Experian Payment Strategies London, June 2011 Drivers for change What are the pressures on the European retail payments sector in 2011 and where will these pressures result in real change over coming years? Please copy and distribute 1 Version 1, 6/13/2011
Introduction We’re going to look at the current environment, then take a look at the technical, business and social drivers, then make some predictions Please copy and distribute 2 Version 1, 6/13/2011
Technology Drivers The technology roadmap for the short- to medium-term is actually pretty well-known and doesn’t contain too many surprises Please copy and distribute 3 Version 1, 6/13/2011
Key Technology Drivers Moore’s Law will continue for the foreseeable future The mobile ecosystem will take longer to assemble (and is more complicated) than we thought ID and authentication technologies, such as biometrics, will change the mass market Social networks and virtual worlds make the whole real/virtual boundary a little fuzzy Please copy and distribute 4 Version 1, 6/13/2011
Moore’s Law Moore’s law will continue over the foreseeable future, although it will become less important in shaping payments. Please copy and distribute 5 Version 1, 6/13/2011
Mobile Ecosystem This is harder than it looks and the battles over the technology are only just starting Please copy and distribute 6 Version 1, 6/13/2011
Mass-Market Biometrics Nearer than many people think, and driven by convenience, not security Please copy and distribute 7 Version 1, 6/13/2011
Social Networks That whole real/virtual thing… …is starting to get a bit fuzzy Please copy and distribute 8 Version 1, 6/13/2011
Business Drivers The business pressures are intense because of downward pressure on interchange and new, non-bank competitors exploiting new technology Please copy and distribute 9 Version 1, 6/13/2011
Key Business Drivers Adding value instead of reducing costs (like Google) The entry of non-bank competitors (like Square) The demands of retailers will reshape products and services Pan-European consolidation (the SEPA effect) will begin to bite Please copy and distribute 10 Version 1, 6/13/2011
Cost Models Perhaps it’s time to start adding value instead of reducing costs? Please copy and distribute 11 Version 1, 6/13/2011
Non-Bank Entry There are plenty of payments markets where current solutions are poor or non-existent and non-banks can offer something new Please copy and distribute 12 Version 1, 6/13/2011
Retailer Demands The retailers don’t just want payments, they want coupons, loyalty, group purchasing, check-in Please copy and distribute 13 Version 1, 6/13/2011
Pan-European Consolidation SEPA and PSD should continue to mean movement toward a genuinely pan- European marketplace that still doesn’t exist Please copy and distribute 14 Version 1, 6/13/2011
Social Drivers Social changes are the most unpredictable because they depend on human nature Please copy and distribute 15 Version 1, 6/13/2011
Key Social Drivers Balkanization and interconnection Worsening identity theft and fraud means regulation Falling tax revenues and economic efficiency mean that European governments will have to take action against cash Consumers will be more open to considering complementary and alternative money and payment systems Please copy and distribute 16 Version 1, 6/13/2011
Balkanisation Every shopping mall, every transit system, every web property to have its own payment system? That can’t be right, can it? Please copy and distribute 17 Version 1, 6/13/2011
New Regulation If identity theft and account fraud gets worse, then “knee jerk” regulatory responses could (eg, on KYC) will impair the development of new payment solutions. Please copy and distribute 18 Version 1, 6/13/2011
War on Cash Perhaps European governments, driven by the need for revenues, will get serious in the war on cash Please copy and distribute 19 Version 1, 6/13/2011
Economic Crisis Perhaps people are more prepared to consider alternatives to the “conventional” money and payment systems Please copy and distribute 20 Version 1, 6/13/2011
Some Predictions Always a dangerous game! However, there are some high-probability factors that can shape corporate strategy Please copy and distribute 21 Version 1, 6/13/2011
Prepaid is set to expand I thought, and still think, that pre-paid alternatives to cash will emerge to make for a step-change in cash usage Please copy and distribute 22 Version 1, 6/13/2011
Contactless will grow Not particularly because of payments, but because of retailer replacement cycles linked to value-added propositions around payments (cf Google) Please copy and distribute 23 Version 1, 6/13/2011
Mobile will build on contactless In time, local and remote mobile payments will integrate to the point of using the same application for all transactions (cf PayPal) Please copy and distribute 24 Version 1, 6/13/2011
Virtual will go mobile, not web The real and virtual boundary is already fuzzy and mobile will make it almost transparent Please copy and distribute 25 Version 1, 6/13/2011
Conclusions It’s not a bad time to be in payments as competition means innovation Please copy and distribute 26 Version 1, 6/13/2011
Thanks for listening For more information ■ Please feel free to e-mail me Please do drop in and visit our blogs and podcasts Tomorrow’s Transactions: thought leadership from Consult Hyperion Read www.chyp.com/media/blog Listen www.chyp.com/media/podcasts Visit www.chyp.com Contact info@chyp.com Follow @chyppings Presentation 27 6/13/2011
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