MOBILE PAYMENTS
The Inflection Point is Now

INVESTMENT CASE

MOBILE PAYMENTS

While the mobile payment infrastructure is now in place (NFC-enabled phones and POS terminals, various platforms such as Apple Pay), we are about to enter the second phase of growth for the theme, which is mass adoption of payment solutions by consumer.

Increasing marketing and improving ergonomics, security and value-added services (such as rewards, loyalty and couponing) should give a major boost to consumer engagement.

Mass adoption is not a question of if, but when:

the example of e-commerce says it all: despite initial concerns around security, now most consumers make online transactions,
new forms of mobile payments will expand the total addressable market: in-car payments and VR shopping.

Government incentives for a cashless society are another major catalyst: increasing number of limits on cash transactions all around the world.

The best way to capture this secular growth in the volume of digital payments is to get exposure to payment processors, which handle all these transactions.

FACTSHEET

PRESENTATION

TERMSHEET USD (Retail)

TERMSHEET EUR (Retail)

TERMSHEET EUR (Institutional)TERMSHEET EUR (Ins)

KIDs (MP USD Retail)

KIDs (MP EUR Retail)

KIDs (MP EUR Instit.)

PRICE (USD)

197.28 18.02.2019

WHAT IS IT ABOUT?

THE MOBILE
AT THE HEART OF DIGITAL INTERACTIONS

Mobile payments refer to all payment transactions made from or via a mobile device and debited either on a bank account or on a mobile operator bill.

TOP 5: SMARTPHONES PENETRATION

Source: geoba.se/usnews.com/emarketer

The rise of smartphones, tablets, and now wearables has driven new means of paying.

SMARTPHONES ARE USED TO PAY,
BUT ALSO TO GET PAID
(MERCHANTS)

All smartphones now allow contactless payments in a simple and quick way via an electronic mobile wallet, and can also become POS terminals for merchants.

THE FUTURE OF MOBILE PAYMENTS
IS ALREADY TAKING SHAPE

In-car payment solutions will allow drivers to pay for gas, toll fees or public parking without having to pull their credit card or smartphone from their pocket.

Payments in virtual stores are another exciting opportunity:

Consumers wearing a VR headset will soon have the ability to visit virtual stores and make purchases.
Alibaba recently unveiled a VR mall called Buy+ in which consumers gaze at products long enough to select them and nod their heads to buy them.
Amazon is said to be working on a similar initiative.

The seamless checkout experience (pioneered by Amazon Go) will deal a final blow to cash payments. In an Amazon Go store, you just walk in, pick the groceries you need and walk out without having to go through a checkout line. Your Amazon account is automatically debited when you exit the store. This revolutionary checkout experience is likely to be adopted by other major retailers in the future.

WHAT IS HAPPENING NOW?

THE USER EXPERIENCE

IS THE KEY IN MOBILE PAYMENTS ADOPTION

The biggest challenge remains the change in consumer habits. It has to be simple, intuitive and comprehensive.
Mobile payment requires better communication and education.
Mobile payments allow the merchant to increase the visibility on its brand, target consumers and increase loyalty services (e.g. coupons).
As illustrated by the recent success of Samsung Pay’s loyalty program, rewards/couponing are expected to be a major catalyst for mobile payments adoption.

SECURITY CONCERNS
NEED TO BE IRONED OUT

With tokenization technologies and the emergence of biometrics, mobile payments become more secure than contactless card payments.

GOVERNMENTS AROUND THE WORLD
PUSH TOWARDS A CASHLESS SOCIETY

To fight money laundering and tax evasion in 2014, Israel limits cash transaction between businesses to 5,000 shekels (USD 1,400) and private transactions done in cash or by check to 15,000 shekels.

In most EU countries cash payments are limited:

In 2015, France has limited the use of cash payments to EUR 1,000 from EUR 3,000.
In 2016, Italy has limited the use of cash payments to EUR 2,999.
Germany plans to impose a limit of EUR 5,000 on cash payments.

India demonetized some of its banknotes at the end of 2016.

The European Union plans to launch a service by the end of 2018 that allows mobile payments person-to-person using the mobile phone number as a proxy for the IBAN.

WHICH PAYMENT WOULD YOU CHOOSE?

PERSPECTIVES

STRONG GROWTH OUTLOOK

The annual transaction volume via mobile payments in 2015 was $450bn and is expected to exceed $1tn in 2019.

Asia Pacific and Africa are early and faster adopters of mobile payments with more than 100 million mobile payments users.

AFRICA AND CHINA ARE THE PIONEERS OF MOBILE PAYMENTS

Mobile Payments are a solution for providing financial services to unbanked people:

In Sub Saharan Africa, the mobile penetration in Africa is 70% but only 10% of the population have a bank account.

Payments via mobile are the faster and cheaper way to send money to family. The SMS and USSD technology is compatible with 99% of mobiles.

In China, under the impulse of e-commerce and due to the low use of bank cards online payment, and especially mobile-commerce, has become a reality.

Annual transaction volume in $Bn
Mobile Payments

Source: AtonRâ Partners, TrendForce, NFC

Mobile payment users by region
(in millions)

Source: AtonRâ Partners, Gartner Inc.

PLAYERS

THE PAYMENT INDUSTRY:
A PRIVATE CLUB?

New players enter the payment industry, already benefiting from a large customer base and offering many online services: Internet and Tech giants such as Google, Apple, PayPal and Amazon are providing new mobile payments solutions.
The legacy players (telecoms, banks, card networks…) must assert themselves. The need for innovation is the opportunity to boost these institutions and offer them a new position in the payment industry.

A LOOK AT THE PAYMENTS INDUSTRY
MAIN PLAYERS



	CARD ISSUANCE Wirecard First Data TSYS		POS TERMINAL Ingenico VeriFone NCR Corp

	SIM CARD, SECURITY Gemalto G&D Oberthur		ATM HARDWARE NCR Corp Wincor Nixodorf Diebold Inc

	SEMICONDUCTOR Infineon Samsung STMicro



	Acquirers differ depending on regions (can be banks or financial institutions)		Some acquirers* outsource the processing to third party processors

	IN US: First Data Global Payments BOA		*TSYS Planet Money WorldPay IPPay

	TERMINAL SERVICES Ingenico Many regional banks offer these services to merchant



	PHONE LINE AT&T Sky British Telcom		CREDIT CARDS Visa Mastercard Discover American Express

	INTERNET AT&T Sky British Telecom		DEBIT CARDS Maestro Visa Electron

HARDWARE AND CARD ISSUANCE
TECHNOLOGY PROVIDERS

Card issuance
credit and debit card suppliers and
software for banks.
Semiconductors
at the heart of IT servers, network
routers and smartphones.
NFC technology
magnetic strip or EMV chips for
bank cards.

Point of Sale terminals providers (PoS)

MERCHANT SERVICES

Acquiring services
The acquirer : providing the merchant the services to accept a transaction. The acquirer will route the encrypted transaction details to the card association/network (Visa/MasterCard).

Distribution and maintenance of PoS.

Most large acquirers do the processing part.
Processors

The technological side of payment processing: clearing and settlement.

Acquirers, processors and POS terminal providers offer value added services to merchants: reporting, fraud management, loyalties program, big data analysis.

CONNECTION

Networks
Identify which financial institution issued the card and re-route the information to the cardholder’s issuing bank.

Set the interchange fees.
Connectivity
Mobile operators and internet:
provide connectivity and data transfers.