Professional Documents
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The Mobile Payments Revolution 2015
The Mobile Payments Revolution 2015
revolution
HOW TO BE READY
FOR THE TIPPING
POINT
Author:
Keira McDermott | Payvision BV
PAYVISION
Global Card Processing
The mobile payments revolution
150 M
120 M
60 M
50 M
80 M 90 M
40 M
70 M
30 M
60 M
20 M
50 M 60 M
10 M
40 M 0M
30 M 2012 2013 2014 2015
30 M
20 M MOBILE PAYMENT USERS
10 M
13.7%
0M 0M
2012 2013 2014 2015
2012 2013 2014 2015
MOBILE PAYMENT USERS
MOBILE PAYMENT USERS
5M
MOBILE PAYMENTS 4M
3M
18% EUROPE
2M
1M
0M 37.3%
2012 2013 2014 2015
20 M
60 M
15 M
10 M MOBILE PAYMENTS
5M 40 M
0M MIDDLE EAST
2012 2013 2014 2015 20 M
MOBILE PAYMENTS
24.8%
LATIN AMERICA
MOBILE PAYMENTS
AFRICA
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The mobile payments revolution
1. Contents
1. Executive Summary 5
2. Going Mobile – an introduction 7
3. mOBILE iNTERNET: Changing the face of the digital world 11
3.1 The Internet of Things 12
3.2 Banking the Unbanked 14
3.3 aCCESS FOR DEVELOPING MARKETS 15
4. The Kessler effect 16
4.1 The Tech Giants and card schemes 19
4.2 The large-scale Retailers 20
4.3 The independents 24
5. Security 26
6. Mobile payments by region 30
6.1 Asia 31
6.2 Africa 34
6.3 Americas 37
6.4 Europe 40
6.5 oceania 43
7. conclusion 46
7.1 the shape of Tomorrow’s mobile landscape 46
7.2 How to be ready 49
8. About the Publishers and Editors 51
8.1 About Payvision 51
8.2 About Acapture 52
8.3 About the Author 52
8.4 About the Editor 52
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1. Executive Summary
While we certainly live in a mobile-oriented
world, mobile payments have struggled to
fully get off the ground in developed Western
markets. M-commerce – shopping on a mobile
device online – has seen steady growth over
the past years, but using a mobile device for
in-store payment (mPOS) has floundered. But in
the West we are sitting on the edge of a mobile
payments revolution.
There have been numerous, futile attempts to consumer journey effortless. So far, the formula
take mPOS mainstream in the Western world, has been missing some key ingredients.
even by large tech players such as Google.
There has certainly been pockets of success in This year, these necessary prerequisites to
niche markets, but despite having all the tech- widespread mobile adoption are finally being
nology at our fingertips, and high smartphone addressed, and we can expect the success of
penetration, the everyday consumer need was mobile payments in developing nations to tip
just too little. into Europe, the US, and beyond.
The developing markets of Asia and Africa, The biggest Western names in tech and finance;
however, tell a very different story. In some Apple, Samsung, Google, Visa, MasterCard,
cases mobile Internet is much more than a have come to the fore with great plans for the
simple commodity, where banking, connectivity mobile payments space. These businesses,
and ecommerce is limited. In countries such with both a high stake in the payments value
as India and Kenya, mobile Internet is quite chain and strong consumer loyalty, will ensure
literally transforming the market. In China, the the main blocking points are addressed. Their
booming consumer trade has much to thank movements will cause a tidal wave effect on the
mobile Internet for. Now, China is generating landscape. Merchants must either innovate to
such seamless omnichannel experiences that in make their own waves, choose to ride the tide,
2014 use of mobile payment apps grew 73.2 or if they ignore the trend; get soaked.
percent.
Never before has it been so
In developed nations, where consumers are important for retailers and
more complacent, mobile payments have three merchants to invest in a
basic prerequisites to see widespread adoption;
mobile-compatible strategy.
superior, rewarding and meaningful experi-
ences, high levels of security to procure trust,
and supreme omnichannelling to make the
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The mobile payments revolution
2. Going Mobile – an
introduction
Today the world is truly mobile. From phone
calls to email, chat, browsing the web,
ordering products, booking a taxi, moving
funds, reserving a hotel room – everything is
possible from the palm of your hand.
‘Going mobile’ means so much more today purchase, either by the consumer or the
than just making an on-the-go call. It is about merchant at the point of sale.
an omnichannel experience; shopping, business, • Mobile commerce (m-commerce)
leisure, payments, banking. The list goes on. Making ecommerce purchases from a
mobile
Omnichanneling is the multichannel • Mobile peer-to-peer (mP2P)
approach to commerce that aims to provide A transfer of funds from one mobile
the consumer with a seamless shopping expe- customer to another via an application or
rience, regardless of which device or payment interface.
point they are using, be it is mobile, desktop or
in-store. With the inevitable increase in mobile So, when did the mobile revolution first begin?
payments, the industry is more focused on Just over 40 years ago.
omnichannel.
The first handheld mobile phone was produced
2014 and early 2015 witnessed a heavy push by Motorola. Created in 1973, the prototype
in the mobile payments landscape, with players weighed over a kilo and offered a talk time
such as Apple and Samsung bringing offerings of 30 minutes, taking a further 10 hours to
to the front line. This will finally provide the re-charge. In 1983, the Motorola Dynatec
necessary push to make mobile payments the 8000x launched in the US with a price tag of
norm. USD 3,995.
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More than half of the world’s mobile subscribers In the UK, mobile transactions were estimated
6.
eMarketer - Mobile are in Asia Pacific. With 3.6 billion subscriptions, at 27 percent of all ecommerce sales in 2014.6
Shopping Drives UK this region accounts for 52.1 percent of the In the US, mobile payments are expected to
Retail Ecommerce Sales,
2014
global figure. triple to nearly USD 9 billion in 2015.7
7.
