1. Webinar The US Mobile Money Revolution
Susan Huynh, Forecast Analyst
March 13, Call in at 10:55 a.m. Eastern time

2. Are we undergoing a payment revolution?
Image source: Flickr ( and

3. Agenda Definitions Proximity payments: Technology comparison Drivers
Methodology
Remote payments:
Likely consumers
Retail by category
P2P
Smartphone evolution
Adoption growth
Demographics
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4. Definitions
Mobile proximity purchases (attended and unattended). These are purchases initiated by using a mobile handset at the retail POS or where the buyer and seller are in-person, both attended (in retail shops) and unattended (generally vending, parking, and transit). Purchases include mobile-hardware- enabled and nonhardware-enabled technologies. Exclusions: purchases made through a programmable NFC sticker attached to mobile handsets
Mobile remote commerce is defined as a transaction over a mobile handset through which payment information is captured on the mobile phone for the purchase of products or services (i.e., retail products, travel, coupons/deals, and games). This excludes SMS commerce (e.g., donations), newspaper subscriptions, stock trades, investments, and gambling.
Mobile P2P/remittances. These are domestic and cross-border person-to- person fund transfers initiated through the use of a mobile handset, either through the use of a preloaded application or a browser-based application to initiate, authenticate, and transfer funds. These include all transfers that originate from the United States. Exclusions: bank-to-bank fund transfers
The forecast numbers do not include purchases made on a tablet device.
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5. Method of payment examples
Retail point-of-sale
Remote
Remote
Proximity
Remote
P2P

6. $20 billion in 2013
Mobile devices are rapidly evolving the way we make payments and purchase products.
US mobile payments
Source: Upcoming “Mobile Payments Forecast, 2013 To 2018 (US)” Forrester report
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7. 71% $2.9 Percentage of the mobile population with a smartphone
The amount dollars spent offline
trillion
Source: *Forrester Research Smartphone Adoption Forecast, 2012 To 2017 (US), 2013 data point; †Forrester Research Online Retail Forecast, (US), 2013 data point

8. Proximity payments RETAIL POINT-OF-SALE Proximity
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9. Hardware-based payment struggle
Early days struggle
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10. Hardware-based failed to pick up
February 2013: ISIS NFC pilot resulted in a 1% adoption rate, most usage in public transportation, vending. Expects up to 2% adoption with nationwide rollout this year
April 2013: MCX partnered with Gemalto to support bar-code-enabled transactions — with $1 trillion GMV.
May 2013: Google Wallet chief, Osama Bedier, resigned.
September 2013: Capital One exited ISIS pilot.
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11. Inhibitor: contact-less terminal capabilities
There are approximately 7 million credit-card-accepting terminals in the US.
POS terminals accepting contactless payments in
Important dates
2013: MasterCard, Visa, Amex, and Discover require EMV processing.
2015: Fraud liability shifts to merchants with non-EMV POS.
Source: EMVCo ( and Dan Balaban, “Google’s Schmidt Predicts Contactless Terminal Rollout,” NFC Times, June 23, 2011 (
© 2014 Forrester Research, Inc. Reproduction Prohibited

12. Software-based payments’ varied successes
Concentration in quick service restaurants (QSR)

13. Case study: Starbucks
Starbucks is an affordable luxury. Its US revenues grew 9% and 11% in the past two years.
Rewards tap into a loyal pool of customers.
Wealthier demographic
Average per visit
$7.54
Source: Starbucks’ statements and “Certify Featured in The Economist with the latest report on 2012 Business,” Certify, December 21, 2012 (
$6.73
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14. Proximity model drivers
Drivers and inhibitors
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15. Category drivers
Assumption: In the short-term future (five years), quick service restaurants (QSR) will drive proximity spend. Statuses of gas stations, transit, department stores, and Rx are unclear.
Assumption: Half of those that are very interested (five) will actually become users in the short term.
MCX?
Retail Online Surveys (US)
“How interested are you in paying for merchandise in a physical retailer store using your cell phone instead of cash or a debit/credit card (e.g., by tapping my cell phone at the point of sale)?”
Q2 2012
Q2 2013
Not interested at all (1, 2)
64%
62%
(3)
14%
15%
(4)
11%
Very interested (5) 9%
10%
Already use this (96) 2%
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16. Consumer interest driver — spend shift
10-year observation
Less
Same rate
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17. Remote
Mobile commerce
Remote

