Mobile Payments Certificate
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Mobile Payments Certificate
Mobile Payments Certificate 2
Investment Case
➢ While the mobile payment infrastructure is now in place (NFC-enabled phones and POS terminals,
various platforms such as Apple Pay), we are about to enter the second phase of growth for the theme,
which is mass adoption of payment solutions by consumer
➢ Increasing marketing and improving ergonomics, security and value-added services (such as
rewards, loyalty and couponing) should give a major boost to consumer engagement
➢ Mass adoption is not a question of if, but when:
✓ the example of e-commerce says it all: despite initial concerns around security, now most
consumers make online transactions
✓ new forms of mobile payments will expand the total addressable market: in-car payments
and VR shopping
➢ Government incentives for a cashless society are another major catalyst: increasing number of
limits on cash transactions all around the world
➢ The best way to capture this secular growth in the volume of digital payments is to get exposure to
payment processors, which handle all these transactions
Mobile Payments Certificate 3
AtonRâ Mobile Payments Certificate details
Mobile Payments Certificate details Mobile Payments Certificate details
(EUR Institutional) (EUR Retail)
✓ Issuing bank: SG Issuer ✓ Issuing bank: SG Issuer
✓ Calculation agent: S&P Opco ✓ Calculation agent: S&P Opco
✓ ISIN: CH0239656462 ✓ ISIN: CH0239656603
✓ Currency: EUR (daily NAV) ✓ Currency: EUR (daily NAV)
✓ Fees: 1.5% management fee + 15% ✓ Fees: 2.0% management fee + 15%
performance fee, high water mark performance fee, high water mark
✓ Minimum investment € 100,000 ✓ Bloomberg ticker: IND1AMPE
✓ Bloomberg ticker: IND1AMPE
Mobile Payments Certificate details (USD Retail)
✓ Issuing bank: SG Issuer
✓ Calculation agent: S&P Opco
✓ ISIN: CH0239657494
✓ Currency: USD (daily NAV)
✓ Fees: 2.0% management fee + 15% performance fee, high water mark
✓ Bloomberg ticker: IND1AMPU
Mobile Payments Certificate 4
Tech giants
Processors &
Networks
Hardware
vendors Biometrics &
Security
Mobile Payments Certificate 5
The Mobile At The Heart Of Digital Interactions
Top 5: Smartphones penetration in 2017
➢ Mobile payments refer to all payment
transactions made from or via a mobile
device and debited either on a bank account
or on a mobile operator bill
➢ The rise of smartphones, tablets, and now 88% 77% 75% 74% 72%
wearables has driven new means of paying
Source: geoba.se/usnews.com/ emarketer
Mobile payments categories
Web / Person-to- Mobile
In-app Person Proximity
Purchases Payments Payments
Mobile Payments Certificate 6
Smartphones Are Used To Pay, But Also To Get Paid (Merchants)
➢ All smartphones now allow contactless payments in a simple and quick way via an
electronic mobile wallet, and can also become POS terminals for merchants
NFC
« Wireless
exchange
of data »
Mobile
QR Code/
money
(SMS) Barcode
Mobile as
a point-of-
sale
terminal
Mobile Payments Certificate 7
Africa And China Are The Pioneers Of Mobile Payments
➢ Mobile Payments are a solution for providing financial services to unbanked people:
➢ In Sub Saharan Africa, the mobile penetration in Africa is 70% but only 10% of the population
have a bank account
➢ Payments via mobile are the faster and cheaper way to send money to family. The SMS and
USSD technology is compatible with 99% of mobiles
➢ In China, under the impulse of e-commerce and due to the low use of bank cards online payment,
and especially mobile-commerce, has become a reality
Over 100%
Mobile penetration in top tier cities:
democratization of smartphones
Mobile Payments Certificate 8
The Payment Industry: A Private Club?