Mobile Marketing Daily From the rise in popularity and trust in mobile This percentage is only set to rise as consumers
- Mobile Proximity technology emerged the evolution of mobile continuously move away from shopping on their
Payments To Reach
$3.5 Billion This Year
payments. desktop or laptops, and shift their shopping
habits to their tablets or paying with their
8.
More than 90 percent of smartphone users smartphones rather than cash.
Digi-Capital – Mobile
Internet Investment report they are rarely more than two feet away
Review, 2014 from their device at any given time.3 Merchants Across the globe, the value of mobile commerce
are looking for more interactive and targeted has been forecast to top USD 500 billion by
3.
methods to engage with their consumers, and 2017, with Asia accounting for half the market.8
Mobile Payments Today
- Mobile helped consumers are looking for more rewarding Today, Asia accounts for almost 40 percent of
restaurants connect ways to pay for their purchases, transfer money mobile payments.
with consumers in 2014
and order goods online. Mobile payments are
an obvious step to bridge this gap.
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2. IN 2014
1%
MIDDLE EAST
18.8%
NORTH AMERICA
37.3%
ASIA
4.1%
LATIN AMERICA
13.7%
EUROPE
24.8%
AFRICA
In 2015, the use of mobile phones for payment payments to create an omnichannel experience
at the counter (mPOS) is expected to grow by a can be an unchartered territory to navigate.
huge 1000 percent, with a majority share still
coming from the Asia Pacific region, but a far This white paper looks
9.
Deloitte – Technology, higher percentage from Europe and US.9 at the rolling wave
Media and
Telecommunications
of mobile payments,
But, if mPOS was first trialed some 17 years
Report, 2015 consumer preferences
ago, why has it taken so long to reach a world-
wide tipping point? and behavior, helping us
understand why the mobile
2015 is going to be the year we witnesses payments revolution is
a breakthrough. With the number of major finally redefining the
players entering the market, particularly
payments landscape, and
Apple with their reputation for taking existing
tech mainstream, the prerequisites are being
ultimately how merchants
addressed, and the landscape is preparing itself should capitalize on it.
for the explosion.
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3. mOBILE iNTERNET:
Changing the face of
the digital world
The term mobile payments consists of three
main underlying components:
REDUCED REGULATION
GROWTH OF M-COMMERCE
OTHER
0 5 10 15 20 25 30 35 40
When asked specifically about the rise of mobile connectivity is driving domestic and
m-commerce, 48 percent strongly agreed that overseas spending.
they had witnessed explosive growth. Indeed,
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11.
Visa’s recent mission is connected to the Internet will explode from 10
Cisco, 2014
to ensure that every billion today to 50 billion by 2020.11
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14.
a third are under- subscribers, but only 150 million traditional
Pymnts.com - Africa’s
Growing Mobile Money
banked (poor access bank customers.14
many as 2.5 billion may transactions are taking place in Kenya where
annual transfers are now around USD 10
12.
GSMA, 2014 be unbanked.12 billon.15
15. For many consumers, accessing a bank account, The most successful mobile payment system
The World Bank - How withdrawing cash from an ATM or depositing in Kenya is M-Pesa; a system owned by the
Kenya became a world
leader for mobile
a check is part of day-to-day life. However, largest network operator in Kenya – Safaricom
money, 2013 in many countries – and not only developing – allowing users to store and transfer money
economies – the unbanked problem is a real via an account on their phones. Customers can
concern. pay in or withdraw at a local agent, and transfer
funds by SMS message.
Estimates suggest that up to 40 percent of
the world population is either unbanked or The popularity of the system has led M-Pesa
underbanked, accessing financial services via to offer loans and other financial products,
alternative methods such as payday loans, and can also be used to pay salaries or bills,
pawnbrokers or microfinance.13 increasing convenience for mobile.
13.
Buckley Sandler LLP The high adoption of mobile devices worldwide, The M-pesa model has great potential in other
- Digital insights &
trends: can mobile
however, presents a solution for the unbanked developing markets, and is gaining traction in
payments solve the population; mobile payments. countries such as Tanzania, Afghanistan and
“unbanked” problem?,
India where mobile penetration is high but bank
2014
There are, for example, 140 million mobile access is lower.
phone subscribers in Pakistan, yet only 37
million bank account holders. In Haiti, under
one percent of the population are granted
loans, but 85 percent of Haitian households
have access to mobile phones.
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whereas traffic from In both China and India, preference for mobile
17.
TRAI Press release – laptops and desktop devices is substantially driving connectivity and
TRAI, 2014
computers grew 13 ecommerce. India had over 970 million mobile
subscriptions in 201417, the second largest
16.
We Are Social, 2015 percent.16 market after China, with an excess of 1.2
million.18
18.
In developed markets, Western Europe
Statista - Mobile phone
users in China, 2014 and the US for example, the Internet is a
02
2013
2011
2009
2007
2005
2003
2001
0 10 20 30 40 50 60 70 80
The penetration of desktop PCs is still around Flipkart predicts that 75 to 80 percent of their
5 percent in India, compared to 75 percent for traffic will soon be mobile.
mobile. Today, mobile is the only point of access
for the Internet for almost 40 percent of Indian This is a common trend across other parts of
consumers. Indeed, Indian ecommerce giant Asia. It is predicted that the combined online
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3.3
retail value of the Association of South- As of December 2014, there were 700 million
east Asian Nations (ASEAN) – Singapore, mobile connections and 328 million unique
Malaysia, Indonesia, Thailand, the Philippines subscribers in Latin America.21 Brazil has more
21.
Latin Link - Latin and Vietnam – will reach USD 34.5 billion by than 250 million mobile phone users alone
American Mobile Data 2018, from USD 7 billion in 2013.19 It is no — the 4th largest mobile market in the world.
Market, 2015
coincidence that ASEAN is home to some of the Mobile commerce in Brazil grew by 83 percent
19.
biggest smartphone markets in the world. in the 2013-14 financial year. 22
Frost & Sullivan, 2014
22.
