towards cash free day
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©2010 MasterCard.Proprietary and Confidential
Towards a Cash Free DayDelivering Innovation with Insights
ADVANCING GROWTH. ADVANCING COMMERCE.
Gabriele Zuliani, MasterCard WorldwideNovember 25, 2010
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
In 2010, we started looking more closely at the
Today we explore some of
December 2, 2010Page 2
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
order to understand how to better meet their needs
Could I live without cash?
What do I & my family spend
on everyday, week, month or
year?
Where do I want to use my card where its
not accepted or welcomed ?
What stresses & frustrates me
when I wantto pay?
What are
everyday payment needs & are they currently being
met?
What would make me use
my card more?
How much cash do I like to keep
in my purse?
December 2, 2010Page 3
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
We used 5 different methodologies designed
360°
MasterCard Advisors Transactional Data Analysis
without Cash
6 country blog
5 country Quantitative Study
Life of 4 4 country Ethnography Study
6 country POS experience
December 2, 2010Page 4
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
How much cash do I like to keep
in my purse?
How much do I usually draw
from the ATM?
How often do I actually pay with cash ?
What do I spendon everyday, week, month
or year?
December 2, 2010Page 5
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
Q8. Frequency of usage of payment means last 12 months, by country Base: All
Cash
Debit
Total Nr of payment txs
Each month, an average German consumer pays about 21x in out of ± 32 payment transactions.
23 21 2417
12
PL DE IT NL SE
125 8
14 16
3 3 311
42 32 37 35 32
Source: TNS, Towards a Cash Free Day research, 2010
Credit
December 2, 2010Page 6
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
For same everyday payments, Germans use mainly cash vs. heavy card habit Swedes who use cash in just 40% of payment occasions
% l
ow
valu
e p
aym
en
ts (
>10
)
Parking fees\tolls Newspaper
Public transport day ticketBooks and
magazines
Food\ snacks\beverages\ sandwiches
Everyday groceries from corner shop
Everyday groceries from supermarket
0
20
40
60
80
100
10 30 50 70 90
Public transportday ticket
Newspaper
Parking fees\tolls
Food\snacks\beverag es\sandwichesBooks and
magazines
Everyday groceries from corner shop
Everyday groceries from supermarket
% paid for in cash moneyBase: 5 countries, Payment occasions yesterday,
Categories: Transportation, Groceries / household items,Entertainment /hobbies / leisureSource: TNS, Towards a Cash Free Day research, 2010
Parking fee/tolls
Food/snacks/Beverages/sandwiches
Everyday groceries from supermarket
Everyday groceries from corner shop
December 2, 2010Page 7
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
What is my path from a
cash only consumer to a more regular debit user?
December 2, 2010Page 8
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
Understanding where cardholders are on their
Incidental Use Confidence Builds Comfort Sets In Habit is Formed
emergency
grocery & fuel clothes & shoes
(core debit territory)
big ticket
socialising
impulse
draw cash from branch or ATM
grocery & fuel plateau
health & personal carerail & bus
18.4 industries
Cash Content
Source: MasterCard Advisors Transactional Data Analysis
December 2, 2010Page 9
Expanding merchant acceptance & continuous communication are key to migrating customers along the card adoption path
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
What are my everyday
payment experiences?
December 2, 2010Page 10
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
What are my everyday
payment needs?
December 2, 2010Page 11
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
around speed, no matter the sophistication levelof the country!
Source: TNS, Towards a Cash Free Day research, 2010
1. Speed be on my way quickly
2. Avoid carrying cash, going to ATM
3. No transaction costVery functional needs
1. Speed be on my way quickly2. Feel in control of my spending
3. Go with the norm, pay as everyone does, not stand out,
not hold up the queueMost emotional needs
1. Speed be on my way quickly2. Feel reassured, not hold up the
queue, easy merchant interaction
3. No transaction cost or feeTheir payment needs are less
extensive as if other thingsmatter more
1. Speed be on my way quickly2. Avoid carrying cash
3. Use my preferred payment method
Very functional needs
1. Speed be on my way quickly2. Feel in control of my spending
3. No transaction cost or fee
December 2, 2010Page 12
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
scale groceries where what matters most is NOT having to carry cash
Source: TNS, Towards a Cash Free Day research, 2010
Consumer Payment Needs for Specific Everyday Payment Occasions
Acceptance SpeedSpeed be on my way
quicklySecurity
Basic condition Basic condition, but not top of mindConsumers do not know what they are liable for. Very different from the online world where security is the key concern.
No transaction cost or fee
FuelBooks and magazines
Go with the normParkingPublic transport day ticketNewspaper
ControlEveryday groceriesFood/snacks/beverages/ sandwiches
Avoid carrying cashLarge scale groceriesFuel
Functional
Emotional
December 2, 2010Page 13
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
Could I live a week without cash?
December 2, 2010Page 14
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
and preconceived notions Habit!
