Mobile Payment Landscape 2016 - Monk...
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Growth Engine for Digital Payments Mobile Payment Landscape 2016
Transcript of Mobile Payment Landscape 2016 - Monk...
GrowthEngineforDigitalPayments
MobilePaymentLandscape2016
Foreword–MobilePaymentLandscape
• MobilePaymentsmodeofdelivery–currentandfuture• Consumerapproachandcomfortandadaptabilityofthevaluechain
• NewEntrants,somebigcompanies,largemulFnaFonal,telcos,BanksanddisrupFveOTTstartupsandtheirrole
• Whichpartofthevaluechainwilldominateandplayersbestplacedtomakemoneyfrommobilepayments?
• Overallmarketdevelopingandalsoaskedthemtoprovidethebenefitfortheirexperienceandopinionsonkeytopics
• Wesurveyed1000usersacrossvariousdemographicsandeconomicclass,includingpeopleinjobs,housemakers,reFredprofessionals,collegestudentsetc.
• TheinsightstheyprovidedgivesafascinaFngsnapshotofanindustryintransiFon,withallpartsofthebusinessrepresented
• HoweverBusinessmodelsareinchurnandvaluechainplayersallacrossareevaluaFngtheiropFonsandthinkingtheirneedtoevolvetheirbusinessplanstostayaheadofthecompeFFon
ExecuFveSummary-IndianMobilePayment(M-Payment)marketisinexplosivegrowthphase• MarketOverview
• MobileBankingtransacFongrewby4000%invaluetermsandover500%involumetermsfrom2012to2015
• IndianWalletTransacFonsoverthelast3years,volume&Value,havegrownbyover500%toReachUSD551MNand2.6BnrespecFvelyin2015
• Howevernearly95%ofalltransacFonsarecashbasedsignalinghugeopportunity
• Fickleloyalty,henceDeals,DiscountsandCashbacksofferedtoaaractusers
• Rechargee-commercearethebiggestrevenuegenerator
• Migrantsarebeingtargetedforremiaance,whileyouth,professionalsandbusinesspersonsareridingthem-commerceboom
• ThreePillarofgrowth:ValueProposiFon,DistribuFon,Partnerships&Tie-ups
• ThecurrenteconomicsandROIforM-WalletservicesareaaracFveforexisFngaswellasnewplayers
• Drivers• Favorable,digitallyawareDemography
• Convenience
• Deals,DiscountsandincenFves
• M-Commerce
• SmartphonegrowthandUsage
• TransacFons
• Compe22veAnalysis
• HypercompeFFvemarket
• Fintechcompanies(Paytm,Oxigenetc.)rulethemarketintermsofcentralityanddisFncFveness.
• Telcosarefocusedonremiaancesandmoneytransfersformasmalluserbase
• Financialservicesplayersarelateadoptersandslowtomarket
• Mobilepaymentsarefollowingthem-commercegrowthcurve,howeverROIsandvaluaFonswillbeunderstressin2016andbeyond
ExecuFveSummary• GovernmentIni2a2ves
• Governmentistryingtobreakthecashcycle• GovernmentincenFvizingdigitalpaymentand
esp.mobilepaymentandJAM*usageforsubsidytransfer
• PathbreakingregulaFonsonJAM,Paymentbanks,BBPS,UPIetc.
• Subsidytransferusingwalletwillbeagamechangerfordigitalpaymentespmobilepayments/walletpayments
• BusinessModels• Twotypesofbusinessmodelsareemerging,a. basedonownershipwhichisdominanttodayb. Basedonservices.• Astheownershipstructuresblurwewillsee
servicesbasedbusinessmodeltakeupprominence
• Technologytrends• Online/offlineintegraFonusingCardreaders,
Virtualcards,PoS,noninternetbasedpayment,MST,Soundpay,QRcodes
• UPI/Interoperability• AuthenFcaFonusingbiometrics• SocialPaymentsusingsocialapps• BeaerfrauddetecFontechniques
• RisksandChallenges
• CashEconomy• Infrastructurechallenges• LackofeducaFon• Threattom-walletsakerUPI• Frauds:Increasingsecuritybreachesinwallets• Moneyinwalletsdoesnotgiveinterest• Dependencyononlineretailers• Sustainacnenowdependsmajorlyon
diversificaFon• BBPSmaymakemerchantacquisiFonirrelevant
StatementofWork(TableofContent)• ExecuFveSummary• Trends• Overview
• Cashcycle
• Mobilepayments
• Growthofm-Bankingandm-Wallet
• Need,&ValueChain
• ClassificaFonofmobilepayments• DriversandRestraints
• EvolvingBusinessModels(KPI)
• DriversandRestraints• EvolvingBusinessModels• PaymentBanks
• SecurityandSoluFons
• RegulatoryoverviewandTrends• BBPS• UPI
• PaymentBanksetc.