CardNotPresent.com In Indonesia, a survey indicated that almost Brazil is the leading Latin American country for
– 2015 Predictions; 60 percent of consumers access the Internet mobile Internet access, but others are following
Ebanx, 2015
via their smartphones, mostly to access social suit. Around 70 percent of Argentinians go
20.
media.20 online with their mobile phones. 50 percent in
Baidu, 2014
Mexico, 43 percent of Columbians, 58 percent
23. In Latin America a similar mobile revolution is of Chileans and 67 percent of Paraguayans
Latin Link - Latin
giving access to previously limited markets. have access to mobile internet.23
American Mobile Data
Market, 2015
24.
growing number of chain reaction. As a result, there is now a band
MobilePaymentsToday
- The Kessler Effect and
businesses with new of space junk which might inhibit rocket travel.24
today’s crowded
payments ecosystem,
technology entering For Kramer, this occurrence is comparable to
2014
the ecosystem. the crowded mobile payments space where
more and more start-ups are entering the
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4.1
This technology provides an edge over Apple In Asia, mobile payments are far more
in the US where most stores are still using commonplace than in Western markets. Apple
the swipe-and-sign system, but in Europe are keen to enter the successful mobile market
and major Asian markets the magnetic strip is with Apple Pay, but discussions are ongoing.
mostly phased out.
China UnionPay, the most globally used
27.
The Nilson Report:
UnionPay Debit Cards
“ What we know for sure is that the
ease and the safety a certain mobile
payments solution will win. The
payment method in 2014, based on purchase
volume27, also announced in the latter part of
2014 their development of an Android based
the Most Popular Global
Payment Method in
acceptance rate also depends on mobile payment app, expecting to rival the
2014, 2015 the consumer promise, which has leading mobile wallet in China; AliPay Wallet.
to be appealing enough to convince
them leave their wallets at home
and share their card details with
different providers. So the battle
will continue between the card
schemes, the wallets, and Apple and
Google.” Gijs op de Weegh, COO at Payvison
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The mobile payments revolution
17%
OTHERS
83%
ALIPAY
1.3%
OTHERS
LIANLIANPAY
10.6%
QIANDAI
99BILL
CHINA MOBILE
BESTPAY
UMPAY
TENPAY
3.9%
LAKALA
The Chinese market is successfully deploying Simple and effective marketing efforts have
smart omnichanneling for consumers through included significantly discounted products
mobile payments. UBox is a new generation within UBox vending machines, encouraging
of vending machines that support payment consumers to become comfortable with mPOS
through mobile wallets and QR codes. and rewarding them with a cheap candy bar or
similar.
Alipay Wallet supports payments at vending
machines operated by Ubox. It also supports Today, China is truly a world leader for omni-
ticketing machines in subway stations, 12306. channel mobile payments, and the Western
cn, the online train ticket vendor operated world can learn much from their movements.
China’s government, about 20,000 cabs in 10
Chinese cities, and some retail stores. Alipay In developed markets, on top of the major tech
Wallet also stores e-coupons and loyalty cards, companies, well-known retailers are jostling
like the Apple Passbook app. for their own mobile payments solution in the
crowded payments landscape.
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4.2
The reasons for this evolution are clear; the
ideal scenario for retailers is to offer omni-
channel experiences by keeping their customers
“ Looking at the definition of what is
going to make mobile payments
successful, so much talk is about
within their own payment ecosystem, tracking merchants, banks, and issuers. But
usage and understanding their preferences. the consumer is getting lost in
Better still, even circumventing the fees process.
imposed by card schemes like Visa and Master-
Card. If you look at the success stories
of mobile, it is the merchants that
But so far, only a few key players have truly have done something that have
succeeded in this segment, while the rest look really changed the experience, by
on in wonder. A clear leader in the mobile tying in loyalty. When consumers
payments space is American coffee chain, Star- behave the way you do, you are
bucks. rewarded for it.” Andy Shober, Chief
Sales & Business Development Officer at
The café giant had more than 30 million mobile Merchant Customer Exchange (MCX)
users at the end of December 2014, according
their reports at the end of the first financial
30.
Forbes - Once Again, quarter in 2015.30 Based on QR code technology, the model
Starbucks Shows follows a similar technology format to the
Google And Apple How
To Do Mobile Payment,
An essential simplicity-plus-reward Starbucks loyalty app. Yet, unlike the successful
2015 formula works perfectly for Star- Starbucks solution, CurrentC has been declared
bucks, it was an organic evolution awkward to use. By adopting QR codes over
from the success of their recharge- NFC, MXW is choosing technology that offers
able loyalty scheme gift cards. With the advantage of greater device compatibility
a Starbucks card, customers receive stars for but is fraught with challenges.
the number of drinks they buy, and the more
stars they earn, the higher level of rewards the The powerful network of American stores
customer receives. The process is clean, intui- backing this payments system, due to launch
tive and easy to track. mid-2015, have also simultaneously disabled
their NFC-enabled readers, so neither Apple
In 2009, the loyalty card was launched as a Pay (nor Samsung Pay, or subsequent Android
digital card, used via a mobile app. At the start Pay platforms when they launch) will not work
of 2015, the 30 million mobile users were in their stores.
making 7 million mobile transactions a week;
31.
Forbes - Once Again, 16% of all transactions.31 From the outset, CurrentC presents itself as an
Starbucks Shows interesting strategy to challenge both the tech
Google And Apple How
To Do Mobile Payment,
The MCX (Merchant Consumer Exchange) a giants and the card schemes imposing the fees,
2015 retail consortium including US giants Walmart, in one fell swoop. Whether it will succeed is yet
Target and BestBuy, among many others, have to be witnessed.
announced their own mobile payment solution;
CurrentC. Their aim is to focus on the customer
experience side of the mobile payments.
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An essential simplicity-
plus-reward mobile
payments formula
works perfectly for
Starbucks, an organic
evolution from their
rechargeable loyalty
scheme gift cards.
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4.3
For our competitors this is much credit, of which there is currently no stream-
harder to do, as their processing is lined process across Europe. 3,700 European
often done elsewhere. banks are supported from launch via Sign2Pay’s
commercial banking partners.
