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Selected slides from International Conference on e-money, cards and payments in CEE/CIS disusing SIM centric TSM solution of Mobile Wallet and influence of HCE (Hosted Card Emulation) on ecosystem
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Why we struggled to bring “the solution” to market despite common understanding that it is future proof?
1) Technology Reasons
HOW IT WAS MEANT TO BE
TSM
OTA platform
BANK A-X
MNO 2
OTA platform
MNO 1
OTA platform
MNO 3
SP
SP
SP
BANK A-X
SP
SP
SP
BANK A-X
BANK A-X
BANK A-X
BANK A-X BANK A-X
1) Technology Reasons
HOW IT IS – “TSM SCHISM”
MNO TSM
OTA platform
BANK A-X
MNO 2
OTA platform
MNO 1
OTA platform
MNO 3
MNO TSM
MNO TSM
C SP TSM (Group)
BANK A-X
C
BANK A-X BANK A-X
BANK A-X C SP TSM (Group)
SP
SP TSM (Aggregated)
HUB
1) Technology Reasons
HOW IT IS – “STANDARDIZATION SCHISM”
MNO TSM SP TSM
STANDARD
Global Platform AFSCM
MO
DE
simple
delegated
authorized
D
S
D
S
SP
SP
SP
BANK A-X
BANK A-X
BANK A-X
BANK A-X BANK A-X
1) Technology Reasons
GRAPH COLORING THEORY - COSTS ON ONE SIDE EQUALS REVENUES ON ANOTHER (VENDOR) ONE
MNO TSM
OTA platform
BANK A-X
MNO 2
OTA platform
MNO 1
OTA platform
MNO 3
MNO TSM
MNO TSM
C SP TSM (Group)
BANK A-X
C
BANK A-X BANK A-X
BANK A-X C SP TSM (Group)
SP
SP TSM (Aggregated)
SP TSM (Aggregated)
HUB
S
D S
D
D
D
S D
S
D S
S
2) Business Reasons
BUSINESS CASE/CONNECTED COSTS
PAYMENT SCHEME SELECTION (TECHNICAL DECISION AT THE END)
RIGID DECISION MAKING – GROUP DECISIONS
CUSTOMER OWNERSHIP (OWN WALLET/APPLICATION)
AND/OR Online payment only vs. Offline payment supported PIN on POS vs PIN on mobile Change PIN posibility Application management gateway integration
3) Customers facing Reasons
DEVICES
NFC penetration
Mobile OS – firmware (compatibility issue )
SECURE ELEMENT – NFC SIM EXCHANGE ISSUE
ACCEPTANCE NETWORK* (50% penetration of contactless POS is it enough?)
EDUCATION (does service activation without need of personal office visit help?)
*Low penetration of POS Terminals
5,97,57,78,89,49,610,312,112,313,414,816,218,819,320,321,022,222,423,624,524,825,928,028,428,530,0
33,135,5
RO SK PL DE BG HU CZ LV BE AT LT NL SI EU EE EUR LU SE DK PT IT UK FR EL ES CY IE FI
Source : European Central Bank Number of POS terminals per 1000 citizens (year 2012)
a) POS terminals in Slovakia is domain of big cities and big retail chains only.
2008 2009 2010 2011 2012 2013
40 000
38 000
36 000
34 000
0
Number of POS terminals
b) And even in this segment it seams market is saturated at level of 40ths. terminals
10
12
14
16
18
20
2013
16%
2012
16%
2011
17%
2010
17%
2009
17%
2008
16%
POS terminals penetration among Cash Registers
c) LONG TAIL MERCHANTS DON’T USE POS TERMINALS. ARE THEY ADDRESSED BY RIGHT PRODUCT AND APPROACH?
Is There Light on the end of the tunnel?