• Supplysidetrends• SegmentaFon• DemandSideTrends
• B2C:ConsumersBehavior,noofusers,transacFonsovervariousplamorms,vendorloyalty,switchingprobability,easeofaccessibility
• DetailedConsumerstudy(samplesize1000)
• B2B:EnterpriseadopFons/OpportuniFes
• GoToMarketStrategy• CompeFtorProfiling• Security&SoluFons• Futureoutlook
• MarketForecasts(2016-22)
• DefiniFonsandAbbreviaFons• ResearchMethodology
Overthelast3yearsm-WalletVolumeandValuehavegrownbyover500%
m-Wallet• AverageTicketsizeofwallettransacFonisaboutUSD5• TransacFonsfromOct14toOct15havegrownby120%toINR15Bn• Whiletotalvolumeshavegrownby127%duringthesameperiod• PertransacFonvalueofmobilebanking(INR950)is32Fmescomparedto
m-WallettransacFon(INR30)• BankedtransacFongrowthshowsappeFteform-transacFon,indicaFnga
sizeableopportunityforMobilePaymentsoverthenextfewyears• Unbankeduserscanalsotransactusingmobile(m-wallet),USSD,WAP
Portal,Kiosketc..• ProximitytransacFonsInvolvingcontactlesssoluFon(likeNFC,soundpay,
MST)andinvolvestoredvalueormaybelinkedtoabank
Source:MonkAnalysis,RBI,NPCI,NewsAr:cles,similarweb
m-Commerce• FlipkarttransacFonsfrommobilehavegrownto70%inJuly2015from15%
inJuly2014• Expansionin3Gand4Gnetworkswillonlyaddtogrowthofm-commerce
especiallyinTier2andTier3ciFes
47%
16%
16%
14%
7% Flipkart
Myntra
Amazon
Snapdeal
Others
37
1818
10
17Flipkart
Snapdeal
Amazon
Myntra
Others
Numberofvisitsthroughmobile AppInstallsonAndroid
7 7 9 8 7 913 14 17 21 21 23
67
4743
50 5054
Apr Jun Aug Oct Nov Dec
2013-14 2014-15 2015-16
MobileWalletTransac2on
MobileWalletTransac2onsYoY(VolMn)
0.4 1
2.687
195
551
0
100
200
300
400
500
600
0
0.5
1
1.5
2
2.5
3
2013 2014 2015
Value(USDBn)
Volume(Mn)
NeedforMobilePayments
Need
Government
• ChallengeswithCash• “CostofCashinIndia”2015report
esFmatescostofmanagingcashinIndiaisUSD3.5Bnpa
• Paralleleconomy• TrackingtransacFonsforrevenue
generaFonisdifficult
Merchant
Customer
Providers
• Technology• IncreasingIn-apppayments• MobilebasedfinancialtransacFononrise
• Telco’s• Opportunitytoupsellcontentservices
• Bank• IncreasenumberoftransacFons
• OpportuniFes• ReducFoninlostsales• ReducedprocessingFme
• CostEffecFve• Governmentmightextendsubsidyon
infrastructure/devicesfordigitalPayments
• Convenience• 24x7Availabilityofcurrency,payment
sandtransfers• Incompetentbankinginfrastructure• Bankingreachislimited
• Beaeroffers,deals&discounts
Source:MonkAnalysis,Mastercard,,Livemint
InfrastructureIndiais2ndlargestsmartphonemarketintheworldInternetuserswillreach319MnbyJune2016Affordable3G&4GOver1MnretailersaccepFngofflinepaymentsusingwallets RegulatoryMobilePaymentasatoolforFinancialInclusion:CostofCashasthePrimaryfactorforserviceselecFonIncenFvizingdigitalinfrastructurePosiFveRegulatoryenvironment(UPI,BBPS,PaymentBanks
CompeFFon
RevenuesIndia’spaymentmarketin2015wasworth~USD253.49Bn&isgrowingbyCAGR12%Indiaisthelargestcurrencyproducer&userakerchina~73%ofallpurchasesaredoneincashBranchbankingisdecliningby7%m-walletsEnablingOfflinePaymentsCurrentlyservicesarefreeforcustomers,onlymerchantshavetopay1-2%transacFonfeetowalletproviders
8
SubscribersSmartphonesisanessenFalbouquetofserviceratherthanastandaloneproductAppusageisIntenseandencompassdiversepurposeIndiaiscomfortablebeingonlineWalletusageisacredible(readytouse,recommendandstartedtounderstandsecurityissues)Youth(18-24)andworkingsegmentdrivingWalletadopFonandusage
ClarityEmergingforVariousStakeholders
MerchantacquisiFonforOfflinepresenceDifferenFaFonusingtechnologyonriseDrivingGMVande-commerceintegraFonorextendingvariousfinancialservices(paymentbanksetc..)Cashbacks,dealsanddiscountsprimaryaaracFonsTargeFngsmallpayments(Fckets,cabs,movie)Threemethodsofofflinepayments–push,pullandtap&gomethod
Source:PrimaryDiscussions,MonkAnalysis
90-95%oftransacFonarehappeningofflinewhileonly5%arehappeningondigital
plamorm
CategoriesofWallets
Wallets
Onthebasisofnature
Open
Walletsinwhichmoneycanbeloadedandwithdrawn
Example:-BanksWallets
SemiClosed
Walletsinwhichmoneycanbeloadedandcanbeusedforpayingat
mulFpleplacesbutcan’tbewithdrawn
Example:-Paytm,AirtelMoney,
Vodafonem-pesa,Freecharge,
Mobikwiketc..