“Today, the industry is really talking
about omnichannel experiences. We The core idea behind the concept; visually a
are one step ahead, by potentially signature can be forged easily, but when you
allowing merchants to connect measure the speed, strokes, touch points, there
dynamically to their consumers via a are multiple data points and variables. This
mobile application, retain customer makes a digital signature on a mobile device
data and engage them through loyalty much harder to imitate.
and rewards. The consumer could
also self-scan in-store with their Coupled with a focus on debit rather than
smartphone, and then pay with their credit, a frequently preferred payment method
chosen method – debit/credit card at a in Europe, Sign2Pay are tapping into a unique
payment terminal or mobile wallet. It share of the mPOS space.
is the complete 360 degrees merchant
/ consumer exchange. Restaurant and hospitality industry-specific
startup, MyCheck, allows businesses in Israel,
“What’s even more exciting, the unique Brazil, the US and the UK to set up a branded
architecture of our solution allows mPOS solution with a bill payment facility, tip
for smooth cross-border ecommerce calculation and personalized loyalty schemes.
processing and the potential for a
unified, omnichannel platform. When Recently announcing funding from Santander
this is coupled with government bank, MyCheck could soon be accelerating their
usage of our secure biometric data international expansion.
collection, PayPlaza can be rolled
out across the major markets in Seamless, the Swedish mobile payment
the world.” Edgar Plasa, CEO PayPlaza company behind the SEQR, use both NFC and
QR code technology to power their mobile
payments solution. In 2013, SEQR won the
The UK is a market heavily reliant on debit Mobile Money Global Award for Best Mobile
card payments. Zapp, an independent mobile Money Deployment in Europe.
payments solution, has signed up a number
of large retailers and banks, to bridge the gap Similarly to PayPlaza, other innovative busi-
between bank accounts and the stores, without nesses are focusing on mPOS technology for
needing to share bank information. the merchant side of the transaction chain,
allowing for a streamlined and simple point-of-
Working with both NFC and QR code tech- sale solutions for small and medium merchants.
nology, and available across multiple operating
systems, Zapp could provide the biggest Nobly POS are one such business, partnering
competitor to the tech giant payment solutions with small retailers and start-up merchants to
in the UK. The application is due to launch in allow then to implement a simple, cost effective
2015. EMV-enabled payment processing system using
cloud-based mobile technology.
Sign2Pay is an independent mPOS solution
focused on debit transactions, rather than
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The mobile payments revolution
4.3
Simple, independent solutions such as this
are perfect for a smooth transition over the
impending EMV switch deadline in the US,
“ For merchants, it’s about trying to
figure out the disruption. Merchants
want to start to be progressive
especially the smaller merchants who have less and bring value to their business
up front capital to invest in their point-of-sale through mobile. They also have to
systems. think about EMV which is a hard
shift for them to make anyway. A
By operating in niche markets, the innovative lot of them fear being left behind.
smaller independent payment providers are They are trying to figure out how
already succeeding where the giants are still to prepare today for what nobody
looking to gain traction. The technology driving knows is coming tomorrow.” Marc
their back-end systems, allowing on-the-go Castrechini - VP, Product Management, Cayan
flexibility to respond to market trends, gives
power to merchants processing mobile
payments. The big-boys; the tech giants and the major
retailers – with their dedicated fan-base – will
Merchants have much to gain by partnering tip mobile payment adoption into the future,
with unique independent providers that can allowing for the small and medium merchants
provide both the market intelligence of expe- to take advantage and ride the wave into
rience, and lack of legacy systems to provide a tomorrow. How these merchants choose to
flexible technological advantage. invest in this future technology will be key to
their success in this landscape.
5. Security
The widespread success of mobile payments
arguably lies across disparate concepts; user
experience and data security.
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The mobile payments revolution
“Looking at the
definition of what is
going to make mobile
payments successful,
so much talk is about
merchants, banks,
and issuers. But the
consumer is getting
lost in the process.
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The mobile payments revolution
05
5.
WHAT ARE OR WILL BE THE KEY SUCCESS FACTORS
DRIVING MOBILE PAYMENT USAGE?
0 10 20 30 40 50 60
The user experience aspect of the mobile driving mobile payment usage, yet to inforce too
payment equation is being approached head on. stringent levels of security across the board will
With the launch of Apple Pay, a company known impact the user seamlessness.
for their intuitive technology, and other mPOS
solutions focusing on eamlessness, practical Equilibrium between the two is a delicate
omnichannelling, intelligent retailer-consumer balance, and a number of technologies have
communication, and ultimately the ‘disappear- come to market removing the PIN and pass-
ance’ of payments, one can expect that the user word methods we are so familiar with, and
experience will only get better. replacing them with more secure, elegant
solutions.
Security-wise, 2013 was the most difficult
on record for merchants. A number of factors Biometric Identification
challenged their fraud prevention efforts; data Unique identification using biometrics is
breaches flooding the black market with stolen certainly not a new concept; we have been
card numbers, expansion into mobile and using eye-scanning and fingerprint detection
alternative payments and virtual currency, and for a number of decades; identifying criminals
efforts to make final use of counterfeit cards and securing international borders, for example.
before the implementation of EMV.
Today, biometrics as a mainstream identifica-
The total of 2,164 incidents reported during tion tool is still largely underused. On this topic
2013 exposed over 822 million records, nearly however, Apple have moved the goalposts.
doubling the previous highest year on record
33.
RBS - Data Breach (2011).33 By first introducing fingerprint recognition
Quick View - An technology – Touch ID – in their earlier devices,
Executive’s Guide to
2013 Data Breach
Addressing the security aspect of the mobile and then later linking this technology to their
Trends, 2014 payments experience, however, is ongoing. With payments offering, Apple have placed biometrics
high-profile data breaches still making headline at the forefront of mobile payment security.
news, consumers are equally concerned about
the security of their data as their user experi-
ence. Reliable risk measures are paramount to
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The mobile payments revolution
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The mobile payments revolution
6. Mobile payments by
region
Predictions on mobile payments vary. US based
research company, Gartner, conservatively
predicts that global transaction volume and
value is to average 35 percent annual growth
between 2012 and 2017, forecasting a market
worth USD 721 billion with more than 450
34.
