Sanchia Gonsalves, Chelsea Gyarmathy, Patience Henry,Jaechun Kim, Atul Prakash, Mahesh Toppae
Mobile Payments and Coupons
Hype CycleConsumer Services and Mobile Applications,
2012
How do mobile payments work?TechnologyService providersTarget market
Understanding Mobile Payments
Current encryption methods for Mobile Payments:Encryption at the sourceEncryption on mobile device
Future developments:New standards (Ex: Error handing and control)
New protocols
Security and Encryption
Promising steps for user acceptance:Central cues
Information and service qualityPeripheral cues
System quality, reputation, structural assurance
User Acceptance
Mobile Coupons: What is a mobile coupon?
• Same type of coupons as paper• Accessed on mobile phones
Mobile Coupons: How to use a mobile coupon
1. Send code 2. Customer Receive
3. Scan 4. Redeem
Mobile Coupons: Why use a mobile coupon?
Mobile Coupons: Why use a mobile coupon?
% of sample who would consider redeeming coupons via mobile
Males and younger users have the highest degree of interest.
Source: AOL-Universal McCann, 2009 (n=1,800 US smartphone users)
OPPORTUNITY & REWARD
Ability to accept card payments for small merchants
Benefits and Costs
China US1.8
1.85
1.9
1.95
2
2.05
2.1
2.15
2.2
2.25
2.3
2.23
1.95
Cards per person
Cards per peson
China US0
500
1000
1500
2000
2500
358.59
2156.46
POS per 100,000
POS/100,000
BenefitsMinimal changes to consumer behaviorTrack customers’ trends
CostsZero cost of application and card readerTransaction fees
Benefits and Costs
Estimates using survey data from farmers’ markets
A ~ 7% increase in revenue by the most conservative estimate
A Quantitative Picture
Benefits
Increased annual revenue $4,680
Costs
Cost of application (0)
Cost of card reader (0)
Annual transaction fees ($1,313)
Annual Revenue Increase $3,367
What is at risk?Personal information stored on credit or debit
card
Security Risks
Why is secure mobile acceptance important?Limited security safeguards on mobile devicesUnclear boundaries of security responsibilityRequired protection by PCI DSS whether
printed, processed, transmitted, or storedSupports customer confidence
Security Risks
Off-the-shelf payment acceptance solution -- partner with a provider of a validated P2PE solutionApproved card reader providedProvider responsible for ensuring compliance
with PCI Security Standards CouncilP2PE Instruction Manual provided, including
P2PE Self-assessment Questionnaire
Mobile Payment Acceptance Solutions
Build own mobile acceptance solutionUsed approved POI device
Must include encryption to secure cardholder data acceptance
Can use approved PIN entry device or approved secure card reader
Comply with PCI Data Security StandardMerchant policies and proceduresContractual agreements with P2PE solution
providersPhysical protection of payment assetsP2PE Instruction Manual
Mobile Payment Acceptance Solutions
PCI Security Standards Council Study
80% of identified compromises of cardholder data involve “Level 4” merchantsSmall restaurants, e-commerce merchants, flea
markets
Targeted Companies
Emerging Markets - IntroductionNewer technologySquare
One of the companies offering the serviceLimited merchants implementing
Due to security issues
Existing Markets – Big PlayersSome companies using this technology:
Starbucks Chick-fil-A
Emerging Markets - Map
Emerging Markets – Industry SectorApparel and accessories
Art dealers and gallery Art, design, and photographyBeauty and barberBusiness servicesCharity and social servicesComputer servicesContractingFood and specialty retailIndividual useLandscaping and
horticultural
Medical and health servicesMembership organizationMusic and entertainmentPersonal, professional, and
recreational servicesRepair and related servicesGeneral retailSchools and educational
servicesTaxis and limosVeterinary
Emerging Markets - FutureFamily shopsCoffee places (Mugwalls)Fast-food places (McDonald’s) International markets (India or China)
Non-profits and fundraising effortsSmall businessesLarge businesses
Case Examples
Encrypted card readersMobile coupons to target customersPositive cost-benefit analysisMitigated security riskSuccessful implementation in other industries
Conclusion
Thank you for your time!
Questions?