Beyond the wallet wars - Towards a holistic mobile payments strategy - Amadeus
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Beyond the
wallet wars
Towards a holistic mobile
payments strategy
A01
A01
Sale
Amadeus Travel Payments02
Index
Introduction: Mobile vs Payments 03 Is there more to life than wallets? 11
The Wallet Wars 04 A suggested framework for mobile commerce 13
Why are tech giants suddenly focussed 07 A proposed framework for building 15
on payments? a mobile payment strategy
How will the wallet wars be won? 08 Tying it all together 16
Mobile Payments and the airline industry 10 Amadeus and mobile payments 1603 Introduction: Mobile vs Payments Hollywood has a tried-and-tested formula for guaranteeing hype: Take two well-known super-heroes and combine in one film. You’ve heard of Batman, right? And Superman? Well now you can see them together in Batman v Superman: Dawn of Justice, which broke box office records on its North American release weekend in March this year. In the only-slightly-less hyped world of technology innovation, 2016 is the year when two technology super-trends duke it out. The impact of mobile devices on society has been dramatic: over 2.5 billion people own smart phones around the world; the iPhone led Apple to become the most profitable and valuable company in the world; people report anxiety when separated from their phones1. Payments is also a hot technology: earlier this year Ant Financial, the company behind Alipay, completed the largest funding round by a private technology company ever, raising 4.5billion dollars for an overall valuation of 60billion. Combining these two trends, Mobile Payments, should be a hype-fest. But the story of Batman v Superman carries a warning; a er a record-breaking opening weekend, poor reviews led the film to slide down the list of box office hits. In this paper we look at the hype and the fundamentals of Mobile Payments and try to offer some guidance to help airlines build or consolidate a mobile payments strategy that stands the test of time. 1 http://www.cbsnews.com/news/iphone-separation-anxiety-heart-beats-faster-mind-works-slower/
04
$
2.5B 4.5B
People own smartphones Dollars raised Alipay for
The Wallet Wars
around the world in 2016 an overall valuation of
60 billion
In October 2014, Apple launched iOS 8.1. Along with the normal collection of
bug fixes and minor feature upgrades, the upgrade to Apple’s mobile operat-
ing system included Apple Pay. It wasn’t the first mobile wallet – that was
PayPal– but it has renewed interest in mobile wallets.
Today Apple, Google and Samsung, the first, fourth and nineteenth2 most
valuable companies in the world, are slugging it out to win the global wallet
wars. Notably, none of them are banks, payment companies or have any
history in the arena. As well as pretenders to the global throne, countless
local mobile wallets have popped into existence – the largest of them, Alipay
or Tencent for example, are very large indeed. By March2016, WeChat Pay
had 697 million active users3.
Moreover, the rate of innovation in this space is so fast that, before any of
the global tech giants have managed to establish a position worth defending,
they are already having to fight off the first wave of disruptive challengers.
Facebook, for example, is backing into mobile payments from their very
successful chat application; Amazon is backing into the space from its posi-
tion in online retail.
2 http://www.statista.com/statistics/263264/top-companies-in-the-world-by-market-value/
3 https://techcrunch.com/2016/03/17/messaging-app-wechat-is-becoming-a-mobile-payment-giant-in-china/05
Country available Total transactions Country available Total transactions
(if available) (if available)
Apple Pay Android Pay
US, UK, Canada, Australia, • 1M new users p/ week US, UK, Singapore, Australia
China, Singapore, Switzer- - Clients that register a (soon)
land, France, Hong Kong card in their app
Expected for 2016/17: • 5x growth
Spain, Turkey, India,
Belgium, Germany, Italy
Samsung Pay Paypal
South Korea, US, China, Worldwide • 184 million of accounts
Spain, Singapore, Australia, (27/04/16)
Puerto Rico, Brazil
• 4.9 bn payments
Expected for 2016: processed in 2015
UK, Malaysia, Canada,
Russia, Hong Kong
Alipay BPay
China • 450 million active users Australia • Daily average 1.5 mn trx,
• 5.2 mn users abroad valued $1.3bn.