Gartner - Forecast: million users by 2017.34
Mobile Payment,
Worldwide, 2014
Conversely, the People’s Bank of China esti- Europe and North America have been the
mates that it already handles a total of 1.67 global powerhouses for ecommerce for many
billion mobile payment transactions a year, years, with Asia fast catching up, China leading
35.
TechNode - China’s worth an incredible USD 1.6 trillion.35 the pack. Yet in 2014, there were double the
Mobile Payment amount of mobile payment users in Asia than in
Turnover Soared 317%
YOY to $1.59 Trillion in
North America, and triple that of Europe.36
2013: PBOC, 2014
36. 150 M
Statista - Number of MOBILE PAYMENT USERS
mobile payment users BY REGION (IN MILLIONS) 120 M
by region, 2015
100 M
90 M
80 M 80 M
70 M
60 M 60 M 60 M
50 M
40 M 40 M
30 M 30 M
20 M 20 M
10 M
0M 0M 0M
2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015
To fully understand the contribution from each sary to analyze consumer behavior, trends and
region to global mobile payments, it is neces- preferences.
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The mobile payments revolution
6.1 Asia
37. Asia – both despite and because of its varied
Statista - Mobile phone
penetration in Asia-
Asia – the world’s markets – has become a driving force of the
Pacific from 2010 to
2015, 2015
largest continent – is mobile sector. Mobile penetration was just
under 65 percent across the region in 201437,
38.
an incredibly diverse and smartphone penetration makes up more
AdExchanger / Forrester
- Smartphone
economic landscape, than half of this figure.38 Smartphone penetra-
tion, giving access to a number of historically
Penetration In Asia To
Reach Mass Market In
with markets disconnected consumers, has seen exponential
2015, 2014
operating at far ends growth in recent years. A number of markets
are surpassing penetration in the US and many
of the commercial European nations.
INDONESIA
117%
SINGAPORE
156% JAPAN
102%
SOUTH KOREA
110% INDIA
72%
CHINA
92.3% 2015 72.6% 2014 64,8%
2012 55,4%
2010 42.5%
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The mobile payments revolution
Payplaza is a unique
payment processing
company, focused on
integrated mPOS
solutions all across
Europe.
This proposition allows partnering
merchants to offer the definitive
omnichannel payments experience, not
only for domestically but also overseas.
In 2013, PayPlaza was awarded ‘The most
innovative company in financial services’
by Accenture.
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The mobile payments revolution
6.1
China, with its 1.4 billion population, is the mobile OS preference in Singapore, 50 percent
powerhouse of Asia. Over 70 percent of the and 49 percent respectively. 43
vast population owns a smartphone, so it is
43.
Payvision – Factsheet no surprise that of the 618 million Chinese Another mobile-driven Asian market; m-com-
Singapore, 2014 Internet users, 500 million use a mobile device merce in South Korea has grown at a CAGR of
as the primary vehicle. That’s over 80 percent 154.7 percent since 2011, more than double
39.
of Internet users.39 that of the US.
Payvision – Tapping into
China, 2014
Mobile commerce sales made up 9.1 Android OS accounts for 60 percent of total
percent of total ecommerce sales in smartphone handsets, whereas iOS makes less
44.
China, a figure that is expected to than 30 percent.44
Payvision – Factsheet
South Korea, 2014 grow to 24.2 percent in 2017.40 In
40. 2014, use of mobile payment apps in Indonesia is the largest developing economy
Payvision – Factsheet
China, 2014 China grew 73.2 percent and mobile within South East Asia. With a rise in cheap
banking grew 69 percent.41 smartphone and tablet availability, Indonesia is
41.
Currency Cloud - Mobile seeing a trend of new web users first accessing
Payment booms in Japan, with a considerably high urban popula- the internet through their mobile devices. As a
Africa and China, 2015
tion at 92 percent, is a well penetrated mobile result, Indonesia is a leading nation for mobile
market; 102 percent. Smartphones are owned payments; 54% use their smartphone to shop in
by 55 percent of the population. the last three months.
Mobile commerce is a driver for ecommerce in The mobile software of choice for Indonesians is
Japan; 22% of online shopping in Japan was Blackberry at 27 percent, followed by Symbian
conducted through mobile devices including at 20 percent.
smartphones, tablets and future phones. It was
worth approximately USD 9.7 billion. India’s consumer market sits on the lower end
of the economic spectrum; with the second
In addition to this, Japan rates third globally largest population after China but only 32
in app usage, at an average of 40 apps per percent urban population, and only 19 percent
smartphone, and ranks highest globally in paid Internet penetration.
app usage. Apple’s iOS also has a strong pres-
ence in Japan; preferred by almost 70 percent, Smartphone penetration is growing
42.
Payvision – Factsheet followed by Android at 30.5 percent. 42 150 percent year on year, and over 90
Japan, 2014 percent of all Internet subscrip-
Singapore, with 100 percent urban population, tions registered by the end of 2013
has an extremely high smartphone penetration were mobile connections. This
rate, at 87 percent. reinforces the notion that mobile
Internet is truly changing the
Smartphone usage is driving ecommerce consumer market in developing
in Singapore, with over 35% of smartphone countries.
users in Singapore making purchases via their
mobile device in the first three months of 2014, Indian m-commerce grew 800 percent from
approximately USD 1.2 billion in value. 2012 to 2013, yet still only contributes a mere
3 percent of total ecommerce value. More than
While Asia is made up of predominantly Android half of online consumers in India make mobile
users, Android and iOS almost equally share purchases for entertainment services; cinema,
PAYVISION 33
The mobile payments revolution
6.1
theatre shows, DVDs, sport games. Just under card’s Mobile Payments Readiness Index, the
95 percent of all mobile devices are Android.45 country ranks 13th in terms of readiness to
accept new forms of mobile payments.
