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International Conference on E-money,
Cards and Payments in CEE/CIS
Michal Suster
25-26 June 2014, Bratislava
Mywallet
myWallet Card
Introducing
MYWALLET CARD PLATOBNÁ KARTA
 Prvá plne virtuálna platobná karta na SK vydávaná „vzduchom“
 Predplatná karta ktorú môže využiť ktokoľvek bez ohľadu na
existujúce zmluvné vzťahy s bankami
 Jednoduchá registrácia a aktivácia karty v priebehu par minút
APLIKÁCIA MYWALLET MOBILNÁ PEŇAŽENKA
 Prvá plne komerčná prevádzka mobilnej peňaženky na SK
 Prvá multifunkčná mobilná peňaženka na SK
 Postavená na plnej TSM infraštruktúre umožňujúcej vydávanie
kariet „vzduchom“ bez nutnosti návštevy vydavateľa karty
 Dostupná na širokej a rozširujúcej sa rade telefónov portfólia
ST
Preconditions for usage
SamsungGalaxySIIImini
SamsungGalaxyS4
SamsungGalaxyS4mini
SamsungGalaxyFame
SamsungGalaxyYoung
SamsungGalaxyNoteIII
KOMPATIBILNÝ NFC TELEFÓN
NFC SIM KARTA
SonyXperia™Z1
SonyXperia™Z
SonyXperia™M
SonyXperia™L
SonyXperia™SP
SamsungGalaxyS5
SonyXperia™Z1Compact
Technical setup
MNO TSM
NBE platforms
Existing
Payment card
system
SP TSM
platform
OTA
platform
NFC phone
NFC SIM
C
BANKA-X
Bank back
end
systems
MNO back
end
systems
CRM
Billing
Application
Why we struggled to
bring “the solution” to
market despite common
understanding that it is
future proof?
1) Technology Reasons
HOW IT WAS MEANT TO BE
TSM
OTA
platform
BANKA-X
MNO 2
OTA
platform
MNO 1
OTA
platform
MNO 3
SP
SP
SP
BANKA-X
SP
SP
SP
BANKA-X
BANKA-X
BANKA-X
BANKA-X
BANKA-X
1) Technology Reasons
HOW IT IS – “TSM SCHISM”
MNO TSM
OTA
platform
BANKA-X
MNO 2
OTA
platform
MNO 1
OTA
platform
MNO 3
MNO TSM
MNO TSM
C
SP TSM (Group)
BANKA-X
C
BANKA-X
BANKA-X
BANKA-X
C
SP TSM (Group)
SP
SP TSM (Aggregated)
HUB
1) Technology Reasons
HOW IT IS – “STANDARDIZATION SCHISM”
MNO TSMSP TSM
STANDARD
Global Platform AFSCM
MODE
simple
delegated
authorized
D
S
D
S
SP
SP
SP
BANKA-X
BANKA-X
BANKA-X
BANKA-X
BANKA-X
1) Technology Reasons
GRAPH COLORING THEORY - COSTS ON ONE SIDE EQUALS REVENUES ON ANOTHER (VENDOR) ONE
MNO TSM
OTA
platform
BANKA-X
MNO 2
OTA
platform
MNO 1
OTA
platform
MNO 3
MNO TSM
MNO TSM
C
SP TSM (Group)
BANKA-X
C
BANKA-X
BANKA-X
BANKA-X
C
SP TSM (Group)
SP
SP TSM (Aggregated)
SP TSM (Aggregated)
HUB
S
D
S
D
D
D
S
D
S
D
S
S
2) Business Reasons
 BUSINESS CASE/CONNECTED COSTS
 PAYMENT SCHEME SELECTION (TECHNICAL DECISION AT THE END)
 RIGID DECISION MAKING – GROUP DECISIONS
 CUSTOMER OWNERSHIP (OWN WALLET/APPLICATION)
AND/OR
 Online payment only vs. Offline payment supported
 PIN on POS vs PIN on mobile
 Change PIN posibility
 Application management gateway integration
3) Customers facing Reasons
 DEVICES
 NFC penetration
 Mobile OS – firmware (compatibility issue )
 SECURE ELEMENT – NFC SIM EXCHANGE ISSUE
 ACCEPTANCE NETWORK* (50% penetration of contactless POS is it enough?)
 EDUCATION (does service activation without need of personal office visit help?)
*Low penetration of POS Terminals
5,97,57,78,89,49,610,312,112,313,414,816,2
18,819,320,321,022,222,423,624,524,825,928,028,428,530,0
33,1
35,5
ROSKPLDEBGHUCZLVBEATLTNLSIEUEEEURLUSEDKPTITUKFRELESCYIEFI
Source : European Central BankNumber of POS terminals per 1000 citizens (year 2012)
a) POS terminals in Slovakia is domain of big cities and big retail chains only.