• Over 290bn worth of
pymnts in ‘15
Smart Pay BBVA Freecharge
n/a n/a India • 35mn active users (wallet)
(bought by Snapdeal) • 1mn/day
(with Snapdeal)06
Country available Total transactions Country available Total transactions
(if available) (if available)
PayTM MasterPass
India • 2.5mn orders/day • United States, Canada, • 2417 merchants enrolled
United Kingdom, Spain,
• 120mn registered users Sweden, Singapore, Israel, • Will soon allow Master-
Italy, Australia and now Card card holders that use
https://paytm.com/about South Africa. Android Pay, Samsung Pay,
or Microso Wallet to use
• Recently-announced the same tokenized
agreement with EcoBank credentials and device
will roll MasterPass out to authentication methods to
33 African countries. complete online transac-
tions at any merchant site
that accepts MasterPass
Mobikwik Amazon Payments
India • 30+mn users US, UK, Spain, France, Italy, n/a
Japan, Germany, India
• 25+ payments/sec
Visa Checkout Walmart Pay
Argentina, Australia, Brazil, • 250,000 enrolled US (just rolled out to 4,600
Canada, Chile, China, merchants stores in the US)
Colombia, Hong Kong,
• 12 million registered users
Malaysia, Mexico, New
Zealand, Peru, Singapore, • 675 financial institutions
South Africa, UAE All data supplied by Visa07
Why are tech giants suddenly focussed
on payments?
Horace Dediu, an analyst of Apple’s business estimates that Apple Pay could
be a billion dollar business by 20204. Mobile payments also represents a
The opportunity is huge:
strategic opportunity. According to figures from the venture capital firm people spend more time with mobile but
Kleiner Perkins Caufield Byers, mobile accounted for 51% of the time
American consumers spent with digital media in 2015, a figure which has this is not reflected in money... yet.
increased from 21% since 20125. Solve the mobile payment experience and
you create “stickiness” for a provider’s mobile platform.
Time Spent per Adult User per Day with Digital Media 2015 Share of Retail
USA, 2010-2015 YTD Time Spent vs. Spending by Platform
- 5.6 -
Source: Kleiner Perkins Caulfield Byers 5.3 Source: ComScore
4.9
2.8 51% OF TOTAL
4.3
3.2
3.7
0.8
1.6
2.3
2.6
60% 16%
0.4
2.4 75% 2.6 2.5 2.3 2.4 2.4 42% OF TOTAL
Time Spent Dollars Spent
0.4 12% 0.3 0.3 0.3 0.3 0.4 7% OF TOTAL
/
2010 2011 2012 2013 2014 2015 YTD $
Other Connected Devides Desktop / Laptop Mobile Desktop Mobile
4 http:⁄⁄www.asymco.com⁄2014⁄11⁄28⁄yet-another-billion-dollar-business⁄
5 http:⁄⁄www.slideshare.net⁄kleinerperkins⁄internet-trends-v108
The opportunity lies in the fact that mobile spend still lags behind mobile How will the wallet
wars be won?
attention. According to comScore, mobile accounts for 60% of the time US
consumers spent with retail sites but only 16% of the money spent. Tech
giants are betting on mobile wallets to close this gap. The opportunity lies in
harvesting transaction revenues, creating a defensive moat around their Mobile wallet developers are pursuing three main strategies to become
mobile businesses and, for some, monetising payment-associated data. Alex ‘top of wallet’:
Rampell, a partner at venture capital firm Andreessen Horowitz, predicts,
1. Reducing payment friction
“As digital wallets increasingly become the
origination point for consumer spending, Entering a sixteen digit credit card number, name expiry date and CVV code is
far from a frictionless experience. Even less so on a mobile phone. Improving
they will become THE platform for down- this experience with card details saved on file and alternative methods of
authentication, like biometrics, improves the attractiveness of a given wallet
stream financial services — creating an op- as well as increasing the wallet owner’s propensity to use his or her wallet
once installed.
portunity for start-ups and a problem for
established players.” ⁶
For the technology giants competing in this space, winning the wallet
Pay with
wars will create an important moat to defend their position in the your finger
smartphone market.