45. Although the highest rates of smartphone
Payvision – Factsheet penetration remain in more developed markets Thailand has a slightly higher smartphone
India, 2014
such as Singapore, it is within other coun- penetration at 49 percent, but m-commerce
tries such as the Philippines and Thailand that remains largely underused by consumer.
m-commerce is growing fastest. A recent flash-sale survey by aCommerce,
an ecommerce service provider in Thailand,
It has predicted that in both the Philippines indicated that while 89 percent of surveyed
and Thailand markets, m-commerce will have consumers viewed products on a mobile device,
passed the USD 9 million mark by the close of 42 percent still purchased via a desktop
46.
Euromonitor, 2015 2018.46 computer.
6.2 Africa
A consumer culture is also emerging in Africa
Africa is an expansive and is expected to continue. Africa has around
48.
second only to Asia. number could reach a projected 128 million by
The Independant - 10
things you didn’t know
Internet penetration 2020.48
PAYVISION 34
The mobile payments revolution
2016
AFRICA
NORTH AMERICA
EUROPE
LATIN AMERICA
MIDDLE EAST
In most of sub-Saharan Africa, only a small Kenya is another African country with increasing
percentage of upper-income households enjoy levels of mobile connectivity. With 67 percent
the convenience of card-based, online, and of mobile sales being smartphones, mobile
mobile banking and payments, while most Internet is significantly higher here than across
consumers still pay with cash. the whole region.
South Africa is one of the largest economies The most remarkable trend in Kenya is the use
in the region, secondly only to Nigeria. South of mobile money. Kenya is now classified as a
Africa also rates highly in Africa for connectivity; middle-income country, where only 22 percent
51.
Financial Times - Internet penetration is over 60 percent, and have formal bank accounts, more than 12
Democratising finance: almost half the population owns a smartphone. million people — 29 per cent of Kenya’s popula-
mobile phones
revolutionise access,
Blackberry currently has the highest share of tion — regularly send money via M-Pesa.
2015 the market at 36 percent, but high sales of
Android phones indicate it could soon be the It was introduced only seven years ago; but
50.
Deloitte Digital - Mobile leading OS. 50 M-Pesa users now send an average of USD 44
operating systems in million daily, via 6.8 million transactions, adding
South Africa, 2014
SnapScan, a South African mobile payment app, up to 31 percent of the country’s annual GDP.51
is taking off in South Africa, allowing consumers
to pay for parking, groceries and even church Nigeria, the largest economy and Africa’s most
donations or homeless magazines by mobile. populous country, is ranked 10th on the list
of world’s top internet users, according to
South African bank FNB reports that its eMarketer; with 57.7 million users at the end of
customers are making 230 million mobile 2014.
payment transactions per month, compared to
45 million on the popular M-Pesa platform in Other dominant markets in Africa such as
Kenya. Ethiopia, Tanzania and Democratic Republic of
Congo will add over 200 million new mobile
PAYVISION 35
The mobile payments revolution
the number of
global biometric
smartphone users
will reach 471
million by 2017.
PAYVISION 36
The mobile payments revolution
6.2
connections by 2020, driving smartphone a lack of mobile payment technology available
adoption rates.52 to consumers, average mobile transaction value
52.
is low, between 55 cents and two US dollars.
GSM – The Mobile Mobile handsets may be increasing in pene-
Economy, 2014
tration in these and other African countries, A number of mobile payment solutions are
but mobile payments are yet to gain traction coming to the market in Egypt. The hope is that,
in these markets. This being said, the paving thanks to a central, developed banking system
stones are being laid for a future mobile by which money transfers occur seamlessly,
payments surge. adoption will rise over the next year.
6.3 Americas
North America is a well-connected region with
The Americas comprise 78.6 percent Internet penetration. Holding
Southern countries of
Latin
07
America.
NUMBER OF MOBILE PAYMENT USERS IN NORTH AMERICA
(IN MILLIONS)
2015
2014
2013
2012
2011
2010
2009
0 10 20 30 40 50 60 70 80
PAYVISION 37
The mobile payments revolution
6.3
North America has seen a steady increase in technologies to flow out to consumers with
mobile payments, and number of users have limited fragmentation.
increased ten-fold since 2010.53
75 percent of major Canadian retailers accept
53.
Statista - Number of The US has long been the global ecom- contactless payments and ten percent of trans-
mobile payment users merce super-power, with 75.8 percent of the actions are already contactless.
in North America, 2015
population shopping online in 2013. With a
high smartphone penetration rate of almost Latin America is a far more emerging region,
70 percent, the country attributed 16 percent but across the markets mobile Internet is a key
of ecommerce to mobile commerce in 2013. driver. Smartphone penetration is estimated to
Android is the preferred mobile operating have reached almost 30 percent by the end of
system in the US, at 51.5 percent, closely 2014, and grow further to 44 percent by 2017.
followed by Apple’s iOS at 41.8 percent.
Latin America is still very much a cash
While growth has been very slow to reach a economy. Whenever and wherever possible,
tipping point in the US, well adopted retailer consumers in the region choose to pay with
schemes with high levels of brand loyalty, cash. Informal workers receive their salary in
such as the Starbucks mobile wallet, and the cash and formal workers often use an ATM
launch of Apple Pay, have turned the US into a to withdraw most or all of their salary on pay
55.
Ericsson – M-Commerce successful mPOS market. day.55
in Latin America, 2013
PAYVISION 38
The mobile payments revolution
08
2015
2014
2013
2012
2011
2010
2009
0 5 10 15 20
In 2009 there was more than double the shopping on mobile. A quarter of all consumers
number of mobile payment users in Latin own smartphones, with a strong preference for
America than in North America, but growth has Android; 62.7 percent, over Apple’s iOS, which
been considerably slower. The number of users accounts for under 10 percent of the total
in Latin America have tripled since 2010, but smartphone usage.
in 2015 there are one fifth of the number of
56.
