mobile wallets
MOBILE WALLETS NACHA Payments Innovation Alliance Meeting February, 2016
ABOUT RICK OGLESBY • President, AZ Payments Group, LLC – Market intelligence and analytics
• Partner, Double Diamond Payments Research – Go-to-market consulting
• Inventor of the digital wallet • Failed mobile payments entrepreneur
2
AGENDA
Inception invention
iPhone
Starbucks
The inflection point
19881998
2007
2011
2016
3
INCEPTION - 1988
$ 4 Image Source: Amazon.com
INCEPTION - 1988
$
5
INVENTION - 1998
6
MISSION: KILL THE CARD
7
CONTACT #1: ELON MUSK
8 Image from Reddit.com
1998 – THE CLOUD WALLET
9
1998 – THE CLOUD WALLET
$ 10 Images from Google, Wikipedia, openclipart.org
THE EUREKA MOMENT
11
CONTACT #2: MOHAMMAD KHAN (2001)
12
CONTACT #2: MOHAMMAD KHAN THE CHALLENGE
13
THE SOLUTION: NEAR FIELD COMMUNICATIONS (NFC)
14
THE BUSINESS PLAN
$ Consumers and their cards
Merchants
Create huge demand from consumers and merchants.
Payment terminals
Software providers
Provide tools for these guys to implement NFC/contactless.
15
Payment processors
Networks
Banks
• Support contactless card implementations, deployments and pilots. • Support NFC as mobile technology. • Partner with us.
THE BUSINESS PLAN (cont.)
Software updates
Trusted Services Manager
16
• Secure element • NFC transmitter / receiver • Software Support
STRATEGY: MONITOR DEVELOPMENTS
17
CAN NFC REALLY HAPPEN?
• We need to improve penetration into small transactions. • We need to support the burgeoning debit card business. ●
is eating our lunch in the cardless space.
• • • •
We need to do a better job of preparing for the future. Mobile expansion is a trend we’ve been watching. NFC is most compatible with our existing systems. We’re planning to partner with ViVOtech.
18
CAN NFC REALLY HAPPEN? NO! CALL THESE COMPANIES
GET THEM TO INSTALL THESE THINGS Secure Element
NFC Transmitter
19
FOR THIS MUCH:
FREE
AGENDA
Inception invention
iPhone
Starbucks
The Inflection point
19881998
2007
2011
2016
20
CONTACT #3: STEVE JOBS (2007)
21
CONTACT #3: STEVE JOBS (2007)
22
CONTACT #3: STEVE JOBS (2007)
$
23
24
CONTACT #3: STEVE JOBS (2007)
25
AGENDA
Inception invention
iPhone
Starbucks
The Inflection point
19881998
2007
2011
2016
26
CONTACT #4: CHUCK DAVIDSON (Starbucks, 2011)
27
CONTACT #4: CHUCK DAVIDSON
28
CONTACT #4: CHUCK DAVIDSON MERCHANTS MUST:
• • • • •
Overcome customer anonymity. Build customer relationships. Defeat showrooming. Gain customer commitment. Make more sales.
Customer commitment
29
WALLET CATEGORIES Deliver merchant value:
Deliver consumer value:
• Overcome customer anonymity. • Build customer relationships. • Defeat showrooming. • Gain customer commitment. • Make more sales. • Minimize complexity.
• Increase security via reduced data exchange. • Provide tap-and-go convenience. • A cooler way to pay.
30
CONTACT #5: MIKE COOK (WALMART) (2012)
31
CONTACT #3: MIKE COOK (WALMART)
32
DELIVER MERCHANT VALUE • Overcome customer anonymity. • Build customer relationships. • Defeat showrooming. • Gain customer commitment. • Make more sales. • Minimize complexity. • Save merchants money.
33
CONTACT #6: JACK DORSEY (SQUARE) (2012)
34
CONTACT #6: JACK DORSEY (SQUARE) (2012) “PAYMENT COMPANIES DON’T TREAT PAYMENTS AS A PRODUCT.”
35
DELIVER MERCHANT VALUE • • • • • • • •
Overcome customer anonymity. Build customer relationships. Defeat showrooming. Gain customer commitment. Make more sales. Minimize complexity. Save merchants money. Deliver tangible, incremental value.