➢ New players enter the payment industry, already benefiting from a large customer base and
offering many online services: Internet and Tech giants such as Google, Apple, PayPal and
Amazon are providing new mobile payments solutions
➢ The legacy players (telecoms, banks, card networks…) must assert themselves. The need
for innovation is the opportunity to boost these institutions and offer them a new position in the
payment industry
-Payments
Internet services
Financial Giants & POS -Processors Telecoms
Retailers Networks
institutions apps terminals operators
developers -ISO
-Acquirers
Mobile Payments Certificate 9
A Look At The Payment Industry Main Players (I)
Hardware and Card Issuance: technology
providers
➢ Card issuance: credit and debit card
suppliers and software for banks
➢ Semiconductors: At the heart of IT
servers, network routers and
smartphones
POS Terminal ➢ NFC technology, magnetic strip or EMV
Card Issuance
- Ingenico chips for bank cards
- Wirecard
- First Data - VeriFone
Point of Sale terminals providers (PoS)
- TSYS - NCR Corp
SIM card, Security ATM Hardware
- Gemalto - NCR Corp
- G&D - Wincor Nixdorf
- Oberthur - Diebold Inc
Semiconductor
- Infineon
- Samsung
- STMicro
Mobile Payments Certificate 10
A Look At The Payment Industry Main Players (II)
Acquiring Services
➢ The acquirer : providing the merchant the
services to accept a transaction. The acquirer
will route the encrypted transaction details to the
card association/network (Visa/MasterCard)
➢ Distribution and maintenance of PoS
➢ Most large acquirers do the processing part
Acquirers differ
depending on regions
(can be banks or
financial institutions) Some acquirers
outsource the
In US: processing to third
- First Data party processors Processors:
- Global Payments
- BOA
- TSYS ➢ The technological side of payment processing:
- Planet Money clearing and settlement
Terminal services
- Ingenico - WorldPay
➢ Acquirers, processors and POS terminal
- Many regional - IPPay
providers offer value added services to
banks offer these
merchants: reporting, fraud management,
services to
loyalties program, big data analysis
merchantMobile Payments Certificate 11
A Look At The Payment Industry Main Players (III)
Networks
➢ Identify which financial institution
issued the card and re-route the
information to the cardholder’s
Credit cards issuing bank
Phone line - Visa
- AT&T - Mastercard ➢ Set the interchange fees
- Sky - Discover
- British Telecom - American
Express Connectivity
➢ Mobile operators and internet:
Internet provide connectivity and data transfers
Debit cards
- AT&T
- Maestro
- Sky
- Visa Electron
- British TelecomMobile Payments Certificate 12
A Look Behind The Scenes
I- Banking data capture and authorization:
PROCESSING*
The acquirer and processor
II- Clearing and Settlement:
The merchant pays to the acquirer a "merchant discount“ of ~ 2.50%. How are these costs shared?Mobile Payments Certificate 13
The User Experience Is Key In Mobile Payments Adoption
➢ The biggest challenge remains the change in consumer
habits. It has to be simple, intuitive and comprehensive
➢ Mobile payment requires better communication and
Rewards Security
Loyalty programs
education
➢ Mobile payments allow the merchant to increase the
Personalized Adapt
visibility on its brand, target consumers and increase Convenience
loyalty services (e.g. coupons)
➢ As illustrated by the recent success of Samsung Pay’s
loyalty program, rewards/couponing are expected to be
a major catalyst for mobile payments adoption
Fast Simple
36% 71%
Secure
68%
Confidence, acceptation
and adoptionMobile Payments Certificate 14 Security Concerns Need To Be Ironed Out ➢ With tokenization technologies and the emergence of biometrics, mobile payments become more secure than contactless card payments
Mobile Payments Certificate 15
Mobile Payments Certificate 16
Governments Around The World Push Towards A Cashless Society
➢ To fight money laundering and tax evasion in 2014, Israel limits cash transaction between businesses
to 5,000 shekels (USD 1,400) and private transactions done in cash or by check to 15,000 shekels
➢ In most EU countries (Spain, Portugal, Belgium ecc.) cash payments are limited for residents :
✓ In 2015, France has limited the use of cash payments to € 1,000 from € 3,000
✓ In 2016/2017, Italy and Lithuania have limited the use of cash payments to € 2,999
➢ India demonetized some of its banknotes at the end of 2016
➢ In November 2018, the European Union kicked off its "TIPS“ (Target Instant Payment
Settlement), an instant payment service that can be used by consumers and businesses in the euro
zone. It will allow everyone to transfer money throughout the year and in a few seconds via a
smartphone, tablet or computer
➢ The European Union still plans to launch a service that allows mobile payments person-to-person
to use the mobile phone number as a proxy for the IBANMobile Payments Certificate 17
Strong Growth Outlook
➢ The annual transaction volume via mobile payments in 2017 was $780bn and is expected to exceed
$1.1 tn in 2019. The forecast is expecting a CAGR growth pace of 32% for the next 4 years to
reach more than $ 3 tn volume in 2022!