18. Mobile retail is 6% of online retail
Mobile travel to gain share against retail products in 2018.
Drivers: smartphone adoption, online tenure, and frequency of mobile Internet access
US mobile remote
Source: Upcoming “Mobile Payments Forecast, 2013 To 2018 (US)” Forrester report
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19. Primary reason for growth: buyer growth
Assumption: Mobile buyers and mobile Internet users will grow 2x faster than online buyers’ and online users’ rates.
Retail buyer accelerator looks at tenure and more importantly, frequency of access (online security comfort).
Source: Upcoming “Mobile And Tablet Commerce Forecast, 2013 To 2018 (US)” Forrester report
© 2014 Forrester Research, Inc. Reproduction Prohibited

20. Category drivers Likely mobile purchases Low High
Offline research (e.g., furniture and art collectibles)
Merchant push (e.g., apparel, footwear, and flowers)
Screen size agnostic (e.g., software, books, music, and videos)
Intensive research (e.g., PCs and medical supplies)
Immediate consumption (e.g., digital goods and event/movie tickets)
Impulse (e.g., music and videos)
Low
High
Likely mobile purchases
© 2014 Forrester Research, Inc. Reproduction Prohibited

21. Frequent Internet users more likely to buy
Specifically those who go online several times a day
Base: mobile phone owners. “How often do you go online using a mobile phone?”
“How often do you buy or order products/services online?”
Total
Several times a day
At least daily
At least weekly
At least monthly
Less than monthly
Never
34%
56%
49%
48%
35%
21%
14%
18%
24%
19%
10% 8% 6%
15%
11% 7% 4% 3% 1% 5%
31%
52%
68%
Source: North American Technographics® Retail Online Benchmark Recontact Survey, 2013
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22. Mobile retail by category
Clothing is the fastest growing category.
US mobile retail products
Source: Upcoming “Mobile Payments Forecast, 2013 To 2018 (US)” Forrester report
© 2014 Forrester Research, Inc. Reproduction Prohibited

23. P2P
P2P
P2P and remittances

24. Mobile remittances picked up share in recent years, but P2P will grow against remittances
US mobile remittances/P2P
Source: Public press releases
Venmo (mobile P2P program) was launched in In 2012, Venmo was acquired by PayPal, the transaction was about $250M. US P2P TPV (2012)
Source: Upcoming “Mobile Payments Forecast, 2013 To 2018 (US)” Forrester report
© 2014 Forrester Research, Inc. Reproduction Prohibited

25. Smartphone evolution
Adoption growth and owner demographics

26. Smartphones will continue to saturate
Feature phones will become almost nonexistent.
Smartphone owners as a percentage of mobile subscribers
Source: Forrester Research Smartphone Adoption Forecast, 2012 To 2017 (US)
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27. Smartphone demographics
Young and wealthy
35%
High income
36%
Middle income
29%
Low income
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28. Smartphones changing shopper behavior
Top mobile activities
Smartphones changing shopper behavior
Information
Purchased on device
Nothing product- or store-related in the past three months
38%
22%
40%
Source: North American Technographics® Retail Online Benchmark Recontact Survey, 2013
© 2014 Forrester Research, Inc. Reproduction Prohibited

29. Appendix

30. Category exclusions and examples
Proximity
mCommerce
P2P
Bill pay
(users only)
Method of payment examples
NFC or RFID (Isis)
QR/2D bar codes (LevelUp and Starbucks)
Cloud/pay by face (PayPal/eBay Now and Square Wallet)
Mobile web
In app
GPS location cloud (eBay Now)
Money sent via mobile handset (originating in the US)
Western Union
PayPal
Venmo
Transaction type examples
Retail, fuel, groceries, cinema ticket, train ticket, restaurant bill, gifts (Bump Pay), transit, and parking
Cinema tickets, mobile phone credit, games, music, and maps
Plumber, taxi fare, music lesson, legal fees, and gifts
Insurance, utilities, rent, tax, and subscriptions
Transaction exclusions
Vendor-size-initiated mobile payment (such as Square), virtual content purchases, and programmable NFC stickers
SMS commerce (e.g., donations), newspaper subscription, stock trades and investments, and gambling
Donations made via mobile SMS to charities or political campaigns, bank person-to-person fund transfers
© 2014 Forrester Research, Inc. Reproduction Prohibited

31. Questions?

32. Susan Huynh