Statista, 2015 mobile payment users as North America.56 In Colombia, 20 percent of consumers use
mobile banking, and 10 percent a mobile wallet.
Over seven percent of Mercadolibre’s sales, a In Argentina and Chile, use of mobile wallets is
Latin American retailer, is via mobile. PayPal 7 percent and 11 percent respectively.
recently reported that 15 percent of its sales in
Brazil and Mexico was carried out via mobile
57.
Ericsson – M-Commerce channels last year.57
in Latin America, 2013
PAYVISION 39
The mobile payments revolution
6.4 Europe
The number of European mobile transactions
59.
Zanox – Mobile Around 10 percent have tripled since the beginning of 2012.59
Performance
Barometer, 2014 of the world’s It is predicted that more than half of European
adults with access to a mobile device will use
60.
ING - International
population live in their device to make payments in the 2015
Survey on Mobile
Banking, 2015 Europe. financial year. At present, 33 percent of people
across the continent do so.60
600000
UK
25%
500000
SCANDINAVIA
BENELUX 20%
18%
400000
SPAIN
14%
300000
200000
100000
PAYVISION 40
The mobile payments revolution
PAYVISION 41
The mobile payments revolution
6.4
7 billion in 2013, but despite strong growth, 21 percent of Italian smartphone users,
market uncertainty hinders widespread adop- approximately 8 million people, purchase goods
tion.61 on their mobile at least once a month. Italy is
61.
Payvision – Factsheet second only to the UK for mobile payments
UK, 2014 Germany is the second largest market in in the EU5; UK, Germany, France, Italy and
62. Europe, with a 74 percent urban population Spain.62
Payvision – Factsheet
Italy, 2014
and over 85 percent of consumers connected
to the Internet. Smartphones are owned by 62 Spain has a high urban population at 78
percent of the population and 78 percent of the percent. Over 70 percent of consumers have
devices are Android. access to the Internet and 2 out of 3 consumers
own smartphones, with 90 percent of devices
In Germany, mobile payments made up 10 being Android. Spain has also seen a significant
percent of online retail sales in 2013. Similarly growth in mobile payments, and 66.5 percent
to the UK, the market is awaiting a break increase in consumers browsing retail sites on
through, to see mobile payments reach the their mobile devices.
tipping point.
Spain also has one of the fastest growing
France is the third powerhouse in Europe, with mobile commerce markets in Europe; regis-
53 percent smartphone penetration, and mobile tering a 66.5 percent increase to 3.3 million
payments accounting for a marginally higher 11 smartphone users accessing retail websites on
percent of transactions. their mobile. Mobile payments currently make
63.
Payvision – Factsheet up 6 percent of total ecommerce in Spain.63
Spain, 2014 Apple’s iOS is used by only 18 percent of French
smartphone owners, Android is preferred by Poland, with a 61 percent urban population,
nearly 63 percent. has long suffered with a low rate of Internet
penetration and access to ecommerce. But
In parts of Eastern, Central and Southern with mobile Internet giving greater access to
Europe, ecommerce is less developed. Yet consumers, Poland is now one of the stronger
in these countries, mobile penetration is ecommerce markets in Central Europe, coming
frequently driving online spending. in fourth place in terms of ecommerce turnover.
Greece has approximately 77 percent urban With a number of Polish consumers having
population, and just over half of people have more than on mobile, with almost half using
64.
Payvision – Factsheet access to the Internet. Yet there is over 100 smartphones.64 Android is the preferred OS
Poland, 2014 percent mobile penetration – a third of which with over 70 percent share. The value of mobile
are Internet enabled. Android holds the lion’s payments is estimated to have doubled in
share of Greek mobile operating systems at 75 2014, and Poland is considered a hotbed for
percent. innovation in digital payment services.
In Italy, while ecommerce is relatively slow, Poland is embracing contactless payment tech-
mobile payments are significantly driving the nology and is Visa’s largest market in Europe in
market. Italy has one of the highest mobile terms of contactless transaction volumes. Close
penetration rates in Europe, and 65 percent to 70 percent of Visa cards in the market have
of which are smart phones. Android is the contactless functionality, with the technology
65.
Visa Europe - 2015 preferred mobile operating system in Italy at accounting for more than 40 percent of all Visa
almost 70 percent. payments in Poland.65
PAYVISION 42
The mobile payments revolution
6.4
Russia’s market has always been limited by Sweden, Finland and Denmark in particular are
low levels of Internet penetration and a long- renowned for their highly developed telecom-
standing preference for cash payments. 36.2 munications equipment and handsets manu-
percent of consumers have smartphones, half facturing industries. Indeed, mobile telephone
of which are Android. technology was born in this region.
However, Russia has a strong tablet market; The Nordics have among the highest Internet
the world’s third biggest after the United States penetration rates in the world; 96.5 in Iceland,
and China. 2.77 million tablets and e-readers 95 percent in Norway, 94.9 percent in Sweden,
were sold in Q3 2013, up 25 percent from the 94.6 in Denmark and 91.5 in Finland.
second quarter.
Mobile penetration in the Nordics is at the top
Around one third of mobile Internet users in end of the spectrum, around 150 percent,
Russia purchase products from online shops via and Internet-enabled smartphones owned by
their devices. around half of consumers.
The Nordics – Norway, Sweden, Finland, Mobile payments, in turn, are seeing comfort-
Iceland and Denmark – have much in common, able adoption rates. A leader in the region; four
economically. They have all evolved from poor, out of five purchases were already made elec-
agrarian countries into the most competi- tronically in Sweden, so retailers and restau-
tive economies in the world with rich, natural rants are using mPOS technology to power an
resources. The average urban population is almost cash-free economy.
86.2 percent.
6.5 oceania
Oceania, also known This region may be large geographically, but it
as the Pacific, is the holds only 0.5 percent of the world popula-
tion. Internet penetration across the region is
region comprising a respectable 72.9 percent, but this is largely
Australia and New driven by Australia and New Zealand; 94.1 and
94.6 percent respectively. The bigger picture is
Zealand as the power far more scattered.