Closed
Walletsinwhichmoneycanbe
loadedorcomesinbyrefundorreturn&can
onlybeusedatthecompany’sstoreonly
Example:-FlipkartWallet
Onthebasisofownership
Banks
Walletsdesignedby
banksfortheircustomers,canbeusedforpayingfor
mulFpleservice
Example-SBIBuddy,ICICIPockets
Telco’s
Walletsdesignedby
Telco'sfortheirsubscribers,thesecanbeusedtoavailvarietyofservices
Examples:-AirtelMoney,Vodafone
M-Pesa
Device
Walletsthatarepresentinthe
handhelddeviceitself
Examples:-ApplePay
Technology
Walletsthataredesignedpurelyasathirdparty
apporincorporatedinanparFcularoperaFngsystem
Example:-Paytm,Androidpay
Source:MonkAnalysis,
RBIistheoverallregulatorforMobilepaymentformingguidelinesalongwithTRAIRegulatoryBodies
• The Payment & Sealement Systems Act (2007) empowers RBI to authorize & regulate enFFesoperaFngpaymentsystemsinIndia
• PaymentcouncilofIndia(estb.-2013)-regulatesnon-bankingpaymentcompaniesunderguidanceofIAMAI
• Banks should ensure technology standards, interoperability, interbank clearing, sealementarrangements,grievance&redressalmechanism&transacFonlimitstoensuresafe,securetransferoffunds
• Only IndianRupeebased services should beprovided andAll pre-paid payment instruments issuedshallhaveaminimumvalidityperiodof6monthsfromthedateofacFvaFon/issuancetotheholder
MobileBankingGuidelines KYC Technology&SecurityMobileBankingguidelines• BankscanoffermobilebasedBankingserviceonlytotheirowncustomers• BanksshouldhaveasystemofregistraFonbeforecommencingmobile
basedpaymentservicetoacustomers• Banksshouldissueanewmobilepinandprovide2factoauthenFcaFonto
itsmobilebankingcustomersBankledmodel• MandatoryformicropaymentscompaniestoFeupwithbanks• AlltransacFonsmustoriginateinonebankaccountandterminatein
anotherbankaccount• Bankslicensed&supervisedinIndiawithphysicalpresencearepermiaed
tooffermobilepaymentservicestoIndianresidents
• Theservicesshouldberestrictedtoonlytobankaccounts/creditcardaccountsinIndiawhichareKYC/AMLcompliant
• ThePaymentCardIndustryDataSecurityStandard(PCIDSS)standardsareapplicable
• TheInformaFonSecurityPolicyofthebanksmaybesuitablyupdatedandenforcedtotakecareofthesecuritycontrolsrequiredspeciallyformobilephonebaseddeliverychannel
KeyActsandLaws
• PaymentandSealementSystemAct,2007
• IndianBankingandRegulaFonAct,1949
• InformaFonTechnologyAct,2000• BoardforregulaFonandsupervision
ofpaymentsealementsystemregulaFons,2008
• PaymentandsealementsystemregulaFon,2008
Source:RBI,MonkAnalysis
CashBurn,WellFundedPlayers,LowCustomerLoyaltyandIntenseCompeFFonMarkstheIndustry
Source:PrimaryDiscussions,MonkAnalysis
LowBargainingPowerforvendors
• Lowbargainingpowerofsuppliersasnumberofsuppliers
isincreasingwiththepassingday
• InvestordrivenConsolidaFoninnext18months
• LowdifferenFaFon
ThreatofSubs<tutes• CashEconomysFllstrong
• ParallelEconomy
• TradiFonalBankingisconsideredmoresecurehencecanbeasubsFtute
• VirtualCurrencies
HighBuyersbargainingpower• Buyer’smarket,higherbargainingpowerofbuyers,low
switchingcosts
• Discounts,bargainanddealsleadtohigherretenFoncostsandLowloyalty
• LowperunittransacFonsvalue• DifferenFalservicesandbeaersegmentaFonkeyto
success
Threatof
Subs<tutes
ThreatofN
ew
Entran
ts
BargainingPowerofsuppliersBargainingpowerofcustomers
ThreatfromNewEntrants• EntryofwellfundednewEntrants• ProductdifferenFaFonandbrandswitchingcost
leadingtomarginpressures
• NewEntrantswithbeaerdiscountscanincreasecashburn
Compe<<onIntensecompeFFonamongvendorsLowbrandswitchingcostsandlowdegreeofdifferenFaFonamongproductshasledto
intenserivalry
DriversandRestraintsofMobilePaymentIndustry
Source:MonkAnalysis
1-2 3-4 5-7
Favorable,digitallyawareDemography
Convenience
Deals,Discountsandincen2ves
M-Commerce
SmartphoneUsage
CashEconomy
Infrastructurechallenges
Technologychallenges
Lackofeduca2on
Securityconcerns
Years
Drivers
1.