36
CONTACT #7: TIM COOK (APPLE) (2014)
37
DELIVER MERCHANT VALUE • • • • • • • •
Overcome customer anonymity. Build customer relationships. Defeat showrooming. Gain customer commitment. Make more sales. Minimize complexity. Save merchants money. Deliver tangible incremental value.
38
APPLE INVENTORY • Most valuable company in the world. • One of the world’s most respected brands. • Tight relationships with affluent customers and quick product turnover. • Infinite opportunities for advertising impressions. • A vibrant mobile app ecosystem. • Banks and networks desperate for an NFC ecosystem.
=NEGOTIATING LEVERAGE!
39
APPLE STRATEGY=GIVE BANKS WHAT THEY WANT
• Enable participation in the App Ecosystem. • Expand transactions in the app ecosystem. • Harvest payment data. • Expand App Ecosystem services.
• • • • • •
Overcome customer anonymity. Build customer relationships. Defeat showrooming. Gain customer commitment. Make more sales. Provide tangible incremental value. App Ecosystem
Banking interface
40
AGENDA
Inception invention
iPhone
Starbucks
The Inflection point
19881998
2007
2011
2016
41
CONTACT #8: MOHAMMAD KHAN (2016)
42
CONTACT #8: MOHAMMAD KHAN (2016) Apple Pay Progress Dramatically Lags Starbucks in a Point-in-Time Analysis, and it’s current trajectory is flat:
Source: DDPR, includes data from Statista, Infoscout, and PYMNTS.com
43
CONTACT #8: MOHAMMAD KHAN (2016) CONCLUSIONS: • Merchant value equals consumer value. – The merchant creates the consumer value.
• Merchants want to enroll consumers in their own apps. – – – – –
Overcome anonymity Build relationships Gain customer commitment Save money Cover all consumers; a device-by-device strategy doesn't work.
• We must deliver tangible merchant value – loyalty, rewards, customer incentives and merchant-branded tender. • Enablement is the benchmark. 44
CONTACT #8: MOHAMMAD KHAN (2015)
45
OMNY PAY FOUNDATION
Customer commitment
46
WALLET CATEGORIES
Deliver merchant value:
(In-app)
Deliver consumer value:
(In-app)
(NFC)
47
(NFC)
DISCUSSION
[email protected] @RickOglesby www.AZPaymentsgroup.com www.DoubleDiamondGroup.com
ABOUT RICK OGLESBY • President, AZ Payments Group, LLC – Market intelligence and analytics
• Partner, Double Diamond Payments Research – Go-to-market consulting
• Inventor of the digital wallet • Failed mobile payments entrepreneur
2
AGENDA
Inception invention
iPhone
Starbucks
The inflection point
19881998
2007
2011
2016
3
INCEPTION - 1988
$ 4 Image Source: Amazon.com
INCEPTION - 1988
$
5
INVENTION - 1998
6
MISSION: KILL THE CARD
7
CONTACT #1: ELON MUSK
8 Image from Reddit.com
1998 – THE CLOUD WALLET
9
1998 – THE CLOUD WALLET
$ 10 Images from Google, Wikipedia, openclipart.org
THE EUREKA MOMENT
11
CONTACT #2: MOHAMMAD KHAN (2001)
12
CONTACT #2: MOHAMMAD KHAN THE CHALLENGE
13
THE SOLUTION: NEAR FIELD COMMUNICATIONS (NFC)
14
THE BUSINESS PLAN
$ Consumers and their cards
Merchants
Create huge demand from consumers and merchants.
Payment terminals
Software providers
Provide tools for these guys to implement NFC/contactless.
15
Payment processors
Networks
Banks
• Support contactless card implementations, deployments and pilots. • Support NFC as mobile technology. • Partner with us.
THE BUSINESS PLAN (cont.)
Software updates
Trusted Services Manager
16
• Secure element • NFC transmitter / receiver • Software Support
STRATEGY: MONITOR DEVELOPMENTS
17
CAN NFC REALLY HAPPEN?
• We need to improve penetration into small transactions. • We need to support the burgeoning debit card business. ●
is eating our lunch in the cardless space.
• • • •
We need to do a better job of preparing for the future. Mobile expansion is a trend we’ve been watching. NFC is most compatible with our existing systems. We’re planning to partner with ViVOtech.
