Mobile Payments – A Frontier For

InnovationPeter Keenan – C.E.O Zapp

14th November 2013

The Age of MobileWhere Are We Now?

The Chasm

Crossing the ChasmZapp

Smartphone/tablet & mobile banking adoption forecasts

Smartphone/tablet adoption Mobile Banking App (MBA) Adoption

Assumes:

• s/p launched in 2003

• 64% combined adoption

rate in 2013 (TGI)

• Reaches average of 99%

by 2023

• In line with Gartner

projections

Assumes:

• M-Banking launched in

2008

• 27% App adoption in 2013

• Reaches average of 80%

by 2023

2013: 27% (avg.)2013: 64% (avg.)

+ population growth forecast 0.5%pa (as in the Zapp commercial model)

The Age of Mobile

Where Are We Now?The Chasm

Crossing the ChasmZapp

Mobile WalletRetail /Closed

Loop

Scheme Driven Payment Platforms Direct Billing

The current payment context: A large volume of innovation but who will win?

Volu

me

Time 2013

WinnersCh

asm

The Age of Mobile

Where Are We Now?

The ChasmCrossing the Chasm

Zapp

Crossing the Chasm

Technologists Visionaries Pragmatists Conservatives Sceptics

Creators Critics &

Collectors

Joiners &

Spectators

Inactives

Adoption

profile:

The Chasm

Winning Solution

Winning Solution

TotalLLMEMEAI

1,626 8,291 18,996 14,271 7,852 51,037

+ Smartphone OR

tablet use

1,518 7,347 13,439 7,369 2,880 32,553

Population

+ Mobile banking

app use*

665 2,721 3,454 1,548 297 8,685

44% 37% 26% 21% 10% 27%

% of population with smartphone or tablet

3.2% 16.2% 37.2% 28.0% 15.4% 100.0%

93% 89% 71% 52% 37% 64%

If crossing the chasm doesn’t seem that daunting, consider the

following…..

The Age of Mobile

Where Are We Now?

The Chasm

Crossing the ChasmZapp

• After a fierce initial land grab, the solutions which will remain will be…

• Those who can scale very quickly.

• Those who find a niche.

• Those whose whose business model best integrates the following three concepts

Who will cross the early adopter / early majority chasm?

Simplicity Scale Security

• Simplicity is key to conversion.

• Simple registration, Simple Authentication, Simple Customer

Journey.

• Easier, more convenient & simpler than traditional payments.

• Seamless interoperability, no limitations on where, when, who

and how.

Simplicity

52% 45% 38% 41%55%

40%38%

38% 33%

36%

Convenient Quick &Easy

Replacecash

Replacecards

Secure

37% 35% 33% 24%37%

42% 45%27%

25%

36%

Convenient Quick &Easy

Replacecash

Replacecards

Secure

What do you want from mobile

payments?How would you describe Zapp?

CONSUMER NEEDSCONSUMER

RESPONSE TO ZAPP

Agree

Strongl

y Agree

• Huge consumer concerns center around security,

fraud and theft.

• Authentication needs to be simple but must be

%100 secure.

• E – COMM & M-COMM transactions need to be

secure and deliverables guaranteed or refunded.

Security Current Card Transactions

» You give away

– Your Name

– Your Address

– Your Card Number

– Card Expiry Date

– Your CVV

– Your Time

– …all to a 3rd Party you may not know!

Consumers state that security is the most prominent issue however concerns

are significantly lower among mobile banking users………

40

38

35

32

25

23

23

22

19

18

1713

11

8

8

6

6

1

38

25

27

24

21

14

14

16

17

20

17

7

20

1212

13

7

5

5

29

I don’t want to put my card details in my mobile phone

I don’t need this service

Mobile phones can be lost easily

Its not secure

I don't trust mobile networks

Prefer to carry and use cash

Its not private or confidential

Phone doesn’t have the capability

I wont be able to use it if my battery on my mobile…

Mobile phones have network problems

Accidently paying the wrong person

I don’t know how to use this service

There is no pin code to enter when I make a payment

Too complicated to set up

It is not widely available in my area

Its expensive

It takes to much time too make a payment via mobile

I tried it and don’t find it useful

Other

None of the above

Reasons for not being interested in mobile payments

All respondents

Mobile banking users

Mobile Payments U&A

Base: All respondents (10,010), Mobile banking users (2039)

Scale or find a niche

• Scale on Users.

• Scale on Transactions

• PayPal + eBay / Droplet + Digitising

Cash

• Dependency on a niche can be risky.

The Age of Mobile

Where Are We Now?

The Chasm

Crossing the Chasm

Zapp

Crossing the Chasm

The concentrated

brand idea for Zapp

Make paying

a simple

pleasure

HUMAN TRUTH

“It’s my #%@!-ing

Money”

BRAND TRUTH

We get out

of the way

MARKET TRUTH

Payment is

made a chore

Putting the bank account back at the heart of spending money

Sell more at lower cost

with instant settlement

Empowering the customer – putting them back in control with a simple payment experience.

The Consumer

MerchantsFinancial

institutions

The category trilemma…

Make paying a simple pleasure

Zapp is a tokenised solution which works behind the banks authentication

layer which means that there is less risk carried by distributor or merchant

Zapp uses time-limited tokens which

carry no financial information

Liability shift from distributor /

merchant to financial institution

TRADITIONAL PAYMENT

» Customer gives away

– Your Name

– Your Address

– Your Card Number

– Card Expiry Date

– Your CVV

– Your Time

– …all to a 3rd Party you may not know!

Zapp - You give away nothing, if the token is compromised then all fraudster can do is pay for

your goods!

TRADITIONAL PAYMENT

» Liability for consumer is

principally taken by the merchant

or distributor

Zapp works within the financial institution mobile banking app and

their authentication hence the financial institution is liable for any

consumer risk

Zapp’s seamless & Simple checkout experience has the potential to deliver a

significant increase in conversion rates for a typical merchant

Worked example: Dixons check out experience current

Worked example: Dixons check out with Zapp

Currys £22.99Currys £ 22.99

Customer needs to enter card details

10% conversion drop out per step in the journey

Pre-registrationneeded for addressand cards

Need to be a customer of Amazon

Single factor security

No pre-registrationwith retailer required

Two factor security

Available to ALLmerchants

One Click Check Out

14seconds

12 seconds

Time in seconds

Average E-commerce

and M-commerce

Check-out

87seconds

37seconds

(if card

registered)

ZAPPQuickPay

Drop outs decreased & conversions increased

100

25

20

20

20

1525

Start Step 1 Step 2 Step 3 Step 4 Final

Drop out of customers

throughout the

checkout process

Zapp’s seamless

check out experience

delivers significant

conversion

improvements

Beginning with 40% of

all UK bank accounts

and 60% of retailers at

Zapp we aim for…..

18m usersUsing Zapp in 36 months

800m transactionsAnnually through Zapp in 36 months

856,212 33,615,916

278,843,651

845,273,706

1,569,483,275

2,399,699,247

3,080,297,149

3,616,471,235

4,026,934,604

4,360,290,127

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

742,046

5,360,439

11,896,359

17,658,668

22,105,025

25,191,412

27,032,325

28,003,698

28,361,611

28,478,339

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

User Scale & Transaction ScaleZapp’s Projections

ThankyouAny questions?