@Vendorcom Business Strategy: - KYC - DT Fraud Conference - London Thursday 24 th March 2016

Connecting Vendorcom

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Connecting It’s as easy as 123, KYC Know your customer; Empathy is EVERYTHING.

Connecting Getting to know the payments ecosystem Normal people don’t think ‘payments’ Make sure you have the right perspective; Payments is not fintech; Fintech is not payments; Payments is ‘generational’; Payments is relatively dull; It IS an ecosystem; It’s a bubble.

Connecting Don’t over-complicate it! Peter and Jane hoped that the shopkeeper would accept Apple Pay.

Connecting Regulation PSR Objectives: –to ensure that payment systems are operated and developed in a way that considers and promotes the interests of all the businesses and consumers that use them –to promote effective competition in the markets for payment systems and services - between operators, PSPs and infrastructure providers –to promote the development of and innovation in payment systems, in particular the infrastructure used to operate those systems

Connecting The Payments Community Possibly the most pompous statement in the history of payments: If you would like to join the Payments Community, you can register your interest by sending an with your name, organisation and address to “The PSR established the Payments Community to influence the work programme of the Forum.”

Connecting PSF - End User Needs The End-User Needs Working Group has been established to ensure that the UK’s Payments Strategy will fully meet the needs of individual and organisational users

Connecting PSF - Simplifying Access to Markets The Simplifying Access to Markets Working Group has been established to examine whether and how payment systems can be developed in order to simplify access and participation in the markets for PSPs.

Connecting PSF - Financial Crime, Security and Data The Financial Crime, Security and Data (Financial Crime) Working Group has been established to engender user trust in safe and certain payments through collaboratively preventing financial crime.

Connecting PSF - Horizon Scanning The Horizon Scanning Working Group has been established to research and present a regular horizon scanning report to the Forum. The report will identify key regulatory and technological developments and suggest how these might be relevant to the Forum’s work.

Connecting Payment Industry Trends

Connecting It’s not a trend when… …innovators use meaningless predictors of success when they have no idea what they’re doing but think they can talk things up to the point where you might be fooled into helping them to deliver their fantasies…

Connecting We already have 20,000,000 customers We have access to 30,000 retail businesses We’re talking to big brands We’re confident we’ll be profitable next year We’ve spent more than $100m We’ve had 10,000 downloads It’s going to go viral …

Connecting We’ve heard it all before… The future is… –Prepaid –Alternative payments –Contactless payments –NFC –Mobile payments –HCE –eWallets –Bitcoin –…

Connecting Here we go again… The future is… –Blockchain –Tokenisation –Apple Pay –Wearables –Regulated innovation –Fee free –Password free –Biometrics –…

Connecting Dynamics - Buying Cycles

Connecting Dynamics - Noise

Connecting Contactless Mis-sold Over-hyped Confused consumers Competitive TfL dependent London / City-centric Impact of Apple Pay?

Connecting The Ever Present Smart Phone

Connecting Using a Mobile ‘Money’ App

Connecting Mobile In-store Payments

Connecting 100 people go to the online checkout…. Source:

Connecting …but only 33 complete a transaction! Source:

Connecting 100 people go to the smartphone checkout…. Source: Klarna – June 2015

Connecting …but only 3 complete a transaction! Source: Klarna – June 2015

Connecting Wearables ‘Smartwatch industry will grow in 2014 to $2.5 bn globally. In the years to follow, the smartwatch industry will keep growing at a 3-digit rate.’ ‘Bloomberg report estimates that Apple could see revenues of up to $3.6 bn with a successful smart watch.’ ‘Global wearables market will grow at the compound rate of 38% over the next five years to hit $20.3 bn in 2020.’ ‘Across Europe, more than 100 million Visa cards are contactless as are 1.8 million Visa terminals. Annual transaction volumes exceeded 460 million which is 263% higher than the previous year and the value of those transactions is 283% higher than the previous year.’ ‘In the last quarter of 2014, says MasterCard, contactless transactions in Europe grew by 174% year on year as consumers increased their usage by more than 20% and acceptance at over three million contactless-enabled retailer locations globally, representing a 56% year-over-year increase, it’s also more convenient than ever for everyone to use their contactless card, mobile or other device for purchases’ Sources: ; ; Key figures and achievements - Visa Europe 2014 Annual Report

Connecting What Drives Uptake / Adoption / Rollout? Business case Low capex Clear route map Consistency Ubiquity Integration Purchasing cycles Consumer appeal / pull

Connecting Apologies for the Inconvenience!

Connecting Who’s where?

Connecting Most are ‘Intermediate’

Connecting Investment decision

Connecting Investment decision Desperate / rescue Conservative Daring

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Connecting Best guess… Nothing will be ‘mainstream’ in payments Nothing will die Prepaid will be niche Bank accounts will be main funding source - PayPort Merchants will develop holistic mobile apps inc. payment MIF reduction will impact the value of card payments Tokenisation will obviate wider data-driven benefits Data protection regulations will stifle insight SecuREpay will cause consumer confusion

Connecting And there’s more… Authentication will be channel centric and biometric Merchants will take more risk - calculated Static authentication will be point of compromise Mobile payments continues as an artificial construct Blockchain will be exposed as a fantasy Purchasing cycles will lengthen again Acquirers’ merchant relationships diminish Capex in payment systems – consumers and vendors Solutions vendors must provide collaborative route maps

Connecting Perspective

Connecting Good Luck!

@Vendorcom Business Strategy: - KYC - DT Fraud Conference - London Thursday 24 th March 2016