The objective of this document is to unveil key aspects of the new payment methods that are changing our lives: the mobile payment. Leveraging the most updated data mined by Observatory NFC & Mobile Payment and taking a closer look at the Cashlog case, as an example of payment solution system for both merchants and customers that allows to sell or buy digital goods of low unit value (0,99€ - 15€) by using the mobile phone . Mobile Payment is a composite payment model which encompasses different paradigms, all characterized by the use of the Mobile phone as their primary means of interaction. There is a shift from paying “up close” in which the phone "emulates" a payment card (Mobile Proximity Payment), and the payment of services from a distance (remote) via SMS or Applications (Mobile Remote Payment), to managing in a broad sense, the entire process of purchase and payment remotely (mobile commerce) and the transfer of money between users or between users and financial institutions (Mobile Money Transfer). The common feature of these paradigms is the use of the phone and its distinctive features to innovate the payment methods: the huge population penetration (more than 5 billion devices worldwide), mobility, extreme portability and interactivity. However, the differences between the different paradigms are such that, beyond some common premises, the analysis of this present situation, the potentials and developments need to be addressed separately. Focalizing to the expectation versus reality the research of Observatory NFC & Mobile Payment evaluate the different types of mobile payment.

1. Unveiling the Mobile Payment opportunity:
a deep dive into the Italian market
Cashlog for MEF
in collaboration with The ICT & Management Observatories Research
Centre

2. INDEX
 A still unresolved dilemma: Mobile Payment, expectations vs. reality
 The level of adoption: an overview
 Mobile Remote Payment
 Mobile Commerce
 Money Transfer services
 Mobile Remote Payment
 The satisfaction with Mobile Remote Payment services in Italy
 The operators
 A model?
 Mobile Commerce
 Who’s The ICT & Management Observatories Research Centre?
CASE STUDY
 Cashlog
1

3. The objective of this document is to unveil key aspects of the new payment methods that are changing our lives: the
mobile payment. Leveraging the most updated data mined by Observatory NFC & Mobile Payment and taking a
closer look at the Cashlog case, as an example of payment solution system for both merchants and customers that
allows to sell or buy digital goods of low unit value (0,99€ - 15€) by using the mobile phone .
Mobile Payment is a composite payment model which encompasses different paradigms, all characterized by the use
of the Mobile phone as their primary means of interaction.
There is a shift from paying “up close” in which the phone "emulates" a payment card (Mobile Proximity Payment),
and the payment of services from a distance (remote) via SMS or Applications (Mobile Remote Payment), to
managing in a broad sense, the entire process of purchase and payment remotely (mobile commerce) and the
transfer of money between users or between users and financial institutions (Mobile Money Transfer). The common
feature of these paradigms is the use of the phone and its distinctive features to innovate the payment methods: the
huge population penetration (more than 5 billion devices worldwide), mobility, extreme portability and interactivity.
However, the differences between the different paradigms are such that, beyond some common premises, the
analysis of this present situation, the potentials and developments need to be addressed separately.
Focalizing to the expectation versus reality the research of Observatory NFC & Mobile Payment evaluate the different
types of mobile payment.
2

