Slides accompanying the techMap Amsterdam talks tonight with Eelco van Wijk - CEO PayPal Benelux, David-Jan Janse (Rabobank), Wouter In 't Velt (VODW) and Geert-Jan van Nunen (4me).

1. Thoughts on the Mobile Wallet
LBMA EMEA Chapter
Amsterdam, 21 March 2012
Dan Armstrong
dan.armstrong@takashimobile.com

2. marketplaceMCI (1994-96)

3. marketplaceMCI (1994-96)

4. 1-800-MUSiC-NOW (1996)

5. The e-commerce shake out
 Many shifting paradigms. However, once the supply chain and
logistics matched people’s awareness, appetite and feelings of
trust for e-commerce settled, clear winning business models
emerged (my personal way of summarising):
• Efficiency (Paypal, Netflix, online photo printing,
online flight tickets/car rental/hotels, UPS/FedEx
tracking, Amazon.com)
• Products (HP, Netflix, Thomann.de, Amazon.com)
• The Long Tail ( eBay, Marktplaats, publishing on demand,
… and of course Amazon.com)
• … plus of course, Monetising Clicks (Facebook, Google,
YouTube, TripAdvisor, pornography)
 Many of these models began to gain traction in the US, but soon
gained popularity in Western Europe and Asia, South America
and are picking up somewhat in Africa and South Asia.
 Internet transaction capability in Africa and South Asia is really
taking off via mobile access.

6. What is the Mobile Wallet?

7. What is the Mobile Wallet?
IVR Banking & SMS Alerts Multi-Channel
Payments Balance-Checking
Full-Service Mobile Remote Payments & Mobile Contactless /
Banking & Payments Electronic Wallets Proximity Payments
“Mobile Money” Mobile Remittances Advertising-led Models
= banks deploy = bank-led models = cooperative models = public transportation-led models
= mobile operator-led models = mobile operators deploy = third-parties deploy

8. So, taking a step back.

9. First of all, what do we expect from a wallet?
 A place to store cash?
 A place to store payment
tokens?
 A place to store other tokens?
 A personal object?
 A private object?
 Something small enough to be
portable/mobile?
 … but … do we need a physical
object?

10. Then, what do we expect from a transaction device?
 Identification of myself, my
rights and capabilities,
memberships.
 Identification of myself, an
authentication tool for payment.
 Secure, multi-factor
 Tamper-resistant/evident
 Personal and private
 Easy to use
 … but … do we need a physical
object?

11. What are we doing when using cards, fobs, NFC cards?
 Authorising transfers/payments
remotely of course …
• Personal authorisation (machtiging)
• Check
• Signature
• Card + Signature
• Card + PIN
• Card + PIN + Biometrics
Four Corner Model
• Card Three Corner Model
• Biometrics
• … you get the idea
 Some payments are different, as
they don’t always require a card
in the first place for transaction,
but other authentication (e.g.
PayPal, MiniTix).

12. Innovative .. but card-based payments, for obvious reasons …
Everyone’s got cards.
And of course, allowing traditional credit
card payments, without a card present ..

13. NFC can be a bridging technology
But the Secure
Element (SE)
standardisation
discussions have
led to stalling the
ubiquity of Single
Wire Protocol-
enabled phones
and NFC
acceptance
devices world-
wide since 2007.

14. The “Trusted Services Manager” Role
MNO
MNO
MNO

15. The “Trusted Services Manager” Role
MNO
“Trusted
Services
Manager” Role
MNO
MNO

16. But, there are some innovative parties combining NFC,
transaction, wallets and mobile marketing ..
• Proximity/ NFC • NFC apps, mobile • NFC • NFC POS, NFC
marketing banking, SDKs, STK, T payment, ticketing, loyal wallets, apps, smartpho
• NFC tag search games SM, secure element ty, ID, access control ne integration, TSM
• Mobile wallets / mgmt, OTA, NFC • POS, mobile wallets • VISA, MasterCard, Disc
reselling MasterCard ticketing, etc., etc. • www.zenius.com over, etc.
• Retail concepts • www.gemalto.com • www.vivotech.com
• www.proxama.com
• Secure Element • Mobile network operator • NFC • Mobile
management / TSM billing-based location & payment, ticketing, loyal ticketing, payments, me
• Mobile wallets NFC payments ty, ID, access ssaging, postage, parkin
• NFC SDK • www.boku.com control, exhibitions, eve g, libraries, etc.
• www.sequent.com nts, mobile wallets • www.unwire.com
• www.nexperts.com
Input:

17. Cardless payments, some people trying to figure out “proximity payments”
without an additional token (like NFC or cards)
WALLET
But then again, if you were a merchant -
you could also just say you accept PayPal
too ..
But the per transaction charges of moving
online payment to the supermarket are
usually prohibitive.

