4. Overview of retail payments: Merchant, acquirer, network
and issuer interactions
Batches of
transactions are
queued by the
merchant, including
a $100 transaction
by Hans
Card network distributes
each transaction to the
issuer, including Hans’s
$100 purchase
$100
Card network routes
funds to acquirer
$100
http://www.creditcards.com/credit-card-news/how-a-credit-card-is-processed-1275.php
Issuer subtracts processing
fees ($1.70) which are
exchanged with the card
network and submits funds,
including funds for Hans’s
transaction
$98.30
Merchant sends a batch of
transactions to the acquirer to
receive payment
Acquirer subtracts discount
fees ($0.50) and pays
merchant
$97.80
Acquirer submits batch of
transactions to card networks
$$
$$
Acquirer submits batch of
transactions to card networks
$$
$$
Note: Names and fees are illustrative and are not from any particular vendor or relationship
6. Mobile money market: what is mobile money
Mobile Banking
Balance inquiry
Account applications
Account transactions
Bank locations
Alerts
Mobile Commerce
Promotions
Behavior tracking
Loyality programs
Mobile Payments
Person to person transfers
Bill pay
Payment at POS
In application payments
Mobile Wallet: linking mobile device with accounts and account activity
Bank accounts
Credit cards
Loyality cards
Bank balances
Credit balances
Gift cards
Receipts
Credit limits
Phone balances
Using a mobile device as payment vehicle
7. Mobile money market: payments are accelerating
in major markets
PayPal processed $4 billion worth of mobile payments in 2011*
•$750 million in 2010*
•$141 million in 2009*
David Marcus, vice president of PayPal Mobile*
Starbucks Mobile Application with rewards and mobile payments
•Started with Northern California and Seattle
•Now available nationwide in the US
•Mobile application is available on apple and blackberry
Juniper Research reports consumers will use mobile
payments to pay for $670 billion worth of goods and
services by 2015.
Google Wallet payments are now supported by Toys ‘R’
Us, Macy’s, and Bloomingdales
11. Mobile money opportunities: overview
Customer Care and Insight
Mobile money software gives a holistic, single view of the customer and glean deeper insight into customer needs, so you
can innovate with less risk. Develop high quality, tailored services to restore customer confidence, increase loyalty, and
drive revenue.
• Mobile Banking
• Branch of the Future
• Mobile Payments
• Mobile Commerce
• Mobile Agents/Claims
• Store of the Future
• Virtual currency
• Location based shopping
• Personalized campaigns
• Mobile cross-sell, up-sell
• Mobile Network Monetization
• Mobile field-force enablement
Retail
TelecommFinancial
Services
Healthcare
• Mobile check-in, Mobile prescriptions
• Mobile payments
• Mobile Health Monitoring & Prevention
• Mobile enabled Clinicians
• Virtual currency – FF Miles
• Customer Loyalty programs
• Ecommerce – Ticketing, Entertainment
Travel &
Transportation
12. Banks - leverage the user’s financial profile data
• Help banks protect and grow revenue by maintaining brand
relevance and leveraging emerging business models
• Provide a safe way to transact business, secure assets, reduce
fraud, ensure compliance
• Offer secure digital vault services to aggregate coupons, transport,
loyalty rewards, traditional currencies
Merchants - leverage the user’s shopping patterns
• Drives a more customer centric view; control point shifts to the
end-user with the mobile device.
• Shift more towards “one to one marketing” and leveraging the
value of “intelligent data from digital currency”
Telcos - Leverage subscriber base and delivery
channel
• Mobile Money will allow MNO's to increase customer retention and
generate new revenue through value added services
Mobile money opportunities: key players
• Create new value by
aggregating data and
applying insights across
the enterprise,
• Provide secure, high
availability, large scale
transaction processing
• Leverage Smarter
Commerce
New mobile
money entrants –
transform business
22. Application scenario: transformative
scenarios
• Mobile devices have unique properties beyond credit
cards, cash, banks and PCs
– Omnipresent: people always carry their phone with them
– Personal: mobile identifies the specific person
– Context: mobile has location, acceleration, orientation
information
– Multiple inputs: gestures, audio, video
• Everyday micropayments
– Parking (knows your car), vending
• Location and destination based pricing
– Bus, subway and train fares
• Delivery of gift cards over the phone
• Integration of loyality, context and location for
promotion
• Streamline general admission event ticketing
• Credit extension based on mobile activity
• Competitive interception based on mobile application
activity
• Multichannel offerings
– Prepare then retrieve ATM withdrawal
– Preorder fast food
• Reminders to replace consumables
• Personal credit card acceptance
Square
ShopSavvy
24. Card
Holder
Credit/Debit
Card Payment
Mobile
Payment
Merchant Acquirer Credit Card
Company
Issuer
Telco
Payment
Provider
Payers Payees Facilitators Fund Holders
MajorMarket
EmergingMarket
Market Dynamics
• Shift from cash and checks to cards and electronic payments
• Mobile and social commerce are creating a discontinuity in the market.