6 https:⁄⁄techcrunch.com⁄2016⁄04⁄24⁄why-your-wallet-is-becoming-the-next-platform⁄09
Suppliers which perfect the mobile payment experience create an opportunity Loyalty is the obvious extension a er payment but it’s farfetched to imagine
to extend the scope to other channels beyond mobile commerce, thus further that, provided the relevant data protection laws are complied with, those
growing the usage of the mobile payments applications. For example, banks wallets could contain other very meaningful datasets to their owners and
have already begun to blur the boundaries between channels when they could make day to day life easier. Passport details, for example, shoe size or
verify your identity when using internet banking by sending a one-time eating allergies. Subject to your authorization and in the right context, this
password to your phone. And recently, Apple announced that people shopping data could be passed to the retailer and truly augment the quality of that
on an ecommerce site from their desktop or laptop can pay using the Apple transaction by making it more specific and personalised. Finally one-to-one
Pay wallet on their iPhone. marketing may ring true.
Another angle of attack is for popular providers of mobile services to equip
2. Increasing wallet utility themselves with payment functionality. Think Facebook, Whatsapp, Wechat,
Instagram, Twitter etc. Their customers spend a significant share of their
According to a survey by payments company TSYS, 30% of Americans want mobile time with them and many have launched ways to send money to
their mobile wallet to allow them to pay with loyalty cards and 28% wanted to friends or businesses. So irrespective of where service providers are coming
earn points while they pay. Samsung, Google and Apple are all obliging by from, offering payment and additional functionality will increasingly be more
offering integration with loyalty cards to both earn and pay with loyalty points7. attractive to consumers than stand-alone payment.
3. Maximising use cases
30% 28% Tech players are looking to maximize the range of uses cases their wallets
can be used for across both online and offline transactions. To this
extent they are focusing on in-store and offline transactions just as much as
online transactions.
of Americans want their mobile wallet to Wanted to earn points
allow them to pay with loyalty cards while they pay.
7 http:⁄⁄qz.com⁄693596⁄the-next-logical-step-for-apple-pay-a-loyalty-program⁄
https:⁄⁄techcrunch.com⁄2016⁄01⁄19⁄google-tests-tap-10-a-rewards-program-for-android-pay-users⁄
https:⁄⁄news.samsung.com⁄global⁄samsung-pay-announces-support-for-membership-and-loyalty-cards-in-the-u-s10
Mobile Payments and
the airline industry
All this creates a practical problem for airlines. Which wallet to implement? It – Other Alternative methods of payment offered by airines in the study
is a non-trivial question: Implement a wallet with a lot of hype but few include: Western Union, TeleCheck, eVouchers, Gi cards, iDeal, CartaSi,
customers or little transactional volume and you have wasted time and BKM Express, Payment at 711 & different stores, Offline bank transfer,
resources implementing something which doesn’t drive revenue or POLi, BPAY, Findomestic, PagoInConto, BancoPosta, PagOnline,
customer experience. Yandex-Money, WeChat.
To try to understand how airlines are responding to mobile payments, we
looked at the payment options offered by the largest airlines by passenger
volume on their websites and mobile apps (iOS and Android).
– Major card brands equally present on website and app: Visa and
Mastercard were equally accepted by airlines both on their websites and Number of airlines accepting major card schemes on their websites vs mobile apps
their mobile apps. More airlines are offering Discover / Diners, JCB and
UATP / Airplus on their websites but not on their mobile apps; there is no
systematic preference between iOS and Android with regards to the
number of card schemes offered.
19 19 19 19 19 19 19 19
18
– Alternative methods of payment are much more available on airline 16
15
websites vs iOS app: This makes sense for some of the more complex 12
11 11
payment methods, like online banking, which is offered by 10 airlines on 10
8
8 7
their websites vs 3 on their iOS apps and just one on Android. Simpler
3
methods of payment like PayPal or Alipay could dramatically reduce 1
0
payment friction in a mobile app; however airlines appear not to be
adopting these simpler methods of payment on their mobile apps: 12
airlines offered PayPal on their websites compared with only 5 offering Visa Mastercard AMEX Discover/ JCB UATP/AirPlus Unionpay
(credit & debit) Diners club
on their iOS app and 4 on Android. On the other hand one airline did offer
Visa Checkout on their Android App and another offered Master Pass.
