Mobile as a

Payment
Method
Contents

• Introduction
• Mobile as a payment method
at physical retailers - Value
Chain & Economics
• Mobile as a payment method
at physical retailers - Key
Players
• Mobile as a payment method
to friends
• How M-Payment System will
work?
Mobile as a payment method
Introduction
 What is M-Payment ?
• M-payment is a real-time payment that is
made with the use of a mobile device.
Formally known as a mobile payment.

• M-Payment involves submitting an electronic

remittance for an outstanding bill.

• Cell phones are all utilized not only for call but
also the means of making an M-Payment.
 What is M-Payment ?
• refers to payment transactions initiated or
confirmed using a person’s mobile device,
usually a smartphone although payments can
be made with other mobile devices such as
tablets and wearables
• covers a number of different types of
solutions, as well as different combinations of
hardware and software technologists
 What is M-Payment ?
• Mobile payments are a popular method for
government’s payments to people, especially
in developing countries, such as India and
Brazil, where more people have smartphones
than bank accounts.
• Just like online payments, there are many
parties involved in any mobile payment
system
 How M-Payment can be more effective
than current e-Payment system ?
• Currently System working on Internet payment which is known
to be e-Payment System.

• As people are not too much familiar with the system and little bit
cumbersome to use and which is totally using debit and credit
card.

• Now cell phones are used as basic need of individual and rather
very chip and easy to use as compared to Internet based
services so it is more efficient and even a common man can
use the latest technology.
 The Changing Face of Payments
Technology review…

NFC still very slow uptake

• Electronic Wallets or eWallets using NFC being
surpassed by other technologies

Contactless
• Low spending threshold

QR Codes
• LevelUp
• Zapper

Direct Mobile banking

• Paym (UK Banking initiative using Mobile phone numbers)
• Venmo

As we.
Major Events
Online / Mobile Payments
Industry Statistics
Payment Instrument Use in the United States
 Industry Statistics
NFC Capable Devices, Mobile Payments

• For low-value payments, consumers in the United States still prefer to use cash; electronic and check payment instruments
are used mostly in larger payment amounts
• The average value of a cash transaction is $21, compared with $168 for checks and $44 for debit cards
• Cash use in the United States is an important factor to consider in the success of the mobile wallet industry; for example,
Apple Pay’s partnership with McDonald’s may familiarize the consumer public with using mobile wallets, which emulate debit
and credit cards, for smaller transactions

Momentum in mobile payments is expected to continue with total global mobile payments volume
expected to increase from $172bn in 2012 to $721bn in 2017 (CAGR = 38%)
 Issues
• For buyer: Security (fraud protection), privacy,
ease of use, and choice of mobile device.
• For seller: Security (getting paid on time), low
cost of operations, adoption by sufficient number
of users, and improved speed of transactions.
• For network operator: Availability of open
standards, cost of operation, interoperability, and
flexibility and roaming.
• For financial institutions: Fraud protection and
reduction, security (authentication, integrity,
nonrepudiation), and reputation.
 Payment types
• Consumer. Buyer pays a merchant for goods and
services. This is the purview of most digital wallets
(e.g., Apple Pay).
• Merchant. Receiving money from a customer in
exchange for goods and services. Often enabled by
mobile POS (e.g., Square).
• Person-to-person (P2P). Money exchange between
two or more people, as a gift or payback (e.g., PayPal’s,
Venmo).
• Institutional. Managing and paying bills from an
institution (like a utility company) for services rendered
(e.g., Finovera or Mint).
Mobile as a payment method
at physical retailers
Value Chain
& Economics
M-Payments Value Chain

Momentum in mobile payments is expected to continue with total global mobile payments volume
expected to increase from $172bn in 2012 to $721bn in 2017 (CAGR = 38%)
M-Payment Value Chain
Sample Apple Pay Transaction Value Chain Economics
M-Payment Value Chain
Mobile Payments Value Chain

Mobile Payments Players in the

Revenue
Value Chain Value Chain

Manufacturer of
Mobile Operator
Handset

Agents

Banks or Financial
Customers
Institutions

Payment Gateway
Company

Terminal Reader
Retailers Merchants/ Sellers
Solution Providers
M-Payment Value Chain
Players in the Value Chain

Mobile Payments Players in the

Revenue
Value Chain Value Chain

Mobile Network • Provides infrastructure, communication & e-money as per regulations.

• Draws money ecosystem together & advises other businesses with their strategies for
Operators revenue.

Bank/Financial • Offering bank services via digital mobile platform.

Institutions • Maintains the financial sector regulation on one hand & handles risk on the other.

• Intermediaries between Operators, Financial Institutions, Regulators & Customers.

Agents • Identifies new opportunities in the current market.

