
The world has moved on
Developer community
Software platform • Can live in part on the device, and in part in the cloud • Must have code, a rich set of APIs
Smart card chip • Must be part of a real computing device that people can use to run applications
Smart cards and cloud computing
Must be friendly to application developers
Take the iPhone as a model
Smart cards: An integral role in future mashups
Failed poster child of change
Business risk: Chicken and egg problems
Security and fraud: Convincing consumers
High
No Go
Low
King of the Hill
High
Low
Degree of Consumer Behavior Change Required
Consumer Heavy Lifting
Merchant Heavy Lifting
Degree of Merchant Investment & Effort Required
Measuring the tradeoffs
High
Low
Consumer Heavy Lifting
Merchant Heavy Lifting
High
No Go Low
“Wow” Factor Level
King of the Hill
Degree of Merchant Investment & Effort Required
At the heart of transformations to come
Finding the
Wow
Thank You DAVID S. EVANS [email protected]
Payments are in for some rough times
The payments industry has underperformed
Credit card lenders are sure to suffer more
In grim times, it always gets better
Income has steadily risen, despite bumps in the road
It always looks terrifying at the bottom
Strength comes from weathering storms
So, innovate for the long run
The future of payments innovation
Change is in the air, but will it really occur?
The elusive cashless society…
Check use declines, and eCommerce grows
The pervasive magnetic stripe card
“Please rank the following aspects of your payment experience by the level of importance to you” Can sign the receipt
24%
30%
26%
Can enter a PIN
25%
28%
25%
Information is kept secure
Offers convenience by being fast Offers convenience by not confusing me Can pay with anything I want
68%
35%
31%
24%
38%
42%
42%
“When I am paying at the checkout I wish I could pay…” (by ranked level of importance) 13%
By using my mobile phone
13%
By using a card with multiple functions (debit, credit, extended payment)
17% 11%
By tapping/waving my card instead of swiping
11% 15%
12%
14%
16%
24%
27%
26%
20%
By typing into the PIN pad without having to swipe
12%
22%
18%
Without pulling out a plastic card
12%
21%
21%
9%
Without signing a receipt
16%
52%
24%
Consumers pretty much like it the way it is
20%
26%
27%
18%
27%
35%
33%
29%
29%
25%
Innovation for the sake of innovation doesn’t work
Into the 6th revolution in payments…
Change today focuses on the form factor
Change It’s in the data. It’s in the cloud. It’s in your hand.
Where to look for the revolution
In the U.S. alone, signature authorized transactions represent:
Over 1 billion Cards in circulation
Over 6 million
Change It’s in the data.
Merchant locations
It’s in the cloud.
Over 44 billion
It’s in your hand.
Transactions each year
Massive amounts of cardholder data
87% of online consumers agree that less than a quarter of ads they see online are relevant to their wants and needs.
Change It’s in the data. It’s in the cloud. It’s in your hand.
People actually like ads that are relevant to them
Change It’s in the data. It’s in the cloud. It’s in your hand.
Innovation is moving to the cloud
Change Merchant Loyalty Database
Paymen t Provider
IPCommerce Software Integration
Integrated Reporting & Settlement to Merchant
Leverage Front-End Processors
Front-End Host
Back-End Host
Front-End Host
Back-End Host
Front-End Host
Back-End Host
Transactio n Data
It’s in the data. It’s in the cloud. It’s in your hand.
A platform for payments in the cloud
Change It’s in the data. It’s in the cloud. It’s in your hand.
The ubiquitous mobile phone
SOUTH KOREA MOBILE BROADBAND
BANGLADESH M-COMMERCE
KENYA COFFEE TRADING
peru mobile payments & microfinance
Philippines p2p sms payments
Mobile payments around the world
Mashup #1
Mashup #2
Mashup #3
Innovation from the chip: Where could it fit?
Mag stripes and smart cards
The world has moved on
Developer community
Software platform • Can live in part on the device, and in part in the cloud • Must have code, a rich set of APIs
Smart card chip • Must be part of a real computing device that people can use to run applications
Smart cards and cloud computing
Must be friendly to application developers
Take the iPhone as a model
Smart cards: An integral role in future mashups
Failed poster child of change
Business risk: Chicken and egg problems
Security and fraud: Convincing consumers
High
No Go
Low
King of the Hill
High
Low
Degree of Consumer Behavior Change Required
Consumer Heavy Lifting
Merchant Heavy Lifting
Degree of Merchant Investment & Effort Required
Measuring the tradeoffs
High
Low
Consumer Heavy Lifting
Merchant Heavy Lifting
High
No Go Low
“Wow” Factor Level
King of the Hill
Degree of Merchant Investment & Effort Required
At the heart of transformations to come
Finding the
Wow
Thank You DAVID S. EVANS [email protected]
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