Website iOS Android11
Alternative Methods of Payment offered on airline websites vs mobile apps Is there more to life
12
10
than wallets?
Important as it is, it may be that the focus on which mobile wallet to
implement online is distracting airlines from building a holistic mobile
payments strategy. Far more than a new distribution channel, mobile is
5
driving significant changes in behaviour and the way that consumers
4 4
3
interact with businesses. Here are just a few examples.
3 3
2
1 1
0 0 0 0
Convenience is mandatory
Paypal Alipay Online Banking Sofort Cash at offices The smaller screens and the fact that people use mobile devices
while on-the-go means that convenience drives significant
competitive advantage on mobile.
Website iOS Android The success of Uber, which stores cards on file to reduce the
payment moment almost to zero, and Starbucks, whose mobile
payment app can be used to speed through queues can partly be
attributed to understanding the importance of convenience
on mobile.
To emulate the success of Uber, airlines should make the payment
step as seamless as possible on their mobile apps by implementing
mobile-optimised payment methods and offering their customers
the option to securely store their card details on file. The Starbucks
example suggests launching the possibility to pay for excess
baggage in the airport on a mobile app instead of queuing up at the
sales counter.12
Instant on demand Gamification
Although mobile bookings still lag behind those made on the desktop Some of the biggest winners in mobile commerce have been gaming
(in Europe and the US, at least), those bookings that are made on companies (think King’s “Candy Crush” or Pokémon Go). Companies
smartphones tend to be last-minute bookings. Booking.com reports are looking at how to introduce gaming concepts, like competition,
that mobile accounts for 30% of all bookings; that figure rises to 50% into their e-commerce and marketing activities to drive engagement.
for travelers who are booking hotel within 48 hours of arrival.
The key opportunity for airlines’ mobile apps, therefore, lies in Airlines are getting in on the act mainly as a mechanism for
providing a streamlined on-trip servicing and upselling platform to promotions. For example Qantas frequent flyers can earn miles
manage, for example, flight changes and ancillary sales – and when they exercise thanks to a tie-up with a fitness app8.
associated payments.
Conversational commerce
The rise of messaging apps combined with advances in artificial
technology have led to conversational commerce, where a
transaction takes place in a messaging app and is managed on the
merchant’s side by commerce “bots” using artificial intelligence to
interpret customers’ messages and provide responses.
In the travel space, KLM launched flight confirmation by chat, in
Facebook’s messaging app, in March 2016.
8 www.airlinetrends.com/tag/gamification/13
A suggested framework
for mobile commerce
At Amadeus we think of mobile driving three main categories of commerce
behavior. This approach allows you to consider how mobile can create new
opportunities to improve the experience in the full range of online and
offline touch-points between an airline and its customers.
Mobile-enabled e-commerce Mobile-enabled offline commerce
This is the most basic kind of mobile commerce experience and is a direct In this use case, “mobile devices are used to enhance the experience of an
translation of a desktop e-commerce experience into the mobile environment. ‘offline’ transaction. It includes:
Examples include mobile-responsive websites and in-app purchases. We
would include conversational commerce in this category. – In-store ecommerce: customers in Apple’s offline stores can pay for items
using Apple Pay. For Apple this is obviously a way to showcase their
– Use different payment options and cards stored securely on file to wallet but is also a way to avoid queues.
increase ancillary sales conversion by reducing payment friction and
pushing offers to customers on the move. – Tap & Pay: use of Near Field Communication (contactless) to smooth the
offline payment process. For example travellers on the London Under
– Calibrate your website functionality to the constraints of the ground can now pay using Apple Pay. In an airport environment, someone
device environment. could pay for an upgrade at check-in whilst in the queue by tapping their
phone on the mobile point of sale of a roaming agent.14
– Call-centre m-commerce: globally between 10% and 15% of airline Mobile-enabled point-of-sale
bookings are made in a call centre. Providing a seamless and secure
The previous two categories apply to use cases where the customer is paying
payment experience, and being able to offer alternative methods of
using a mobile device. In this category it is the merchant point of sale which
payment, is a challenge which smart phones can help to overcome. This
is mobile. Examples include iZettle or Square used primarily by taxi drivers.
is one trend we’ve highlighted further up in this report whereby the
payment part of a transaction takes place in a different channel than the
– Use roaming agents to collect payment transactions in the airport to
one where the transaction was initiated.
reduce queues and improve ancillary sales conversion. In other words,
use this as an opportunity to proactively reach out to your customers
– Use the specific qualities of mobile devices (highly personal, always
rather than wait for them to come to you.
connected, always with the traveller, can be geo-located) to reduce
friction in ‘offline’ transactions.