4. A still unresolved dilemma: Mobile Payment, expectations vs. reality
By Osservatorio NFC & Mobile Payment – School of Management of Politecnico di Milano*
2010 was expected to be as the turning point in the market for Remote Mobile Payments in Italy (see the report
entitled 'Mobile Payment in Italy: at last at the starting blocks!"). Expectations concerning its development were
extensive and shared. With regard to those paradigms already technologically "mature" - Mobile Remote Payment,
Mobile Commerce, Money Transfer - a wider spread of services and the emergence of some cases of excellence was
expected. Regarding Mobile Proximity Payment all the conditions were there to start some serious pilot projects that
would allow the assessment of its potential in real application situations.
These expectations were also motivated by some fundamental changes in the contextual environment:
- growth of the penetration of smartphones in the Italian population (1 out of 3 Italians) and a simultaneous increase
in the use of Internet and Mobile Applications;
- implementation of the new European legislation on payment services (PSD), which introduced new roles and market
rules;
- infrastructure development - such as the gradual introduction of contactless POS acceptance network - and
announcements of the impending launch of new NFC mobile phones;
- the emergence of some Mobile Payment services successful on the international level, potentially replicable in the
Italian context as well.
Although many of the aforementioned trends have become a reality and the market for Mobile Payment has made
progress, the feeling is that there are still many open and largely unresolved issues:
- Which Mobile Payment services best exploit the opportunities afforded by the mobile channel? - Which services will
be appreciated and used by consumers and which will not?
- How will the real value-added services of Mobile Payment be conveyed to consumers and merchants?
- How will a virtuous system with high circularity involving a large number of operators and users be generated?
- How can positive margins for all players involved in the Mobile Payment in light of the necessary organizational and
monetary investments be obtained?
- How long will it take for a significant portion of users to have NFC-enabled phones? And what strategies might
manufacturers and Telco operators choose to help this process?
The level of adoption: an overview
Mobile Remote Payment in Italy has grown little in terms of the offer (65 services in 2010, 2
more than in 2009); there are still few broad strategies that can be compared with the first 10
worldwide.
In 2010 the Mobile Remote Payment offer in Italy presented a slow trend - 65 services compared to the 63 in 2009
were surveyed - with one important change represented by the emergence of the multi-operator platform Bemoov
(which aims to aggregate a large number of already-active or soon-to-be-active merchants including Telepark), the
emergence of new independent services (e.g., activation of the public waste fee in Rome) and the expansion of
3

5. existing projects (such as the extension to more cities of the Telepark service), but also the decommissioning of some
services (such as suspension, hopefully temporarily, of the ski pass payment service in some ski resorts). The offer
remains highly fragmented – there are only 4 (Bemoov, CartaSi, PosteMobile, Telepark) platforms that have
developed multi-operator solutions with very different models, aggregating a total of about 40 services - and very
focused ones at that - almost 78% of which cover parking payment or phone cards. The total market size of almost €
200 million is almost entirely represented by the Mobile phone top ups. Besides phone top ups, none of the other
services has reached a significant level of diffusion (except perhaps Telepark). The main causes of the limited outreach
to consumers are, in our opinion, the lack of circularity of services, the complexity of the activation process for the
user and reduced promotional activity. Even at an international level, to be fair, the market for Mobile Remote
Payment is characterized by high turbulence with many services that appear and then disappear in a matter of a few
years. However, at least a dozen cases of success can be indentified in which widespread diffusion has been achieved
amongst users, cases such as Plusdial in Scandinavia; in Belgium, Pingping; Paybox in Austria; PaybyPhone in the U.S.
and the UK; some GCash platform services in the Philippines; Obopay in the U.S., Africa and India; and finally, M-
Parking in Estonia. Plusdial, for example, has sold since 2002 more than 53 million tickets for public transport in
Sweden, Finland, Belgium and Turkey, with highly significant penetration rates (40% of single fare tickets in the city of
Stockholm). In Belgium, Pinping offers a platform of Remote Payment services, of which those for parking payment via
SMS are particularly popular (e.g., in the city of Antwerp, one in two parking places is paid with this option).
Mobile Commerce - albeit a still embryonic phenomenon – in 2010 reached 12 million
Euros in transactions; more than 20 of the top 100 eCommerce operators have activated
the mobile channel.
By Mobile Commerce we mean those services provided through mobile sites and / or applications that allow the
entire purchasing process and not only payment, to be carried out via Mobile phone, simulating the purchasing
process typical of eCommerce from one’s PC. Mobile Commerce in Italy is growing, driven primarily by two factors:
the growing number of those Italians who surf using the mobile phone - now 12 million, according to ComScore, and
thanks to the improved usability of new generation cell phones and flat rates - and an increase in the offer of mobile
sites and applications – jumping from 12 to 38 services.
Money Transfer services in Italy are still underdeveloped; unlike the same services
internationally
In Italy the offer of money transfer services is still extremely limited. 6 agencies were surveyed, most of which related
to the transfer of phone credit – “Ti ricarico” by Tim, “SOS mi ricarichi” by Vodafone, “Ricaricami” by Noverca,
“Ricarica SMS” by Wind - while there are only 2 services of Money remittance/p2p that have also used the Mobile
component - Paypal and Moneygram with Post Office’s Mobile offer.
In the sequel of this document the focus will be given to Mobile Remote Payment, as it appears to be the field with
most opportunities for development in the near future in Italy because of the actual breadth of the offer and the high
number of business areas in which Mobile Payment solutions can be implemented and adopted by consumers.
Mobile Remote Payment will spread in those areas characterized by immediacy in
purchasing, limited range of choice and high frequency of use, provided the ability to
propose fast, simple and open solutions – available transversally amongst the different
Telcos and financial institutions.
Buying tickets for urban transport, parking payment and phone top ups are the application areas that best meet the
requirements outlined above and we believe that the Mobile Remote Payment can take hold the fastest. We believe
there are opportunities even in the payment of theatre or cinema tickets and taxi rides. However, it is not enough to
4