2008 2009 2010 2011 2012 2013
40 000
38 000
36 000
34 000
0
Number of POS terminals
b) And even in this segment it seams market is saturated at level of
40ths. terminals
10
12
14
16
18
20
2013
16%
2012
16%
2011
17%
2010
17%
2009
17%
2008
16%
POS terminals penetration among Cash Registers
c) LONG TAIL MERCHANTS DON’T USE POS
TERMINALS. ARE THEY ADDRESSED BY RIGHT
PRODUCT AND APPROACH?
Is There Light on the end of the tunnel?
26.6.2014– mimoriadne citlivé / citlivé / interné / verejné – Autor / Názov prezentácie 14
 TSM INFRASTRUCTURE IS COMPLEX BUT
CURRENTLY THE ONLY SERCURE SOLUTION
PREPARED FOR MASS COMERCIAL DEPLOYMENT
 MOBILE WALLET MARKET IS NASCENT
ECOSYSTEM BUT TSM INFRASTRUCTURE
STANDARDIZATION AND EXISTING COMMERCIAL
DEPLOYMENTS ARE PAVING THE WAY –
UNIFICATION IS ON THE WAY
 HOSTED CARD EMULATION MIGHT BY PROMISING
ALTERNATIVE/COMPLEMENT TO TSM
INFRASTRUCTURE IN FEW YEARS
 DEVICE PENETRATION AND CUSTOMER
EDUCATION IS IN OUR HANDS
Way to go right here right now with ST and
MyWallet
SP
SP
SP
BANKA-X
BANKA-X
OTA
platform
OTA
platform
STMNO TSM
BANKA-X
C
C
SP TSM (Group)
SP
SP TSM (Aggregated)
SP TSM (Aggregated)
NFC phone
NFC SIM
Application
BANKA-X S S
S
S
1)
2)
+ Full Control
- Higher costs
- Longer time to market (9+ months)
- General ST solution constrains
support
planned in
2015
support
planned in
2015
+ Low Costs (NFC revolution program)
+ Fast time to market (6months)
? Outsourced solution
- General ST solution constrains
Card
Multipurpose wallet vs.
single purpose wallet,
are those two
approaches mutually
exclusive?
Wallet ≠ payment instrument only
 INTERNAL MARKET RESEARCH HAS REVEALED THAT 87%OF CUSTOMERS PERCEIVE VALUE IN WALLET
APPLICATION THAT AGGREGATES MULTIPLE SERVICES
 AMONG MOST REQUIRED SERVICES ARE TRANSPORT CARDSAND LOYALTY CARDS
 OTT PLAYERS AND MNOs (INTEGRATED ICT TELCO PLAYERS) ARE MORE LIKELY TO
INTEGRATE/AGGREGATE MULTIPLE SERVICES THAN BANKS
 AT THE END IT IS FEAR OF LOOSING CUSTOMER OWNERSHIPIF APPLICATION IS PROVIDED BY
SOMEBODY ELSE (ON BOTH MNO AND TSM SIDE)
War over customer ownership via Secure
Element control
UICC
(Universal Integrated
Circuit Card) – SIM card
SMC
(Secure Memory Card)
– SD card
ESE
(Embedded Secure Element)
– separate device HW
HCE
(Hosted Card Emulation) – SE
in cloud
FULL TSM INFRASTRUCTURE NEEDED
IS HCE a holy grail?
BIG JOB AHEAD
 SECURITY (MALICIOUS APPLETS, FAULT ATTACKS, MASQUERADES
AND SIDE CHANNEL ATTACKS)
 CERTIFICATION (Including emvco, visa, mastercard, american express,
etc.)
FUNCTIONAL DRAWBACKS
 LOW POWER MODE
 ROAMING AND NO DATA CONNECTIVITY SCENARIOS
 TRANSACTION SPEED (Over LTE, network latency can be as low as 20ms
but for a 3G or 2G network it can
 frequently exceed 100ms and even 300ms what is close to 400ms
threshold)
Who can benefit from hce?
Bank
MNO
NEW ENTRANTS
 Big OTT players may leverage
and finally penetrate from
online to physical stores
 They are not likely willing to
negotiate with local players
 It is expected that many startups will
bring their innovation to ecosystem
 They are flexible not bounded by
legacy approach – who from current
players is able to cooperate with
them?
 Banks willing to bring their own
application for their payment cards
as complement to existing mobile
banking applications.
