1. Emerging players in the
M-Commerce market
Vishal Jain, Analyst, Mobile Services
The 451 Group

2. The 451 Group
New York City: HQ Staff of 170+
Founded in 2000 Offices in London,
San Francisco & Boston
30+ Analysts
Analyzing the business of enterprise IT innovation

3. The 451 Group
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‘change’ in consumer spending behavior, corporate purchasing, and
industry, company and technology trends.

4. Agenda
• Introduction to context of mobile commerce and payments
• Expanding scope of mobile commerce opportunity
• Emerging players and their business model
• Evolving nature of mobile advertising leading to payments
• Trends and Implications

5. Whose payments is it anyways
• Not so long ago - Mobile banking was seen as a harbinger of mobile
payments
Carriers Banks
• However, its emerging into a wider context
• New entrants are making payments a part of their services
ecosystem

6. Mobile commerce – starts with payments
New marketplaces
“By breaking the market boundaries of theater
and circus, Cirque du Soleil gained a new
understanding not only of circus customers but
also of circus noncustomers: adult theater
customers.” – W. Chan Kim and Renee
Mauborgne, Blue Ocean Strategy

7. Mobile commerce – starts with payments
New marketplaces
• Around 150 (451 Group estimates) mobile
payment startups with more than $500m in
VC/PE money
• PayPal to top $3bn in mobile payments
volume
• Apple iTunes reports $1.4bn revenue in Q2
2011
• M-Pesa contributed 13% to Safaricom’s
revenues for 2010

8. Mobile commerce – starts with payments
New marketplaces The Handwriting on the Wall
• Around 150 (451 Group estimates for WE
and US) mobile payment startups with more
than $500m in VC/PE money
• PayPal to top $3bn in mobile payments
volume
• Apple iTunes reports $1.4bn revenue in Q2
2011
• M-Pesa contributed 13% to Safaricom’s
revenues for 2010
“The quicker you let go of old cheese, the sooner
you can enjoy new cheese” - Dr. Spencer
Johnson, Who Moved My Cheese

9. Mobile commerce – starts with payments
New marketplaces The Handwriting on the Wall
• Around 150 (451 Group estimates) mobile • Visa Europe commits €100m for mobile
payment startups with more than $500m in payments
VC/PE money • Major banks across US and Europe form
• PayPal to top $3bn in mobile payments consortium for mobile payments
volume • US Carriers commit $100m for mobile
• Apple iTunes reports $1.4bn revenue in Q2 payments
2011
• M-Pesa contributed 13% to Safaricom’s
revenues for 2010

10. Mobile commerce opportunity
Higher Digital + Physical Content In-store purchases
complexity Real time offers
Coupons/Offers
Financial
Ticketing Services
Digital Content Web app In-app Apps
content content
Location-
Games
Features
based/targeted
Books
Video
Newspaper
Music
Potential
VAS/WAP Content Addressable
Wallpapers Scores Opportunity
Present
Ringtones
Voting Opportunity
Low News feeds
Screensaver
complexity
Low Value High Value
Price per unit

11. Alternative payment chain
Initiating channel Transaction Account Identifier Clearing account
currency
Credit card
Card network
E-money Debit card
Mobile phone
Carrier
Cards/fobs/etc
Virtual Email/phone/
currency Id etc
Wallet
Direct channels operator
Money Pre-paid
equivalent account
Bank
Bank Account

12. Emerging players and their charging and billing methods
• Virtual currency going beyond virtual items
• Pre-loaded wallet – build an ecosystem around it
• Talk time as a global instrument – for remittances
• Directly linked to bank account , phone bill or card
account
• Embedded payments – inside the browser but linked to
card or bank account
• Loyalty is the next big payment engine – well entrenched
and understood – but new form factors

13. Which model to follow – Different pricing regimes
Paypal Google Amazon
Checkout MPS
• Quick setup and low fees Merchant 1.4% to 1.4% to 1.5% to
but why charge higher for account 3.4% + 3.4% + 2.9% +
fees £0.20 £0.20 $0.01 to $
low volume 0.30
Facebook iTunes
• Amazon vs. Facebook and Apple Credits
30% per 30% per
• Premium for ecosystem redemption redemption
• Low fees but merchant accounts setup Carriers Online merchant
the online way have to go through the account for accepting
cards
time consuming set up process
5% to 30% 2% to 4% + fixed fee +
monthly fee + setup
Micro+ payments – right mix? fees

14. Simplicity- equivalent of a card swipe and cash
By offering
Merchants Consumers
• Quicker on-boarding and • Reduce the amount of information
integration required to purchase
• Stop fee loss to traditional • Enable new touch points – QR,
payment methods
NFC for P2P, P2M environments
• Track User purchasing
behavior
• Load offers and promotions
• Open new channels
• Monetise assets
Target cash and card volumes
+

15. Mobile advertising has built the ecosystem for payments
Offer marketing App marketing
Product marketing In-App upgrades
Brand advertising Lead generation

16. Incumbents will leverage relationships driven by needs
Expanding monetisation
opportunities for
Publishers/Developers
developers
Advertising Networks
Development platforms
Content aggregators
OEMs
Carriers
App stores
Services Platforms
Consumers Expanding their digital
ecosystem for business
opportunities

17. By enabling mobile payments
Embed into the browser or app
Attach/Embed the POS
Advertising + into the device
Coupons Redeem
Offers And/or
Purchase
NFC
QR New touch form
+ Bluetooth factors – for seamless
Camera redemption and
Offers Initiated from – app, Audio purchases
social network, navigation app, Voice
search, SMS, proximity scan

18. Market movements around mobile payments
Market entrants Acquirer Target
Mobile payments Mobile Interactive Group ZayPay
acquisitions eBay-PayPal Zong, Fig Card
Google Zetawire
Proxama Hypertag
Neomobile Onebip
Market launch Lead Provider Product
launch/partnership
Mobile payment product InMobi SmartPay
launches Blackberry Messenger Mobile gifting
Opera Software, Blackberry with Bango
App World
Android Market with carriers

19. Mobile commerce is pervasive
Trends Reason Implication
Its just not app stores but several
Boundaries of Expanding scope of mobile
other entities that are vying to sell
mobile commerce outside the app store goods, content and therefore need a
commerce ecosystem mobile payments option.
Content Payments will have to be right Are payment options on existing
+ Payment sized for the mobile medium and platforms suitable for the content
federation transactions being sold?
Need for an end to end interface New players are building critical
Smartphone is
blocks, beyond content, to sustain
the media and that rolls in advertising, offers and
user affinity – identity, payments,
channel payments into one advertising.

20. Thank You
Questions?
?
Vishal.jain@the451group.com