6. focus on these areas to obtain consumer approval. The best national and international experiences teach that the
critical success factors for a Mobile Remote Payment initiative are:
"Openness", meaning availability of the service regardless of the phone company or financial institution selected;
simplicity and speed, both in use as the initial service subscription; adequate and constant communication regarding
the presence and value of the service, without which its diffusion can only come about by relying on weak, viral
marketing trends.
One debated issue is the validity of proposing a single platform that enables a greater number of merchants to share
registration and association payment tools in order to expand the user base. Thanks to these platforms the
opportunities to use the service could increase and obstacles tied to initial registration can be overcome. In that
regard, it is fair to imagine that users expect to find similar services on the platform (for example, all taxi companies in
the same city or different cities, or the payment of parking in many cities like the service in the U.S. PaybyPhone) or
ones that are complementary (the ability to park and take the bus or take public transportation like the urban and
regional service Plusdial in Sweden). The positive effects of the combination on a single platform could be reduced or
disappear in the case of highly heterogeneous services without a design that offers a similar/unique shopping
experience to the user.
The satisfaction with Mobile Remote Payment services in Italy is high, even if users are
still very few - less than 1% of Mobile users.
The research carried out on existing users of the parking payment systems in Italy via Mobile phone (over 450 users of
the 1,700 respondents surveyed) shows a high satisfaction rate. 55% of users state being very satisfied and say they
use the service often (68% use it 2-3 times or more in a month and between 1 and 4 users use it almost every day).
The main reasons are the convenience (61%), the speed of payment (53%), the ease (for 61% it is even "extremely
easy"). An analysis of the criticalities confirms that the low level of adoption in Italy - compared with the best
international experiences - is not due to the difficulty in using the solution, but rather to the complication of the
process of registering for the service and inadequate communication campaign and poor training to users and
employees. The research highlights a second very interesting element. People who have already learned to use the
services of Mobile Remote Payment - albeit in a specific area - show a strong interest in using them in other contexts:
to the question "How much would you be interested in using the Mobile phone to make other payments?" 73%
answered that they were very or fairly interested, and in particular in buying buy bus tickets; (57% of respondents
considered it quite or very interesting); tickets for the train (50%); for entry to cinema/theatre shows (50 %), or to pay
the taxi (45%) - a confirmation of the areas considered most attractive.
The operators are on the one hand very interested in the services of Mobile Remote
Payment, but on the other little aware of the real benefits.
We have conducted a campaign of interviews involving 15 operators in local public transport and parking
management. It revealed a good knowledge of these tools (90%) and widespread interest (around 80%), although
there are still a few who already offer services to Mobile Remote Payment (only 3 of respondents). The main reason
hindering investment in these tools is the lack of knowledge of their real benefits: an increased level of service and
improved efficiency of internal processes. A more in-depth analysis of two operators that have already implemented
Mobile Remote Payment services - respectively in the fields of "parking" and "public transport" - actually showed
significant benefits in several areas. In particular, from the standpoint of internal process efficiency, a significant
reduction in costs related to sales commissions on the physical channels and costs of collection and cash management
was estimated. The analysis of time of return on investment - despite the presence of positive results with a payback
time of less than 5 years in both cases - at the same time highlights the dependence of benefits on an adequate
"critical mass" of users who move from the physical to the mobile phone, certainly higher than ten percentage points.
5