2.
3.
4.
5.
2.
3.
4.
HighImpact:Above70% MediumImpact:Between25%and70% LowImpact:Below25%
1.
5.
FiveClearBusinessModelsEmerging
Source:MonkAnalysis,CompanyWebsites,PrimaryDiscussions
OwnershipType Channel Services Customer Revenue
TelcoBased(AirtelMoney,
Vodafonem-pesa)
TelecomOperator–OwnDistribuFon/3rdpartychannelpartners.
Theyemploytwotypesofmodel–SelfhelpandBCmodel.TheyalsoactasBCofaBank
MigrantPopulaFonTransacFonfeeonremiaance.Commissionchargedfromthemerchants
BankBased(Axislime,ICICIpockets&
SBIbuddy)DirectandUnilateralchannel Recharges,billpayments
andmoneytransferYouth,UnbankedandcapFveusers TransacFonfees
DeviceBased(applepayandSamsungpay)
OwnDistribuFon/3rdpartychannelpartners.
Developingtheirowndevicebackedecosystem
Youth,UnbankedandcapFveusers TransacFonFee
FintechBased(Paytm,Oxigen,Freecharge,
Mobikwiketc..)
Onlineandofflinepresence(throughcompanyownedretailstores)
Recharge,moneytransferandBillPayments,m-commerce,offlinepaymentusingPoS
Youth,upwardlymobile,professionals,businessowners,andtradersetc.
TransacFonsfees,registraFonfeesandcommissiononmoneytransfer.ThesecompaniesalsochargefrommerchantsEveryFmeapaymentismadetothem.
AssistedOfflinepresencethroughoutletorBusinessCorrespondents
Worksasserviceaggregator/facilitator.Theyclubdifferentservicesprovidedbydifferenttypesofwalletandbringthemonasingleplamorm
unbankedpopulaFonandmigrants.Theyhavestrongholdatboaomofthepyramid
CommissionsandServiceCharges
Fintechareabsorbingmostoftheinvestmentscomingintothissector
Source:Newsar:cles
BelowUSD25Mn USD25Mn-50Mn USD50Mn-75Mn USD75Mn-100Mn MorethanUSD100Mn
OWNERSHIP
SERVICES
BankBased Travel&TourismBased
DeviceBased MarketPlaceBased
FintechBased
TelcoBased FinancialServices
RemiaanceBased
ServiceswillDefineFutureBusinessModels
Source:MonkAnalysis
C&DMatrix
Source:MonkAnalysis
Dis2nc2v
eness
Centrality
Paytm
Mobikwik
AirtelMoney
VM-Pesa
Pockets
LimeOxigen
CitrusApplePay
SamsungPay
MoM
NovoPaySBIBuddy
Payzapp
PayU
MRupee
SpeedPay
Freecharge
0
1
2
3
4
5
6
7
0 1 2 3 4 5 6 7
Aspira2onalUnconven2onal
MainstreamPeripheral
GlobalPlayersTelcoBasedBankBasedFintechBased
CompeFFveAnalysisbasedondetailedprofilingofplayers
ConsumerStudy–samplesize1000,youthdrivingwalletadopFon
Source:MonkAnalysis
FutureOutlook-5pointroadmap2015-2022
ConsolidaFon
Regulatory
BeaerDevice&ServiceEcosystem
Commerce
DiversificaFon
COMPETITORPROFILING
AirtelMoneyVodafonem-PesaICICIPocketsMobikwikLimePaytm
OxigenWalletCitrusPayNOVOPayMoneyonMobileApplePaySamsungPayFreeCharge
AboutMonkConsulFng
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