 Multipurpose mobile wallet freed
from SIM centric and complex TSM
solution is ideal for customer reach
extension even beyond own
customer base
A bird in the
hand is worth
two in the bush
SIM Centric
TSM solution
2014 201?
HCE
Musical chairs – how
many players will last
and who will be out of
the game if we play
Mobile Payments?
Too many players not enough revenues
Bank
MNO
NEW ENTRANTS
 WE BELIEVE THAT THERE WILL BE
SEVERAL WINNERS AS IT IS
COMMON IN MOBILE
APPLICATIONS WORLD
 ULTIMATE DECISION POWER IS IN
THE HANDS OF CONSUMER AND
HE/SHE WILL DECIDE WHO WILL
SURVIVE
First X months of
MyWallet commercial
operation
Current Performance
 X = 1,5
 SO FAR WE ARE OVER PERFORMING OUR PLANS BY 20% :)
 INTENSIVE MARKETING COMMUNICATION IS ABOUT TO START
 SIGNIFICANT DECISIONS TO INCREASE TARGET CUSTOMER BASE
APPROVED
proposition
 MyWallet service is offered to customers with 100% price discount till
year end 2015
 MyWallet will be avaliable for whole base of mobile customers
(prepaid, postpaid, retail, business) till year end 2014
 Prepaid payment card MyWallet Card is offered by ClickandBuy
International Ltd – 100% daughter of DTAG
 MyWallet Card issuing fee for 3 years is only 9,95 EUR
 With digital MyWallet Card is issued also plastic payment card
connected to the same account for ATM withdrawal and cases when
contactless terminal is not available
Future of MyWallet
PAYMENT CARDS
ID CARDS
TRANSPORT CARDS AND TICKETS
EVENT TICKETING
LOYALTY AND COUPONING
ENTRANCE CARDS
FRIST WAVE
SECOND WAVE
Way to go right here right now with ST and
MyWallet
SP
SP
SP
BANKA-X
BANKA-X
OTA
platform
OTA
platform
STMNO TSM
BANKA-X
C
C
SP TSM (Group)
SP
SP TSM (Aggregated)
SP TSM (Aggregated)
NFC phone
NFC SIM
Application
BANKA-X S S
S
S
1)
2)
+ Full Control
- Higher costs
- Longer time to market (9+ months)
- General ST solution constrains
support
planned in
2015
support
planned in
2015
+ Low Costs (NFC revolution program)
+ Fast time to market (6months)
? Outsourced solution
- General ST solution constrains
Card
Having questions or willing to
discuss cooperation? You are
welcome to contact me:
Michal.Suster@telekom.sk

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SIM Centric TSM Mobile Wallet in Slovakia

  • 1. International Conference on E-money, Cards and Payments in CEE/CIS Michal Suster 25-26 June 2014, Bratislava
  • 3. Introducing MYWALLET CARD PLATOBNÁ KARTA  Prvá plne virtuálna platobná karta na SK vydávaná „vzduchom“  Predplatná karta ktorú môže využiť ktokoľvek bez ohľadu na existujúce zmluvné vzťahy s bankami  Jednoduchá registrácia a aktivácia karty v priebehu par minút APLIKÁCIA MYWALLET MOBILNÁ PEŇAŽENKA  Prvá plne komerčná prevádzka mobilnej peňaženky na SK  Prvá multifunkčná mobilná peňaženka na SK  Postavená na plnej TSM infraštruktúre umožňujúcej vydávanie kariet „vzduchom“ bez nutnosti návštevy vydavateľa karty  Dostupná na širokej a rozširujúcej sa rade telefónov portfólia ST
  • 4. Preconditions for usage SamsungGalaxySIIImini SamsungGalaxyS4 SamsungGalaxyS4mini SamsungGalaxyFame SamsungGalaxyYoung SamsungGalaxyNoteIII KOMPATIBILNÝ NFC TELEFÓN NFC SIM KARTA SonyXperia™Z1 SonyXperia™Z SonyXperia™M SonyXperia™L SonyXperia™SP SamsungGalaxyS5 SonyXperia™Z1Compact
  • 5. Technical setup MNO TSM NBE platforms Existing Payment card system SP TSM platform OTA platform NFC phone NFC SIM C BANKA-X Bank back end systems MNO back end systems CRM Billing Application
  • 6. Why we struggled to bring “the solution” to market despite common understanding that it is future proof?
  • 7. 1) Technology Reasons HOW IT WAS MEANT TO BE TSM OTA platform BANKA-X MNO 2 OTA platform MNO 1 OTA platform MNO 3 SP SP SP BANKA-X
  • 8. SP SP SP BANKA-X BANKA-X BANKA-X BANKA-X BANKA-X 1) Technology Reasons HOW IT IS – “TSM SCHISM” MNO TSM OTA platform BANKA-X MNO 2 OTA platform MNO 1 OTA platform MNO 3 MNO TSM MNO TSM C SP TSM (Group) BANKA-X C BANKA-X BANKA-X BANKA-X C SP TSM (Group) SP SP TSM (Aggregated) HUB
  • 9. 1) Technology Reasons HOW IT IS – “STANDARDIZATION SCHISM” MNO TSMSP TSM STANDARD Global Platform AFSCM MODE simple delegated authorized D S D S
  • 10. SP SP SP BANKA-X BANKA-X BANKA-X BANKA-X BANKA-X 1) Technology Reasons GRAPH COLORING THEORY - COSTS ON ONE SIDE EQUALS REVENUES ON ANOTHER (VENDOR) ONE MNO TSM OTA platform BANKA-X MNO 2 OTA platform MNO 1 OTA platform MNO 3 MNO TSM MNO TSM C SP TSM (Group) BANKA-X C BANKA-X BANKA-X BANKA-X C SP TSM (Group) SP SP TSM (Aggregated) SP TSM (Aggregated) HUB S D S D D D S D S D S S
  • 11. 2) Business Reasons  BUSINESS CASE/CONNECTED COSTS  PAYMENT SCHEME SELECTION (TECHNICAL DECISION AT THE END)  RIGID DECISION MAKING – GROUP DECISIONS  CUSTOMER OWNERSHIP (OWN WALLET/APPLICATION) AND/OR  Online payment only vs. Offline payment supported  PIN on POS vs PIN on mobile  Change PIN posibility  Application management gateway integration
  • 12. 3) Customers facing Reasons  DEVICES  NFC penetration  Mobile OS – firmware (compatibility issue )  SECURE ELEMENT – NFC SIM EXCHANGE ISSUE  ACCEPTANCE NETWORK* (50% penetration of contactless POS is it enough?)  EDUCATION (does service activation without need of personal office visit help?)
  • 13. *Low penetration of POS Terminals 5,97,57,78,89,49,610,312,112,313,414,816,2 18,819,320,321,022,222,423,624,524,825,928,028,428,530,0 33,1 35,5 ROSKPLDEBGHUCZLVBEATLTNLSIEUEEEURLUSEDKPTITUKFRELESCYIEFI Source : European Central BankNumber of POS terminals per 1000 citizens (year 2012) a) POS terminals in Slovakia is domain of big cities and big retail chains only. 2008 2009 2010 2011 2012 2013 40 000 38 000 36 000 34 000 0 Number of POS terminals b) And even in this segment it seams market is saturated at level of 40ths. terminals 10 12 14 16 18 20 2013 16% 2012 16% 2011 17% 2010 17% 2009 17% 2008 16% POS terminals penetration among Cash Registers c) LONG TAIL MERCHANTS DON’T USE POS TERMINALS. ARE THEY ADDRESSED BY RIGHT PRODUCT AND APPROACH?
  • 14. Is There Light on the end of the tunnel? 26.6.2014– mimoriadne citlivé / citlivé / interné / verejné – Autor / Názov prezentácie 14  TSM INFRASTRUCTURE IS COMPLEX BUT CURRENTLY THE ONLY SERCURE SOLUTION PREPARED FOR MASS COMERCIAL DEPLOYMENT  MOBILE WALLET MARKET IS NASCENT ECOSYSTEM BUT TSM INFRASTRUCTURE STANDARDIZATION AND EXISTING COMMERCIAL DEPLOYMENTS ARE PAVING THE WAY – UNIFICATION IS ON THE WAY  HOSTED CARD EMULATION MIGHT BY PROMISING ALTERNATIVE/COMPLEMENT TO TSM INFRASTRUCTURE IN FEW YEARS  DEVICE PENETRATION AND CUSTOMER EDUCATION IS IN OUR HANDS
  • 15. Way to go right here right now with ST and MyWallet SP SP SP BANKA-X BANKA-X OTA platform OTA platform STMNO TSM BANKA-X C C SP TSM (Group) SP SP TSM (Aggregated) SP TSM (Aggregated) NFC phone NFC SIM Application BANKA-X S S S S 1) 2) + Full Control - Higher costs - Longer time to market (9+ months) - General ST solution constrains support planned in 2015 support planned in 2015 + Low Costs (NFC revolution program) + Fast time to market (6months) ? Outsourced solution - General ST solution constrains Card
  • 16. Multipurpose wallet vs. single purpose wallet, are those two approaches mutually exclusive?
  • 17. Wallet ≠ payment instrument only  INTERNAL MARKET RESEARCH HAS REVEALED THAT 87%OF CUSTOMERS PERCEIVE VALUE IN WALLET APPLICATION THAT AGGREGATES MULTIPLE SERVICES  AMONG MOST REQUIRED SERVICES ARE TRANSPORT CARDSAND LOYALTY CARDS  OTT PLAYERS AND MNOs (INTEGRATED ICT TELCO PLAYERS) ARE MORE LIKELY TO INTEGRATE/AGGREGATE MULTIPLE SERVICES THAN BANKS  AT THE END IT IS FEAR OF LOOSING CUSTOMER OWNERSHIPIF APPLICATION IS PROVIDED BY SOMEBODY ELSE (ON BOTH MNO AND TSM SIDE)
  • 18. War over customer ownership via Secure Element control UICC (Universal Integrated Circuit Card) – SIM card SMC (Secure Memory Card) – SD card ESE (Embedded Secure Element) – separate device HW HCE (Hosted Card Emulation) – SE in cloud FULL TSM INFRASTRUCTURE NEEDED
  • 19. IS HCE a holy grail? BIG JOB AHEAD  SECURITY (MALICIOUS APPLETS, FAULT ATTACKS, MASQUERADES AND SIDE CHANNEL ATTACKS)  CERTIFICATION (Including emvco, visa, mastercard, american express, etc.) FUNCTIONAL DRAWBACKS  LOW POWER MODE  ROAMING AND NO DATA CONNECTIVITY SCENARIOS  TRANSACTION SPEED (Over LTE, network latency can be as low as 20ms but for a 3G or 2G network it can  frequently exceed 100ms and even 300ms what is close to 400ms threshold)
  • 20. Who can benefit from hce? Bank MNO NEW ENTRANTS  Big OTT players may leverage and finally penetrate from online to physical stores  They are not likely willing to negotiate with local players  It is expected that many startups will bring their innovation to ecosystem  They are flexible not bounded by legacy approach – who from current players is able to cooperate with them?  Banks willing to bring their own application for their payment cards as complement to existing mobile banking applications.  Multipurpose mobile wallet freed from SIM centric and complex TSM solution is ideal for customer reach extension even beyond own customer base
  • 21. A bird in the hand is worth two in the bush SIM Centric TSM solution 2014 201? HCE
  • 22. Musical chairs – how many players will last and who will be out of the game if we play Mobile Payments?
  • 23. Too many players not enough revenues Bank MNO NEW ENTRANTS  WE BELIEVE THAT THERE WILL BE SEVERAL WINNERS AS IT IS COMMON IN MOBILE APPLICATIONS WORLD  ULTIMATE DECISION POWER IS IN THE HANDS OF CONSUMER AND HE/SHE WILL DECIDE WHO WILL SURVIVE
  • 24. First X months of MyWallet commercial operation
  • 25. Current Performance  X = 1,5  SO FAR WE ARE OVER PERFORMING OUR PLANS BY 20% :)  INTENSIVE MARKETING COMMUNICATION IS ABOUT TO START  SIGNIFICANT DECISIONS TO INCREASE TARGET CUSTOMER BASE APPROVED
  • 26. proposition  MyWallet service is offered to customers with 100% price discount till year end 2015  MyWallet will be avaliable for whole base of mobile customers (prepaid, postpaid, retail, business) till year end 2014  Prepaid payment card MyWallet Card is offered by ClickandBuy International Ltd – 100% daughter of DTAG  MyWallet Card issuing fee for 3 years is only 9,95 EUR  With digital MyWallet Card is issued also plastic payment card connected to the same account for ATM withdrawal and cases when contactless terminal is not available
  • 27. Future of MyWallet PAYMENT CARDS ID CARDS TRANSPORT CARDS AND TICKETS EVENT TICKETING LOYALTY AND COUPONING ENTRANCE CARDS FRIST WAVE SECOND WAVE
  • 28. Way to go right here right now with ST and MyWallet SP SP SP BANKA-X BANKA-X OTA platform OTA platform STMNO TSM BANKA-X C C SP TSM (Group) SP SP TSM (Aggregated) SP TSM (Aggregated) NFC phone NFC SIM Application BANKA-X S S S S 1) 2) + Full Control - Higher costs - Longer time to market (9+ months) - General ST solution constrains support planned in 2015 support planned in 2015 + Low Costs (NFC revolution program) + Fast time to market (6months) ? Outsourced solution - General ST solution constrains Card
  • 29. Having questions or willing to discuss cooperation? You are welcome to contact me: Michal.Suster@telekom.sk