7. Hence the importance of acting on the levers to rapidly increase the level of adoption: ease of registration and use,
and the communication campaign.
A model of dominant sector has not yet emerged, and perhaps never will; whereas it is
almost always true that the successful projects have an actor who plays the role of
leading aggregator.
It is not possible a priori to determine whether a “broken down” Mobile Remote Payment sector/chain, with more
players involved and a composite offer is better, rather than a lean one with few players focused on providing a few
services: for both configurations, there are positive and negative aspects, ranging from potential size of the user base
to the complexity of the revenue sharing models. To better understand the possible configurations we looked to the
international success stories. Typically, the main drawback of lean value chains with a few players involved - such as
an operator in conjunction with a service provider - is the lack of openness, namely the difficult access to several
payment tools and several types of services. The case of Plusdial is an example of a rather slim configuration - in
addition to the service provider, local public transport companies and Telcos are involved – that guarantees an
extremely simple registration and payment process, through the involvement of Telcos and the model of the debiting
the ticket price to the available telephone credit. The flip side is that the services are extremely focused and there is
no way of charging other payment instruments. At the same time, there are successful projects that aim to
incorporate a large number of players to increase the "circularity" of the service. The main advantage of these
configurations is that they can create a larger user base, thanks to the involvement of several banks and Telcos that
facilitate service subscription, and the availability of more operators that increase the breadth of services offered. For
example, in the case of Pingping, all the Telcos are involved, as well as an Electronic Money Institution and, marginally,
a bank, in order to allow users to pay with a variety of tools, from phone credit/phone bills to the bank account. In the
case of Paybox, several types of merchants are involved, from municipalities for the parking to vending machines
operators for snacks. The downside in these cases is that the business model is much more complex to develop and
maintain and it increases the risk of providing a less immediate and less simple service. In all successful cases analyzed
however, there is always an element of commonality: the presence of a leader who has played the role of promoter of
the initiative, able to bring together other players around a business model.
Mobile Commerce – the extension of Mobile Remote Payment to include all stages of the
buying process - expands the opportunities for use; to today, with the current mobile
devices, it is an interesting model when the benefits of mobility are higher than its
usability limits.
Mobile Commerce is suited mainly to those application areas where the mobile channel, thanks to its mobility and
immediacy, can strengthen the value proposition of those goods or services for which a purchase may be necessary
when in mobility and not near one’s PC, as well as those with an intrinsically simple buying experience. For those cases
in which a purchase requires a complex experience characterized by interaction with other multi-media elements -
such as viewing photos, videos, comparing prices and products, configuring the product / service before choosing
what to buy - the Mobile device does not easily represent an added value in comparison to the PC (or tablet). The
purchase of transportation tickets (trains, planes, ships), hotel reservations for business users, whose purchase is
often last-minute in nature – e.g., food, coffee refills - or a raise at an auction, in our opinion, are examples that can
best and first seize the development opportunities during the 2011 year. In the configuration of a mobile commerce
service, it is important to design ad hoc services with a purchasing process consisting of only a few steps to fill the
shopping cart, a site that is not too heavy on the system to avoid network slowdowns and the provision of a fast
payment system. Focusing on payment systems, copying the eCommerce system’s characteristic of entering the card
information for every purchase can run up against the limits of Mobile usability. For this reason "quick check-out"
systems from the Mobile site - such as PayPal’s Mobile Express Checkout, Google Checkout or Amazon Mobile
6