– Leverage mobile to simplify authentication for face-to-facce transac
tions with biometric authentication (fingerprint, behavioural, etc).
– Offer travellers already at an airport the option to pay for a class
upgrade, seat change, fast track boarding anywhere in the airport
between check-in and boarding.
amadeus.com15
A proposed framework for building a mobile When planning a mobile payments strategy, the second axis to examine is the
trip journey. This enables us to tease out the broader opportunities to improve
payment strategy the experience throughout the journey.
Key opportunities for mobile to enhance the customer experience
throughout the journey.
AIRPORT
48 / 24h
Inspire Book Before Departure Airport Post-Trip
01 03 05 07 09
02 04 06 08
Shop 24 / 48h Check-In On-Trip
A er Booking
HOTEL
Shop
Trip stage
m-commerce
category Between Booking
Touch point Book and Check-in Check-In Airport In flight On-Trip Post-Trip
Mobile-enabled Mobile app Seamless mobile Flight changes, customer service, cross-sell
Seamless mobile payment for ancillary services
e-commerce payment (AMOP, cards (AMOP, cards on file, mobile wallet) (destination services)
Mobile web on file, mobile wallet)
Increase digital sales in Improve security,
Improve security, customer experience and addition to food & dutry customer experience and
Mobile-enabled Call centre additional methods of payment free payment by card additional methods
offline commerce of payment
Airport check-in Seamless NFC payment
Mobile enabled Queue-busting airport agents
Airport agents
point of sale16
Conclusion: Amadeus and mobile payments
Amadeus has a number of solutions (some in development) aimed at helping
Tying it all together airlines deploy mobile payment-related technology throughout the customer
journey and across multiple touch points.
Much of the considerable hype around mobile payments focusses on the
battle for the mobile wallet space. This is clearly an important consideration Touch point Key opportunity Outline Amadeus Solution
for airlines, especially as they consider which payment methods to accept on
their websites and mobile apps. Mobile app / Increase reach by offering Mobile-enabled payment pages gives
mobile-enabled a wide range of payment access to 300 alternative payment options.
website options Amadeus Payment webservices fully
However, in Amadeus’s view mobile wallets should form part – albeit an mobile-compatible.
important part – of a holistic mobile payment strategy which considers Full integration with Amadeus Merci
across the board how smartphones can improve the customer experience
and improve conversion across the full range of touch points and
Mobile app / Convert more sales by Amadeus PCI Security Suite: Tokenisa-
customer journey. mobile-enabled providing a seamless tion / detokenisation service enabling
website payment experience airlines to store card details securely
Call centre Convert more sales by Amadeus Agent Pay: A mobile payment
improving the call centre page integrated into the booking process
payment experience and triggered by the call centre agent
rather than taking payment over the phone
Airport check-in Increase ancillary sales Amadeus Airport Pay: A contact and
conversion in the airport contactless EMV-enabled payment point of
sale which can be used in shared airport
environments and works with multiple banks
In flight Increase on-board ancillary Amadeus solution enables airlines to sell
sales which have traditional- additional services on-board and process
ly been restricted to food payments via seat screens / customers’
and duty free because it was own devices.
necessary to use a physical When plane is 'offline', card details are
card in a POS terminal). collected, encrypted and stored on a local
web server. Authorization requests sen
on landing.
For Altea airlines, stored PNR details can be
used to improve authentication process.Thank you! Website:
amadeuspayments.com/travel-payments/
The LinkedIn showcase page:
linkedin.com/company/amadeus-travel-payments
Twitter account:
@amadeuspayments
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