As mobile payments rapidly become the norm, you need to stay on top of trends. Vantiv interviewed 35 top executives at financial institutions and tier1 merchants. Then, they compared responses with consumers' outlooks on mobile. Vantiv's research revealed significant gaps – as well as opportunities. These compelling results were compiled in a new webinar – giving you the mobile insight you need to lead your business to the next level. Fore more info: www.nafcu.org/vantiv

1. Welcome

2. Executive Thinking
On Payments
Part of the Vantiv Insight Series
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3. Housekeeping
…and some data
How will consumers use
mobile payments in 2017?
Numbers reflect consumer-
projected increase in mobile
payments by shopping category
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4. Today’s Speakers

5. Vantiv Insight Series Research
Conducted by Vantiv and • February 2012 Consumers asked about
Mercator Advisory Services • 1200 consumers surveyed making payments now
and in the future
Representative Titles From the
Executive Research – Merchants: • June 2012
• SVP Payments • 35 interviews with financial Industry Executives
• SVP eCommerce asked about how they
• VP CRM institution and tier1 merchant
• Dir. Global Risk and Payments executives are enabling payments
Titles – Financial Institutions:
• Bank President Financial Institutions interviewed included major regional and smaller community banks as
• SVP Payment Strategies well as credit unions. Merchant companies interviewed were national in scale including:
high-end and discount retailers, large drugstore chains, grocery store chains, a major
• SVP Operations
hospitality chain, a quick food service chain, home improvement retail chains, a cellular
• Head of US Commercial Cards
phone company with retail outlets, a retail apparel conglomerate, an auto parts store chain,
a large internet retailer, a large internet travel site, and a major airline.

6. Executive Perspectives
What’s Keeping Them Up At Night?
Customer Experience
Prepaid Cards Mobile Wallets
Mobile Payments Customer Retention
EMV QR Codes Cloud-based Payments
Data-Mining Security Encryption NFC
Rewards Legislation

7. Executive Thinking on Mobile Payments
Security is a key concern, but executives are looking for
solutions that reduce costs rather than increase them
“The phone is smarter and supports data
elements to allow issuers better protection
against fraud, which should result in lower
transaction fees for merchants”
- Discount Retailer

8. Executive Thinking on Mobile Payments
Executives worry about implementation costs
plus uncertain standards and evolving technologies
“The most challenging [thing] is to figure out
which payment types a bank with limited
resources should offer…. We can’t offer every
type of solution that comes along.”
- Regional Bank Executive

9. Executive Thinking on Mobile Wallets
• Lack of Functionality
• Lack of Standards
• Disappointing Merchant Trials
Just Not There Yet

10. Executive Thinking on Mobile Wallets
OK, but which ones?
A wide range of developers
are coming out with mobile
wallets at an increasing rate
– more than 120 to date
Source: IE Market
Research Corp.

11. Merchant Exec Thinking on EMV
Anxiety Around:
• Compliance with mandates
• Cost and complexity of implementation
• Assumption of liability
“EMV is a big challenge for us because we are in the
midst of upgrading terminals now with better software,
but the EMV technology isn’t there yet…so that makes it
very difficult for us to comply. We certainly won’t upgrade
any sooner than demanded for that technology.”
– Supermarket Executive

12. Financial Exec Thinking on EMV
Anxiety Around:
• Cost and Timing
• Customer Reactions
• What’s In It For Us?
“Issuing an EMV card is just a direct expense for us – it’s
50% more expensive and we only get the added security
impact if the merchants have the right EMV readers to
accept it.”
– Senior VP, Large Regional Bank

13. Merchant Exec Thinking on New Threats
Will we lose control of customers —
and customer data?
“Merchants are scared… Why would anyone want to give
their sales data to get into the Google wallet? Merchants
will lose ownership of their data and I could lose my
customers.”
- Airline Executive

14. Financial Exec Thinking on New Threats
Will non-card-based mobile
entrants cut into our revenues?
“The banks should be hoping that VISA figures mobile
payments out before Wal-Mart does, because if they
don’t, the banks could very well be cut out of the
equation.”
- Community Bank Executive

15. Cost + Uncertainty + Complexity =
WAIT and SEE
“We are taking a “wait and see” approach for mobile…. It’s not there yet.”
- Credit Union Executive
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16. Disconnect: What Consumers Want
Executives Think:
Customers are focused
on CONVENIENCE and
REWARDS
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17. Disconnect: What Consumers Want
Customers Say:
COST – not convenience –
is #1 priority
87% say cost is critical in choice of payment method
say worst payment experiences are unauthorized,
80% unexpected, or added fees
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18. Disconnect: Timeframe
1/3 of consumers think
mobile payments will be
common in just 2 years
Execs Say: Not So Fast!
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19. Disconnect: Timeframe
Expectations On Mobile Payments Becoming Common
Consumers 1/3 In 2 Years 2/3 in 5 years
Financial
1/5 In 2 Years 3/4 in 5 years
Institutions
Merchants 1/6 In 2 Yrs 1/2 in 5 years

20. Disconnect: Demographic Differences
Younger High-Value
Consumers Consumers think
think that that smartphone
smartphone payments will be
payments will be common within 5
common within 5 years
years

21. Disconnect: Mobile Payments
Consumers have Many Executives
high expectations for think mobile payments
better tools, will be a vehicle for
information, and Card-based
convenience – an transactions –
altogether compelling “electronic plastic.”
value proposition.
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22. Disconnect: Prepaid’s Role
Consumers are Many Executives think
increasingly interested in prepaid has its place, but is
prepaid’s value props and not yet an important payment
expect to buy more tool
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23. Now What?
Move ahead
• Take incremental steps, rather than “big bets”
• Hold on to customers as payments evolve
• Partner with providers to navigate changing landscape
Don’t Do Nothing

24. Moving Ahead: With Mobile Payments
Financial Institutions should...
Leverage the mobile banking platform
• Add features ahead of payments
• Learn how customers use mobile tools
• Keep providing “pieces” of value as you evolve
• Understand wallets before competitors do.
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25. Moving Ahead: With Mobile Payments
Merchants should...
Integrate mobile into the shopping experience
• Enhance in-store and online experiences
• Incorporate mobile rebates, rewards, and coupons
• Experiment to see what customers want
• Transition to mobile payments when time is right
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26. Moving Ahead: With Prepaid
Financial Institutions & Merchants should...
Strengthen prepaid programs to take advantage of
consumer interest
• Balance information, ability to split transactions, etc.
• Integrate into mobile wallet and loyalty programs
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27. The Research Says:
“Financial institutions and merchants have an opportunity to
take a leadership role in the evolution of payments. Those
that take early steps to engage their customers will be better
positioned to keep those
customers tomorrow.”
—Mercator Research

28. Key Takeaways:
• Despite uncertainty, wait-and-see may not be wise
• Consumers want change sooner, rather than later
• Consumers have high expectations for mobile and prepaid payments
• Take small steps, experiment, learn, and
Stay Close To Consumers

29. Q&A

30. Thank You
For More Vantiv Insights, visit vantiv.com/research
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