26.6.2014 – mimoriadne citlivé / citlivé / interné / verejné – Autor / Názov prezentácie 9
TSM INFRASTRUCTURE IS COMPLEX BUT CURRENTLY THE ONLY SERCURE SOLUTION PREPARED FOR MASS COMERCIAL DEPLOYMENT
MOBILE WALLET MARKET IS NASCENT ECOSYSTEM BUT TSM INFRASTRUCTURE STANDARDIZATION AND EXISTING COMMERCIAL DEPLOYMENTS ARE PAVING THE WAY – UNIFICATION IS ON THE WAY
HOSTED CARD EMULATION MIGHT BY PROMISING ALTERNATIVE/COMPLEMENT TO TSM INFRASTRUCTURE IN FEW YEARS
DEVICE PENETRATION AND CUSTOMER EDUCATION IS IN OUR HANDS
Way to go right here right now with ST and MyWallet
SP
SP
SP
BANK A-X
BANK A-X
OTA platform
OTA platform
ST MNO TSM
BANK A-X
C
C SP TSM (Group)
SP
SP TSM (Aggregated)
SP TSM (Aggregated)
NFC phone
NFC SIM
Application
BANK A-X S S
S
S
1)
2)
+ Full Control - Higher costs - Longer time to market (9+ months) - General ST solution constrains
support planned in 2015
support planned in 2015
+ Low Costs (NFC revolution program) + Fast time to market (6months) ? Outsourced solution - General ST solution constrains
Card
Multipurpose wallet vs. single purpose wallet, are those two approaches mutually exclusive?
Wallet ≠ payment instrument only
INTERNAL MARKET RESEARCH HAS REVEALED THAT 87% OF CUSTOMERS PERCEIVE VALUE IN WALLET
APPLICATION THAT AGGREGATES MULTIPLE SERVICES
AMONG MOST REQUIRED SERVICES ARE TRANSPORT CARDS AND LOYALTY CARDS OTT PLAYERS AND MNOs (INTEGRATED ICT TELCO PLAYERS) ARE MORE LIKELY TO
INTEGRATE/AGGREGATE MULTIPLE SERVICES THAN BANKS
AT THE END IT IS FEAR OF LOOSING CUSTOMER OWNERSHIP IF APPLICATION IS PROVIDED BY
SOMEBODY ELSE (ON BOTH MNO AND TSM SIDE)
War over customer ownership via Secure Element control
UICC (Universal Integrated Circuit Card) – SIM card
SMC (Secure Memory Card) – SD card
ESE (Embedded Secure Element) – separate device HW
HCE (Hosted Card Emulation) – SE in cloud
FULL TSM INFRASTRUCTURE NEEDED
IS HCE a holy grail?
BIG JOB AHEAD
SECURITY (MALICIOUS APPLETS, FAULT ATTACKS, MASQUERADES AND SIDE CHANNEL ATTACKS)
CERTIFICATION (Including emvco, visa, mastercard, american express, etc.)
FUNCTIONAL DRAWBACKS
LOW POWER MODE
ROAMING AND NO DATA CONNECTIVITY SCENARIOS
TRANSACTION SPEED (Over LTE, network latency can be as low as 20ms but for a 3G or 2G network it can
frequently exceed 100ms and even 300ms what is close to 400ms threshold)
Who can benefit from hce?
Bank
MNO
NEW ENTRANTS
Big OTT players may leverage and finally penetrate from online to physical stores
They are not likely willing to negotiate with local players
It is expected that many startups will bring their innovation to ecosystem
They are flexible not bounded by legacy approach – who from current players is able to cooperate with them?
Banks willing to bring their own application for their payment cards as complement to existing mobile banking applications.
Multipurpose mobile wallet freed from SIM centric and complex TSM solution is ideal for customer reach extension even beyond own customer base
A bird in the hand is worth two in the bush
SIM Centric TSM solution
2014 201?
HCE
Musical chairs – how many players will last and who will be out of the game if we play Mobile Payments?
Too many players not enough revenues
Bank
MNO
NEW ENTRANTS
WE BELIEVE THAT THERE WILL BE SEVERAL WINNERS AS IT IS COMMON IN MOBILE APPLICATIONS WORLD
ULTIMATE DECISION POWER IS IN THE HANDS OF CONSUMER AND HE/SHE WILL DECIDE WHO WILL SURVIVE
Having questions or willing to discuss cooperation? You are welcome to contact me: