News and Views – Jun 2014
The collection of the latest in the world of mobile financial services + Mobey’s take on it
In this edition of News and Views:
- Host Card Emulation
- Mobile Commerce and Wallets
- Banks go for Loyalty
HCE (Host Card Emulation)
According to a report by Juniper Research mobile wallet launches across North America and Western Europe are increasingly expected to feature contactless payment functionality. The sector is forecast to receive a boost both from the anticipated launch of an Apple iWallet later this year and through HCE (Host Card Emulation)-based NFC (Near Field Communications) services. According to the report, more than 1 in 3 mobile wallets – and over 50% of wallets in developed markets – will featuring contactless payment by 2018.
Read an overview on the report here
A blog post with some good points and predictions about Apple and NFC. http://blog.starpointllp.com/blog/?p=3707
What is interesting in this Juniper’s paper is that they see P2P or stored value accounts as very interesting add-value features for consumers in today’s cashless society. We have already seen and heard the success stories of Danske Bank for its MobilePay app, but there are also those who have failed in this same area, such as Pingit or Swedbank’s Bart, which was closed due to low uptake. It becomes clearer every day that user experience is what counts in success.
There are stronger and stronger rumours of Apple launching its iWallet functionality for iPhones later on this year. But is it just hype where everyone is quoting one another? I doubt it, since in our last News with Views publication we reported Apple hiring more payment professionals from well-established banks – there must be something cooking. Whether it’s sweet or is it sour, it remains to be seen.
Host card emulation has really been a hot topic for financial industry lately. All the players are now rushing to reposition themselves in the new ecosystem brought about by the emergence of HCE. Mobile network operators, card schemes, chip card / SIM providers, former TSMs –you name it! It will be interesting to see which parts of the ecosystem will be made in-house and which parts outsourced by banks. In any case the chosen business model will be the decisive factor in executing host card emulation.
Mobey Internal update on HCE:
1) Mobey has a workgroup on HCE, led by Zaf Kazmi from CaixaBank. In addition, we have been working together with GSMA on their upcoming paper on HCE, which Mobey Forum will endorse. If you want more information on any of the above, please contact us.
2) Check out the presentations from Mobey Forum’s Las Vegas Member Meeting on HCE, including presentations from MasterCard and Metaforic https://mobeyforum.org/members-area/presentations-archive/may-2014-las-vegas/ (please note that you must be logged on to the members’ area to access the presentations archive. If you don’t have logins, you can request them here mobeyforum.org/register )
MOBILE COMMERCE AND WALLETS
Google accepts PayPal in Google Wallet: In a move that surprised the industry, Google opened up its wallet to its rival PayPal for application sales on the Google Play platform. PayPal will now be available as a payment option in Google Wallet accounts. Google hopes that the inclusion of PayPal in its wallet, to be rolled out in twelve countries, will help growth.
Mobey thinks this was very expected move from Google. Having talked to several digital content providers, it seems they all agree on PayPal being one, if not THE most critical payment instruments in paying for digital content. It is the most user-convenient and has very quickly become the ‘must-have’ option in every webshop. Mobey recently met the CFO of Rovio (the company behind Angry Birds), and he told us what happened when they had the PayPal payment link broken for 3 hours; sales plummeting by 70% during that time. So, if the primary payment link does not work, most users will not bother trying another option.
There might be something between the lines here: the winner is the one with the best user experience.
The sentence that caused a lot of confusion “I don’t want to be in the wallet business,” by the MasterCard CEO, Ajay Banga, was widely misunderstood. The reason for the misunderstanding was a question of definitions of the mobile wallet.
Read the story on Bank Innovation
The reason for publishing this piece of new is to cut down the rumours that the schemes “would not be in the wallet business any longer”. This has been the piece of news that has come across in many discussions in May. It was only recently we found the source of this, which we believed to be just an ugly rumour. Yes, it has been the CEO of MasterCard saying he does not see them being in the wallet business. But when you read his quote, you very soon see that the article is written in a way that causes misunderstandings and misquotes. You should read what the CEO says, and at the same time understand that he is not talking about mobile wallet as we understand it at Mobey Forum (“a functionality on a mobile device that securely interacts with digitized valuables”), but sees each mobile wallet as a different type of payment instrument. The CEO is promoting white-label wallet from MC, while saying that the proprietary solutions may not be the best solutions.
BANKS GO FOR LOYALTY
A new cross-industry loyalty scheme has been launched in Finland. The PINS services has been integrated as a “loyalty card” to a number of major online and brick-and-mortar retailers, airlines, hotels and supermarkets. OP-Pohjola Bank provides PINS customers with a PINS MasterCard and its Pivo mobile wallet application.
Read the full story here
Finally we see a bank who is taking loyalty seriously: OP-Pohjola Bank is offering MasterCard with the cross-industry loyalty programme called PINS, which includes well-known web shops such as Zalando, but also number of country wide medium-size brick and mortar retailers. OP-Pohjola had previously launched the Pivo mobile wallet, which is very visual and easy-to-use mobile app for personal finance management. The natural next step would be to include MasterCard mobile payment functionality by using Host Card Emulation mode to Pivo Mobile Wallet.
OP-Pohjola Bank is also well known for its internal bonus program where it brings financial benefits to its most loyal customers. Since the merger of an insurance company (Pohjola) and a bank (OP), they have been able to offer significant benefits to customers who concentrate their insurance and banking.