Annual transaction volume in US$ bn - Mobile Payments Mobile Payments users by region (in mn)
3500 180 163.6
160 2012 2016
3000 CAGR growth of around 32%
between 2017 and 2022 140 +92%
2500 120 101.3
2000 100 85 +75%
90.7
1500 80 64
60
57.8 +177%
+140%
1000 32.8
40 26.7 22.3
500 8.5
20 1.5 6
0 0
2015 2016 2017 2018 2019 2022 Asia/ Africa North Europe Latin Middle
(est.) Pacific America America East
Source: AtonRâ Partners, Statista 2018 Source: AtonRâ Partners, Gartner Inc.
➢ Asia Pacific and Africa are early and faster adopters of mobile payments with more than 260
million mobile payments users in 2016Mobile Payments Certificate 18
The Future Of Mobile Payments Is Already Taking Shape (I)
➢ In-car payment solutions will allow drivers to
✓ pay for gas, toll fees or public parking
✓ without having to pull their credit card or
smartphone from their pocket
➢ Payments in virtual stores are another
exciting opportunity
✓ consumers wearing a VR headset will soon
have the ability to visit virtual stores and
make purchases
✓ Alibaba recently unveiled a VR mall called
Buy+ in which consumers gaze at
products long enough to select them
and nod their heads to buy them
✓ Amazon is said to be working on a similar
initiativeMobile Payments Certificate 19
The Future Of Mobile Payments Is Already Taking Shape (II)
➢ The seamless checkout experience (pioneered by Amazon Go) will deal a final blow to cash
payments
✓ In an Amazon Go store, you just walk in, pick the groceries you need and walk out
without having to go through a checkout line
✓ Your Amazon account is automatically debited when you exit the store
✓ This revolutionary checkout experience is likely to be adopted by other major retailers in
the futureMobile Payments Certificate 20 This report has been produced by the organizational unit responsible for investment research (Research unit) of AtonRâ Partners and sent to you by the company sales representatives. As an internationally active company, AtonRâ Partners SA may be subject to a number of provisions in drawing up and distributing its investment research documents. These regulations include the Directives on the Independence of Financial Research issued by the Swiss Bankers Association. Although AtonRâ Partners SA believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this report. The information contained in these publications is exclusively intended for a client base consisting of professionals or qualified investors. It is sent to you by way of information and cannot be divulged to a third party without the prior consent of AtonRâ Partners. While all reasonable effort has been made to ensure that the information contained is not untrue or misleading at the time of publication, no representation is made as to its accuracy or completeness and it should not be relied upon as such. Past performance is not indicative or a guarantee of future results. Investment losses may occur, and investors could lose some or all of their investment. Any indices cited herein are provided only as examples of general market performance and no index is directly comparable to the past or future performance of the Certificate. It should not be assumed that the Certificate will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between the Certificate’s returns and any index returns. Any material provided to you is intended only for discussion purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security and should not be relied upon by you in evaluating the merits of investing in any securities.
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