18. Two ways I find handy of thinking about the mobile wallet ..
Card Emulation Forget Cards
A mobile phone that takes the Next-generation authentication
place of a physical card using that could leverage a POS for
different authentication methods merchant speed and
to enact a transaction at a vs. convenience, but doesn’t require
physical location. one for payment.
Can be EMVCo-based or New “opt-in” models required
scheme-based, but allows the for auto-payment and
phone to pay, like a super card. confirmations, transparency.
• Can leverage the card/NFC POS locations. • Hard to forget the POS though. It’s what the
Consumers are comfortable with cards. merchant needs to validate the payment
quickly, and on-the-spot (see Square Card
• Must face the standardisation jungle if the Case, later).
phone is to co-exist at these acceptance points.
• Consumers must feel like they are in control
• Consumers don’t like to have loads of of the process. Otherwise its not to going to
wallets, so this all has to be connected work.
seamlessly on the back end.

19. Two ways I find handy of thinking about the mobile wallet ..
Card Emulation
With the ubiquity of
A mobile phone that takes the cards in the
place of a physical card using marketplace, and POS
different authentication methods devices in place for
to enact a transaction at a
physical location. electronic payments,
this is hard to ignore in
Can be EMVCo-based or the EU, Asia, North
scheme-based, but allows the America.
phone to pay, like a super card.
• Can leverage the card/NFC POS locations.
Consumers are comfortable with cards.
• Must face the standardisation jungle if the
phone is to co-exist at these acceptance points.
• Consumers don’t like to have loads of
wallets, so this all has to be connected
seamlessly on the back end.

20. But “collaboration” on mobile phone-based payments is tricky
Player: Category 1 Player: Category 2
“I have stuff I want to do via channels. Make “I have a pipe and want to monetise my
payments, provide ticketing, sell ads, general investments in my GSM license, radio and access
loyalty models, etc. and I need as many (cost network, etc. I want as much to get through that
effective) channels and pipes to do it.” pipe and my re-sold mobile phones as possible.”

22. In some places, we’ve not got a lot of smartphones ..
How can we enable this merchant to accept mobile payments?
 Limited smartphones
 Limited (and expensive)
mobile data
 Limited (and expensive) fixed
internet & electricity
 Limited literacy
 Limited trust in bank
accounts
 High cost of ATM and branch
operations, limited in-country
IT capabilities
 Limited amount of people
with official IDs
 Everyone wants a (payment)
card anyway. It’s modern.

23. Bank Branch: Rwanda
No power, internet connectivity

24. Bank Branch: Rwanda
Waiting for teller cash withdrawals

25. Bank Branch: Rwanda
Teller

26. Bank Branch: Rwanda
Teller

27. Two ways I find handy of thinking about the mobile wallet ..
Card Emulation Forget Cards
A mobile phone that takes the Next-generation authentication
place of a physical card using that could leverage a POS for
different authentication methods merchant speed and
to enact a transaction at a vs. convenience, but doesn’t require
physical location. one for payment.
Can be EMVCo-based or New “opt-in” models required
scheme-based, but allows the for auto-payment and
phone to pay, like a super card. confirmations, transparency.
• Can leverage the card/NFC POS locations. • Hard to forget the POS though. It’s what the
Consumers are comfortable with cards. merchant needs to validate the payment
quickly, and on-the-spot (see Square Card
• Must face the standardisation jungle if the Case, later).
phone is to co-exist at these acceptance points.
• Consumers must feel like they are in control
• Consumers don’t like to have loads of of the process. Otherwise its not to going to
wallets, so this all has to be connected work.
seamlessly on the back end.

28. So, in Africa, South Asia, Southeast Asia perhaps …
Forget Cards
Limited no. of POS in Next-generation authentication
place, limited no. of that could leverage a POS for
cards in the market. merchant speed and
convenience, but doesn’t require
Great opportunity for one for payment.
mobile payments. But
not via smartphones! New “opt-in” models required
for auto-payment and
confirmations, transparency.
• Hard to forget the POS though. It’s what the
merchant needs to validate the payment
quickly, and on-the-spot (see Square Card
Case, later).
• Consumers must feel like they are in control
of the process. Otherwise its not to going to
work.

29. Thank You!
Dan Armstrong
Takashi Mobile | Financial Services
Rapenburgerplein 81
1011 VJ Amsterdam
The Netherlands
www.takashimobile.com
dan.armstrong@takashimobile.com
+31 652 085 071