8. Payment - may have some success because they allow memorization of payment tool data, thereby accelerating the
payment stage. It is clear that many of these considerations will have to be extensively revised if the Mobile
Commerce paradigm is to include highly advanced mobile devices, such as next-generation smartphones and even
more, tablets.
* The ICT & Management Observatories Research Centre is an integral part of Politecnico di Milano and its
Department of Management, Economics and Industrial Engineering . Many of the approximately 60 research team
members, comprising full and associate professors, researchers, PhD students and contract professors hold academic
roles within Politecnico di Milano.
The Observatories are directed to all those companies that offer ICT services and solutions (software and hardware
vendors, service providers, consultants, channel operators), and provide a detailed picture of the different Italian
market scenarios, with the objective of supporting companies in setting up the most effective offers.
Case Study: Cashlog1
Cashlog is the innovative mobile payments solution system for both merchants and customers that allows to sell or
buy digital goods, by using the mobile phone number only.
Since April 2011, Cashlog is available in Italy with the full coverage of the four national carriers; it is also part of a
commercial bundle of innovative payment services with CartaSi, the Italian leader in the credit card market, consisting
of Virtual POS and e-wallet facilities, plus the Cashlog m-payments solution. Currently also available in Spain, the
Cashlog solution will be progressively rolled out in the other European countrie sby the end of the year.
Description of the Service
Cashlog allows to pay for a digital content from an online site through the “Cashlog button”. By clicking the button,
the customer is redirected to a webform where he types the telephone number and confirms the purchase. As a
response, Cashlog sends a secure PIN code via SMS, that needs to be typed into the webform, to have the purchase
completed.
Benefits and targets of the Service
Cashlog does not foresee any hidden fees or additional ‘network fees’, it allows the immediate opportunity to verify
the transaction status, working only with reputable companies and with industry clean track record Cashlog’s
customer care service is also available on a 24/7 basis.
Cashlog makes fast and easy the payment process by mobile phones, in a safe and secure environment - boosting
revenue for merchants by attracting potential customers who either do not own a credit card or prefer not to use it.
In fact, Cashlog has two key targets, Merchants and Customers:
1
To learn more, visit www.cashlog.com or join Cashlog on LinkedIN at: http://www.linkedin.com/groups/The-
Future-of-Commerce-Payments-3889780?mostPopular=&gid=3889780
7

9. 1. Merchants who sell low value digital goods (0,99€ - 15€), such as virtual currency, news, e-Books,
multimedia, ticketing and couponing, service bookings etc, can use Cashlog to have much higher conversion
rates compared to credit cards or bank trasfers, due to the direct connections to the mobile operators
powered by Buongiorno.
2. Customer, that can take advantage from using Cashlog as a fast and secure way to pay as a replacement for
credit cards.
The Company
Cashlog is developed by Buongiorno**, a leading global enabler of the mobile connected life. With direct
connections to more than 130 telecom operators in 57 countries, 10 years experience in the mobile ecosystem and a
team of 1000 professionals, Buongiorno makes the mobile internet experience happen. Buongiorno is the preferred
partner for telecoms, enterprises, handset and connected device manufacturers, supporting them in delivering
customized mobile data experiences. Buongiorno has a potential reach of over 2 billion mobile consumers and an
array of services and content spacing from mobile content based value added services (VAS), innovative solutions to
deliver personalized mobile experience which are marketed or reside on many of the most popular OEM handsets
and digital stores; to mobile loyalty programs and mobile advertising and marketing campaigns.
**Since 2003, Buongiorno, a leading global enabler of services and solutions for the mobile connected life,
and the ICT & Management Observatories Research Centre, Politecnico di Milano, feed a strong and mutual
collaboration, jointly aimed at supporting the research in the telecom industry.
Buongiorno considers the research activity of the Observatories as the most authoritative voice on the
Italian mobile scenario.This fruitful collaboration is today even more empowered since the recent launch of
Cashlog, Buongiorno’s new solution in the promising sector of mobile payments.
8