Payment Gateway • Authorizes the payments for the businesses and facilitates the transfer of information
between a payment portal and the Front End Processor or acquiring bank.
Company

• Use the platforms as provided by Mobile Network Operators to improve on their ways of
Consumers living.
 M-Payment Value Chain
Players in the Value Chain

Mobile Payments Players in the

Revenue
Value Chain Value Chain

Mobile Banks & Financial Revenue

Operators Institutions • Closed-loop stored-value card such as is offered by
Starbucks, which receives accelerated and incremental
revenue when customers shift their purchase to the
Key Rental or Fees per Starbucks card and the company avoids paying
Transaction Interchange Fee
Costs interchange fees on those transactions.
• In another example, companies such as Square and
Dwolla offer free or a low flat-fee pricing for processing
Churn Rate is reduced Halo Effect towards payments.
Key as the customers bank • As per an article of Wall Street Journal : Apple Pay will
Costs become more loyal generate revenue of $118 million in 2015 and $310
million in 2016—less than 1% of Apple’s estimated
revenue of $180 billion in the fiscal year ended Sept.
Key Handset & Rental or Fees per 27.
Costs Infrastructure costs Transaction • The mobile-payments market will probably more than
quadruple to about $90 billion by 2017, according to
Forrester Research.

Revenue Model Suggested models as per Research by EDC

• The arrangement builds on the existing fee structure for credit and debit
cards in the U.S., according to the people. Merchants there typically pay • Rental of SIM space based on Usage Volumes
fees totaling about 2 percent of the purchase price for credit-card • Rental of SIM Space Based on number of Accounts
transactions. The swipe fees, also known as interchange, help card- • Hybrid: Per Transaction Charge plus Percentage of
issuing banks cover fraud costs and fund reward programs. Transaction Value
• Google doesn't currently charge users or merchants for access to Wallet, • Percentage of Transaction Value
and plans to make money by offering sponsored ads to their users. • Per Transaction Charge
Mobile as a payment method
at physical retailers
Key Players
• Apple pay
• Samsung pay
• Google wallet
• MCX wallet
• Amazon wallet
Mobile as a payment method
to friends
• Venmo
• Dwolla
• Paym
Peer to Peer Payments
Generic Benefits…

• Customers can easily, securely and conveniently initiate or request a

Unified User Experience P2P payment within a single mobile banking session.

• Direct benefits from products or services sold and thus helps in

bundling
Revenue Generation • Lead generation through Customer list integration
• Recurring & Pending Payments recovering chances more

• Seamless Payment experience through expedited standard payment

Wallet of Share increase methods
• Real time notifications & thus complete transactions solutions

• Higher customer satisfaction

Lower Churn Rate • Enhanced Customer Relationship Management

• Less use of paper work & easy ways of Work Orders, Invoices & Bills
generations
Going Digital • Use of the digital media to enhance their reach and provides medium
for advertisements & brand building
How M-Payment System will
work?
How can we implement M-Payment ?

• These System is very easy to Implement because there is no need

to implement from the core.

• Just we have to need some of the collaboration of following Entities

which makes it possible to implement this system.

Ø USER

Ø M-PAYMENT APPLICATION SERVICE PROVIDER

Ø LOCAL MERCHANT

Ø BANK SECTOR
 How M-Payment System will work?

• Let we consider that all entities are get

together to make this System.
5. Delivery of content
Consumer Content Provider (CP)
1. Purchase indication

0.Registration 2.Purchase 4. Purchase

7. Payment 6.Billing request authorization

3.Authentication/ 9.Revenue sharing

Authorization
Trusted Third Party (e.g. Payment Service Provider (e.g.
telco, bank, credit card telco, bank, credit card company,
company, ISP) 8.Revenue sharing startup)
 Mobile Payment System

Mobile Payment User Merchant

Purchase Request

Give Merchant your Mobile Number

Merchant Send Mobile Number and Amount

System Call Mobile Phone, Speaks Amount & Request PIN

User Enter and Send PIN using Mobile Phone

System Credit Amount to Merchant

System Debit Amount from User Account

 Major Benefits & Advantages of
M-Payment

• There is no need to implement special machine to read

such ATM Card or CREDIT Card which reduces the cost
of making such cards and machine both.

• Every merchant can afford mobile rather than very high

cost CARD System so by which there are number of
user to use these technology as compared to Credit
Card & Debit card.

• You can use as mobile as ATM Card also to receive

currency from ATM machine.
• You can use the mobile for IDENTIFICATION of individual. At the
time of registration in Bank and Mobile Service provider both have
their proof so we can get total detail information of customer.

• One of the major advantage of M-payment is it reduces the

DUPLICATE CURRENCY flow in the market and misused and also
reduces currency maintenance cost due to all flow of currency is
transferring one account balance to another.

• No chance of HACKING your Bank Account or transferring your

Money by fraud or cheat as we have seen many cases on the
internet.

• All payments are on LEGAL TRANSCACTION no doubt of illegal sales

by the merchants.
 Disadvantages of M-Payment System

• Perfect Database implementation cost.

• Quick time transaction capability.

• Quick response and accuracy from service provider.

• Powerful and Capable server.

• Mobile Network Problems.

• To change the service provider you have to do number of

changes to other connected account to change.
Thank You