Source: TNS, Towards a Cash Free Day research, 2010
Cash gives me power Card makes me feel liberated
I don't have to go to ATM all the time
Its fast and easy
Card is easy its widely accepted
Not accepted everywhere
More electronic payments could mean less meaningful interaction with merchant
Less need to spend
Its safe
Card fraud
Feel empty without it
Physical incarnation of money (look, feel, smell)
Cash is comfortable, its accepted everywhere
Go with the norm - socially not always accepted to pay by card
last penny slips out of your hand
Not safe (carrying large amounts & pick pockets)
December 2, 2010Page 15
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
Merchants reactions have significant impact
CARDS ACCEPTED
Large shopsLarge amounts
SurpriseFirst reluctance, after acceptance of cardCARDS NOT ACCEPTED
Smaller shopsSmall amounts
reaction
IrritationCash only acceptedRefusing the card
brought so
Feeling embarrassed
he/she can do, leave shop without goods
December 2, 2010Page 16
Participants were very inventive on seeking solutions, but these were only temporary. In everyday situations cardholders land up using the method
most insisted on by merchant or following societal norms
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
What stresses & frustrates me
when I want to pay ?
Do I want touse my card where its not accepted or
welcomed ?
What reactiondo I get ?
December 2, 2010Page 17
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
Merchants in Munich & Turin had most card unfriendly attitude, refusing card acceptance, even at indicated minimum spend
100% card acceptance100% No restriction for card transactions
for card transactions 100% card acceptance100% No restriction
Warsaw
Rotterdam
No terminal 25%Refused card offered 6%Minimum amount 7%
TurinMunich
GothenburgExpressed preference for card 1%Refused card offered 1%Minimum amount 4%Card transaction surcharged 1%
No terminal 6%Minimum amount 3%Card transaction surcharged 2%
Manchester
Expressed preference for cash 8%Refused card offered 15%Minimum amount 19%
December 2, 2010Page 18
Italians and Germans had highest cash usage at 75% and 71% respectively
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
What do consumers want ?
Payment solutions that can simplify and facilitate their day to day lives
For the industry & all its stakeholders, its about delivering
December 2, 2010Page 19
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE. Page 20
Internet banking & security
9
Parking2
Tollroads1
LVP solutions / e-purse4
Retailer Loyalty 7
Transit3
10Personal Finance
Management
e-Com5
December 2, 2010
6Multiple
Credit and Debit cards
Identification Card
8
BANK
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
one card!
Small ticket itemsEg. tolls, parking, coffee etc.
Everyday necessitieseg. groceries,petrol etc.
Large necessities eg.bills, rent, insurances etc.
Large indulgenceseg. electronics,holidays etc.
Mass
Co
nven
ien
ce
Relevance
Loyalty Affluent 50+FamiliesSmall
BusinessYouth
Mass affluent
December 2, 2010Page 21
Enhance security
Improve control
Improve convenience
Increase relevance
Increase relevance
Improve convenience
ConvenienceMaking debit faster, easier and universally accepted
across channels
SecurityImproving all aspects of payment security from prevention to recovery
ControlGiving consumers ways
of managing their money more effectively
RelevanceTailoring payment solutions
to the needs of different consumer segments
Remove barriers Increase appeal
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
Parking2
Tollroads1
e-purse4
Transit3
BANK
Expanding Debit cards into Low Value Payments
Debit cards accepted on Italian, French, Croatian, and Polish Tollways since 2009
Parking (garage and on-street) debit card solution now available
First transit PayPasscontactless transit solution introduced in Turkey (Asya Bank)
National e-purse migration plans to Maestro/MC PayPassimplementing
Page 22
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
Perceive cash as free
Expect ubiquitous acceptance
Believe card transactions are slower than cash
Mixed view on the cost of cash
Think of cards as just more costs
Believe card transactions are slower than cash
Believe LVP transactions are loss making
Free-cash trap
ATM to POS migration requires time and investments
MasterCard Low Value Payments strategy is developed around 3 pillars addressing the core needs of all stakeholders
Consumers
RetailersAcquirers
Issuers
Need to drive profitability
Increase POS use
Develop acceptance for new card sectors
Increase speed and acceptance
Lower end-to-end transaction cost
Change Consumers / Retailers attitude towards cash vs. debit
3. Marketing & Awareness
1. New Technology & Solutions
2. Lower Cost Model
Page 23
There is no one-solution in the LVP space, but a combination of solutions that must fit each stakeholder and offer an improvement over cash
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
MasterCard view of the opportunity for Low Value Payments
Tran
sact
ion
Valu
e
Acceptance Locations
ATV
CurrentBreak-even
Point
FutureBreak-even
Point
The key LVP objectives:
Increase card usage by: extending the acceptance of debit cards at
Facilitating card payments at existing debit card accepting merchants
Expanding to new acceptance channels by leveraging the latest technologies
Provide an attractive solution for all stakeholders that is a faster, more secure, more convenient and a more economic equivalent to cash and bring the barrier down
A
LVP Opportunity
DebitToday
A
New Merchant categories
Taxis, Doctors, Butchery, Bakery
ExistingMerchants
SupermarketsPetrolGroceriesFast-FoodMovies B B
Page 24
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
Migration from e-purse to mobile/contactless A cost-effective way out of the cash trap and long-term vision for Low Value Payments
Page 25
MagstripeNo CVM
EMV ChipDip & Go
EMV chip with PayPass
PayPassMobile tag
Mobile Integrated NFC PayPass
Online only Pre-Load/e-purse
Online/offline/chip pre-auth.
Auto top-upe-purse
MobileInfo
Structural (Back-end)
Front-End Technology(customer experience)
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
One card to unlock the door to simpler cash free
December 2, 2010Page 26
©2010 MasterCard.Proprietary and ConfidentialADVANCING GROWTH. ADVANCING COMMERCE.
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