• Agents in Emerging Markets play an important role in distribution and liquidity
Impacts: new paths for payment processing introduced
Acquirers and credit
card companies can
be utilized by or
disintermediated by
telcos and payment
providers in mobile
transactions
Agent
25. Impacts: consumer and retail experiences are transforming
Swipe
NFC
OTA
In-Person Transactions
Online Transactions
Context-Aware Marketing
RetailersConsumers
Interactive
Non-interactive
Non-location-aware
Location-aware
P2P B2B
Optical
Scan
26. Acquirers
Impacts: retailers, banks and facilitators look to expand
their roles
BanksRetailers
Payment Providers
Credit Card Companies
Telcos
Both Acquirers and
credit card companies
can be utilized in or
disintermediated from
electronic payments
In major markets
banks act as the
fund holders
Telcos and payment
providers can either
access payers’ funds
directly through banks
or indirectly through
acquirers and credit
card networks
29. Operations: Support of parallel channels
• Expectation of consistency across
multiple channels
– Pay bills anywhere
• Expectation of cross channel
interaction
– Finish ATM, food order or
application transaction
– Video interaction with call center
from tablet and ATM
• Need one view of the customer
maintained across all systems
supporting channels
– Including in-flight interactions
34. Operations: IBM can help bring assets
to provide business value
Strategic role in mobile money
Neutral provider of capabilities from IBM and
partners, including business consulting,
technology consulting and software
IBM middleware can provide the enterprise
backbone for mobile money enabling
transactional insight and connectivity, and the
ability to connect mobile devices to payment
interactions
IBM is a thought leader in the space, contributing
to standards and driving innovative customer
transformation
IBM’s Global Business Services provides
reference architectures for the mobile money
ecosystem
Payers:
Consumers
Businesses
Payees:
Merchants
Businesses
Governments
Fund
Holders:
Banks
Facilitators
P2P B2B
35. Operations: from theory to practice
Customer Merchant Acquirer Credit Card BankMobile Wallet
Transaction/payment processing
• Messaging and Integration - WebSphere MQ & ESB
• Transaction processing (CICS & WAS)
• Financial Transaction Manager
• Banking industry process and data models
• WebSphere Decision Management
• Smarter Commerce: WebSphere Commerce
• Analytics: Cognos
• Financial Fraud Detection: SPSS, i2
Consumer payment platform
• Mobile application platform (Worklight)
• Integrated buying experience
(WebSphere Commerce)
• Banking Transformation Toolkit (BTT)
Merchant Consumer Interaction
• Marketing management (Unica)
• Analytics and marketing optimization
(Coremetrics, Cognos, SPSS, Tealeaf)
• Event-driven interactions (Ilog and
WebSphere Business Events)
• Smarter Commerce
Merchant Point of Sale
• Point of sale devices, software, integration and
management (IBM Retail Store Solutions/Toshiba)
• IBM Payment Systems – Services -- addresses
merchant/acquirers/credit card processors
37. ING Direct France
• Leading iPhone banking app in France with a unique user experience
• Flexibility: Valued HTML5, but preferred starting native
• Mobile adaptation of data integration and authentication layers
38. 38
Lotte Credit Card
Augmenting offerings with IBM Worklight
WSP14583-USEN-00
Solution components:
IBM Worklight
Finance All Solutions (FAS)
The need:
Korean companies are facing a demand for mobile apps from over 7
million smartphone users, up from only 800,000 in 2009, forcing them to
vigorously explore options for value-added services.
The solution:
To capitalize quickly on this rapidly growing trend, Lotte Credit Card
turned to IBM Worklight to develop an advanced application with a rich
and engaging user experience using over 100 screens, location-based
features and scannable mobile coupons. The application incorporates
augmented reality components—a first in the region—helping users find
the retail locations of its reward partners on the go.
The benefit:
Reduced time to market and associated costs
Deployment of one of the region’s most advanced financial mobile
applications
Enabling better customer and employee user experience across more
devices
“We chose IBM Worklight
because it was the best
technology for Lotte to
consolidate application
development, enhancement
and maintenance, while
ensuring cost savings and
timely delivery to our
customers.”
—Kim, Young Sam, IT Planning
Team Leader, Lotte Credit Card
40. Visa’s real-time messaging
technology (RTM) creates a
seamless experience for
merchants who want to increase
engagement with their
consumers through
Visa provides real-time technology to
achieve breakthrough marketing
effectiveness for merchants.
Personalized
offers
Business problem
Merchants operate in a highly competitive environment where the keys to success
are bringing customers in the door and then keeping them loyal to the merchant’s
brand.
Solution: Visa’s real-time messaging technology (RTM) allows merchants to
provide more relevant offers to enrolled consumers by combining historical
purchasing behavior with real-time purchase location information. Offers are
delivered to enrolled consumers through their mobile devices and personalized to
them.
Visa created a new revenue
stream by maximizing the value
of
Real-time
purchase
location
information