18
CAN NFC REALLY HAPPEN? NO! CALL THESE COMPANIES
GET THEM TO INSTALL THESE THINGS Secure Element
NFC Transmitter
19
FOR THIS MUCH:
FREE
AGENDA
Inception invention
iPhone
Starbucks
The Inflection point
19881998
2007
2011
2016
20
CONTACT #3: STEVE JOBS (2007)
21
CONTACT #3: STEVE JOBS (2007)
22
CONTACT #3: STEVE JOBS (2007)
$
23
24
CONTACT #3: STEVE JOBS (2007)
25
AGENDA
Inception invention
iPhone
Starbucks
The Inflection point
19881998
2007
2011
2016
26
CONTACT #4: CHUCK DAVIDSON (Starbucks, 2011)
27
CONTACT #4: CHUCK DAVIDSON
28
CONTACT #4: CHUCK DAVIDSON MERCHANTS MUST:
• • • • •
Overcome customer anonymity. Build customer relationships. Defeat showrooming. Gain customer commitment. Make more sales.
Customer commitment
29
WALLET CATEGORIES Deliver merchant value:
Deliver consumer value:
• Overcome customer anonymity. • Build customer relationships. • Defeat showrooming. • Gain customer commitment. • Make more sales. • Minimize complexity.
• Increase security via reduced data exchange. • Provide tap-and-go convenience. • A cooler way to pay.
30
CONTACT #5: MIKE COOK (WALMART) (2012)
31
CONTACT #3: MIKE COOK (WALMART)
32
DELIVER MERCHANT VALUE • Overcome customer anonymity. • Build customer relationships. • Defeat showrooming. • Gain customer commitment. • Make more sales. • Minimize complexity. • Save merchants money.
33
CONTACT #6: JACK DORSEY (SQUARE) (2012)
34
CONTACT #6: JACK DORSEY (SQUARE) (2012) “PAYMENT COMPANIES DON’T TREAT PAYMENTS AS A PRODUCT.”
35
DELIVER MERCHANT VALUE • • • • • • • •
Overcome customer anonymity. Build customer relationships. Defeat showrooming. Gain customer commitment. Make more sales. Minimize complexity. Save merchants money. Deliver tangible, incremental value.
36
CONTACT #7: TIM COOK (APPLE) (2014)
37
DELIVER MERCHANT VALUE • • • • • • • •
Overcome customer anonymity. Build customer relationships. Defeat showrooming. Gain customer commitment. Make more sales. Minimize complexity. Save merchants money. Deliver tangible incremental value.
38
APPLE INVENTORY • Most valuable company in the world. • One of the world’s most respected brands. • Tight relationships with affluent customers and quick product turnover. • Infinite opportunities for advertising impressions. • A vibrant mobile app ecosystem. • Banks and networks desperate for an NFC ecosystem.
=NEGOTIATING LEVERAGE!
39
APPLE STRATEGY=GIVE BANKS WHAT THEY WANT
• Enable participation in the App Ecosystem. • Expand transactions in the app ecosystem. • Harvest payment data. • Expand App Ecosystem services.
• • • • • •
Overcome customer anonymity. Build customer relationships. Defeat showrooming. Gain customer commitment. Make more sales. Provide tangible incremental value. App Ecosystem
Banking interface
40
AGENDA
Inception invention
iPhone
Starbucks
The Inflection point
19881998
2007
2011
2016
41
CONTACT #8: MOHAMMAD KHAN (2016)
42
CONTACT #8: MOHAMMAD KHAN (2016) Apple Pay Progress Dramatically Lags Starbucks in a Point-in-Time Analysis, and it’s current trajectory is flat:
Source: DDPR, includes data from Statista, Infoscout, and PYMNTS.com
43
CONTACT #8: MOHAMMAD KHAN (2016) CONCLUSIONS: • Merchant value equals consumer value. – The merchant creates the consumer value.
• Merchants want to enroll consumers in their own apps. – – – – –
Overcome anonymity Build relationships Gain customer commitment Save money Cover all consumers; a device-by-device strategy doesn't work.
• We must deliver tangible merchant value – loyalty, rewards, customer incentives and merchant-branded tender. • Enablement is the benchmark. 44
CONTACT #8: MOHAMMAD KHAN (2015)
45
OMNY PAY FOUNDATION
Customer commitment
46
WALLET CATEGORIES
Deliver merchant value:
(In-app)
Deliver consumer value:
(In-app)
(NFC)
47
(NFC)
DISCUSSION
[email protected] @RickOglesby www.AZPaymentsgroup.com www.DoubleDiamondGroup.com
