1. Mobile Commerce Payments European Market Ben Donnelly, Wireless Telecoms Analyst Frost & Sullivan www.wireless.frost.com

2. Agenda Introduction to Frost & Sullivan’s Wireless Research Overview and Definition of Mobile Payments Market Drivers and Restraints User Perspective and Forecasts Leading Mobile Payment Case Studies Conclusions Question & answer

3. Introduction to Frost & Sullivan Wireless Research

4. Frost & Sullivan Wireless Research Short range research topics in 2002 Wireless LAN, Bluetooth market service. Cellular research topics in 2002 Mobile Commerce Payments. Enterprise End-User Study. SMS & MMS Messaging. Entertainment and Multimedia Services. Financial Services. Portals. www.wireless.frost.com

5. Mobile Payment Overview and Definition

6. Overview and Definition Mobile Commerce Payments are... “...monetary transactions that involve the use of a mobile device at some stage in their execution.” They can be used in a variety of situations: Shop, taxi, pizza delivery or other retail outlet. Vending or ticketing machine, parking meters etc. Fixed internet sites. Mobile internet (WAPsites). Between individual people.

7. Overview and Definition Variety of procedures... Require both merchant & customer to be pre-registered. Can use mobile phone bill; existing bank or credit card account or special deposit account. Example procedure: Automated account transfer from existing bank or credit card. Merchant Customer Payment provider 1 2 3 4 7 7 Bank / CC server 5 6 7

8. Mobile Payment Drivers and Restraints

9. Consumers’ perspective Drivers Lifestyle convenience. Alternative payment option. Increased security. Spontaneous and impulse purchasing. Merchant incentives. Restraints Accessibility and ease of use of payment method. Associated cost. Low awareness & security concerns.

10. Merchants’ perspective Drivers New channels to existing customers. Larger addressable market. Increased sales. Improved brand image. Cost reductions. Restraints Apprehension of technology. Related costs. Low awareness & security concerns.

11. Operators’ perspective Drivers New revenue sources. Competitive advantage. Reduction in customer churn. Can easily extend existing billing systems. Restraints Focus on shorter-term initiatives. Traditional unwillingness to partner with banks. Counterparty roaming risks.

12. Banks & credit cards’ perspective Drivers New service channel. Value added service. Cost reductions. Improved brand image. Fear of losing control of payments industry. Restraints Regulation. Slow to move & cautious of new retail technology. Other shorter-term priorities.

13. Mobile Payment User Perspective and Forecasts

14. User Perspective and Forecasts Mobile Commerce segmentation MOBILE COMMERCE Mobile content & servicesReal-world goods & services Mobile channelled (eg: news, games, city guides etc) Mobile specific (eg: ringtones, logos) Internet Peer to peer POS Mobile accessed internet (eg: WAPsite) Mobile assisted internet (eg: call-back, email bill payment) Attended POS (eg: shop, taxi, restaurant) Automated POS (eg: vending, parking meters)

15. Methodology summary: Each user payment scenario considered independently. Influencing factors & how they change over 5 years. Payment provider activity and expected strategies. Comparison with uptake of online retail commerce. Socio & demographics of consumers & spending patterns. User Perspective and Forecasts Mobile Commerce Payment Expenditure

16. User Perspective and Forecasts Mobile Commerce Payment Expenditure Comparison with expected online retail expenditure.

17. Leading Mobile Payment Case Studies

18. Mobile Payment Case Studies Bankpass Mobile EMPS Mint MobilMat Mobipay Omnipay Orange Mobile Payment Paiement CB Sur Mobile Paybox Payline Sonera Shopper Streetcash Telepay

19. Leading Mobile Payment Case Studies Mobipay First inter-operator AND inter-bank alliance. Should do well in Spain, if marketing is properly addressed. Potential to expand into other countries. Paybox First international commercial mobile payment company. Success in Germany (however unique market because of low credit card use). Needs to offer more customer promotions to encourage usage.

20. Conclusions

21. Existing technology is sufficient Main challenges are attracting consumers and merchants. Genuine market demand, long term opportunity Many user and merchant benefits, but also ignorance and apprehension. Think back to introduction of credit cards. Stakeholder marketing is critical to success. Many different pilot trials, small startups & forums In general operators and banks are involved in proprietary trials. Many industry forums some with very similar objectives.

22. Conclusions (cont.) Collaboration is essential Interoperability between systems is absolutely necessary. Collaboration between operators, banks, forums etc is essential to speed up development and time to market. Foundations for success already being established Although many banks and operators are focused on shorter- term priorities, the future success stories are going to be those companies acting now.

23. Thank you for listening! Any questions...? www.wireless.frost.com