PAYVISION 43
The mobile payments revolution
AMERICAN SAMOA
AUSTRALIA
COOK ISLANDS
FIJI
FRENCH POLONESIA
KIRIBATI
NEW CALEDONIA
NEW ZEALAND
SAMOA
SOLOMON ISLANDS
TONGA
VANUATU
0 20 40 60 80 100
Australia is a well-connected market; 3 out of 4 Westpac predicts three million Australians will
consumers have smartphones. The country has make an average of five contactless mobile
a high urban population; 89 percent. payments per month in 2015– resulting in an
66.
Business Spectator industry worth USD 3 billion.66
- The future of mobile Mobile payments, however, are not widespread
payments in Australia,
2014
but they are increasing; purchases via mobile New Zealand is an equally strong market in the
grew by 30 percent in 2013. Android is the region. Over half the population buys online,
preferred mobile operating system in Australia reaching a total of just over USD 3 billion in
at 57.7 percent. 2013. Urban population drives this connectivity
at 86 percent. This is forecast to grow to USD
67.
yStats - Asia-Pacific Despite the slow uptake of mobile payments, 4.9 billion by 2017.67
B2C E-Commerce almost half of the nine million Australian smart-
Market 2014
phone owners downloaded a banking or finance Two out of three consumers own smartphones
app in 2014. This enthusiasm has led the in New Zealand, and like other regional trends,
large financial institutions and major retailers mobile is driving online spending. There are
to unveil mobile payment solutions, aimed at now 650,000 consumers shopping on their
simplified mPOS and loyalty schemes, ready for smartphones (up 127 percent year on year)
the inevitable mobile payment tipping point. and 414,000 on their tablet, a 73 percent
increase.
PAYVISION 44
The mobile payments revolution
PAYVISION 45
The mobile payments revolution
6.5
In 2015, the first integrated mobile wallet –
Semble – was announced in New Zealand, using
NFC technology. What sets the solution apart in
the region is the unity by leading financial and
communication companies. The app, somewhat
controversially, is only available to Android
users, but as Android hold two thirds of the
market, future success should not be hampered.
7. conclusion
7.1 the shape of Tomorrow’s mobile
landscape
Of total mobile payments,
today m-commerce
represents 90 percent. mPOS
only accounts for 4 percent.
PAYVISION 46
The mobile payments revolution
13
26%
MOBILE
MOBILE PAYMENTS %
OF ECOMMERCE 2014
74%
ECOMMERCE
4%
6% MPOS
MP2P
BREAKDOWN OF MOBILE
68.
eMarketer, Internet
Retailer, Business
PAYMENTS 2014
90%
Insider and Forrester
M-COMMERCE
Research, 2015
68
Mobile payments have rested on a few key scale. Without the three key ingredients, usage
prerequisites to initiate their inevitable tipping has remained low.
point; superior user experience, trusted security
that is invisible or discreet, and seamless omni- In 2015, these prerequisites are finally being
channel functionality that pulls together the addressed. This is largely due to the waves
entire consumer experience. generated by the tech giants like Apple and
Samsung, and their alliance with the card
There have been years of floundering attempts schemes like Visa and MasterCard, both holding
to make mobile payments go mainstream, considerable weight in the value chain. Influ-
particularly in developed markets where tech- enced by these players, we can expect to see
nology is advanced and connectivity is high. But elegant technological advancements across the
paradoxically, despite having the sophisti- board, giving consumers a far superior experi-
cated tools, these markets were complacent. ence than the current payment methods.
Consumers take mobility for granted and these
futile attempts refused to take off on a wide Where only smaller, niche offerings have had
pockets of success in various Western markets,
PAYVISION 47
The mobile payments revolution
PAYVISION 48
The mobile payments revolution
7.1
we will see widespread acceptance and With further technological advancement, both
adoption of m-commerce, mPOS and mP2P, consumers and merchants will utilize mobile
much like markets in Asia and Africa. In these point-of-sale tools to create meaningful, omni-
markets, mobile Internet is a wonderful luxury, channel experiences that are both engaging and
opening up disconnected markets struggling rewarding for consumers. These experiences
with insufficient infrastructure. are not limited to domestic payments, but will
be fully integrated global solutions.
With the prerequisite addressed, and the
ever-expanding Internet of Things, mobile As both buyers and sellers become increasingly
payments will soon cover more than just confident, we can expect to move further and
smartphones and tablets. An infinite number further away from a cash-based society. From
of objects will become a touch-point for ecom- contactless payments, to mobile wallets and
merce. The Apple Watch, a commerce-capable mPOS enabled devices, payments will become
wearable, is the just the starting point for these part of a 360 degrees interactive, connected
endless possibilities. consumer ecosystem.
In some retail spaces, consumers can already Merchants that do not pay attention to these
interact and purchase via their mobile through movements and adapt to the evolving trend
entirely digital changing rooms, building an may gradually fall behind, as consumer prefer-
online and in-store hybrid experience. Rebecca ences shift.
Minkoff has pioneered this experience in New
York by introducing her digitally connected Never before has it
store. Mobile will become more and more been so important for
central to the in-store and point of sale expe- merchants to invest
rience.
in mobile-compatible
From a security perspective, this year we will technology, to keep up with
see eradication of swipe-and-sign authentica- this fast-paced, evolving
tion and the gradual decline of chip-and-pin, as landscape, and be ready
biometrics and tokenization take center stage in for the mobile revolution.
combatting fraud and data breaches.
PAYVISION 49
The mobile payments revolution
PAYVISION 50
The mobile payments revolution
PAYVISION 51
The mobile payments revolution
PAYVISION 52
Mobile
Payvision
O
Payvision, an independent global card
processor, offers international payment
service providers and ISOs unprecedented
business opportunities by connecting
PAYVISION 53
The mobile payments revolution
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