Taking Prepaid into Account Wednesday, 17 September 2014 CEESCA, Budapest

Most Important First Prepaid is a major driving force in the near future of mobile wallets

‘a container into which valuables can be stored and retrieved using specific methods’ Prepaid is…

Source: MasterCard / partners in prepaid

Merchants Means of increasing the brand loyalty of customers Anticipation of future purchases in exchange for store discounts Transport and ticketing services Hong Kong’s Octopus prepaid travel card London’s Oyster Card MNOs Mainly airtime PAYG accounts have eclipsed their pay monthly counterparts Prepaid mobile money initiatives Past: Simple but Effective Tool

Enhancing existing physical products via mobile channel Mobile reload / top up Additional channel to improve customer value Interactive channel to get in touch with the users Mobile Prepaid: A Future Full of Opportunities

Enhancing existing physical products via mobile channel Mobile reload / top up Additional channel to improve customer value Interactive channel to get in touch with the users Digitisation of existing physical prepaid solutions Replacement or endorsement of the existing solution Host card emulation (HCE) Mobile Prepaid: A Future Full of Opportunities

Merchant has a Winning Combo: HCE (or) Apple Pay + (Closed Loop) Prepaid MNO Bank Payment Scheme

Enhancement of existing physical products via mobile channel Mobile reload / top up Additional channel to improve customer value Interactive channel to get in touch with the users Digitisation of existing physical prepaid solutions Replacement or endorsement of the existing solution HCE? Development of new mobile-based prepaid solutions Launching a new mobile-based prepaid solution No need to produce physical cards anymore - is there? Mobile Prepaid: A Future Full of Opportunities

Benefits of Mobile Prepaid Customer Benefits Lower entry barriers More control More functionalities Perceived feeling of security Business Benefits Lower entry barriers Lower operational costs More flexibility Business agility Less restrictive regulatory environment

Different stakeholders - each of them holding a piece of the puzzle (control points) Each of them is vying to establish a commercially influential position in the value chain Deadlock and market fragmentation Reduced integrative potential and market adoption Mobile Wallets 1.0: Digitising Leather Wallet

Strengthening the brand loyalties of customers Uniquely pleasurable shopping experience Minimising the inconvenience of payment Prepaid: a way to minimise payment disruption Focus on unique advantages to conventional commerce Mobile Wallets 2.0: Reinventing Commerce

Starbucks (US, Canada, UK) Examples: Reinventing Commerce AtB (Norway) Apple / iTunes (Worldwide)

Prepaid instead of current account Challenging the banks at their own game Integrated cashback, reward and loyalty schemes of high street and online retailers Prepaid as a model for personal mobile banking Progressive banking customers and NOT underbanked Mobile Wallets 2.0: Reinventing Banking

Examples: Reinventing Banking T-Mobile Google WalletAmex Bluebird Mobile Money

Mobile or not, it must be ‘loaded’ No credit, prescribe or interests facilities Not covered by any guarantee scheme (insolvency) No official board of appeal (customer complaints) Those that do not operate on the network of a major payment scheme, may be less frequently accepted by merchants Limits of Prepaid (Mobile or not)

Prepaid Options for Banks Option 1: Deploy an invisible prepaid infrastructure in support of a new service Option 2: Establish a prepaid agent network and resell the products of high profile merchants Option 3: Use prepaid openly and actively Option 4: Play a supporting back-end role to new players in prepaid

Examples: Options for Banks Option 1: Danske Bank Option 2: PostFinance Option 3: Use prepaid actively & openly Option 4: CBW Bank

Looking to the Future – What a Bank Should Consider Mobey Forum predicts: Prepaid – a major driving force in the near future of mobile wallets New forms of engagement with the merchant sector (compare to PayPal) Start paying attention to possible disruption of current account and customer relationship Question your own role in the ecosystem Obstacles such as with regulation, operating procedures and legacy systems integration are no good excuse for missing the momentum

Anne K. ShreinerAmerican Express Hans S. IldstadEVRY Thor Ragnar KlevstuenEVRY Sarah KocianskiMonitise Ville SointuEricsson Kasper Sylvest OlsenDanske Bank Kristian Thure SørensenNets André ZölchPostFinance Special Thanks to the Core Team!