November 22, 2010

Mobile Monday Mobile Payments Panel

Stephen Ezell, Senior Analyst

Information Technology and Innovation Foundation

 Why Mobile Payments Are Important
1. Bring operational efficiencies to merchants, retailers, service
providers, transit authorities, etc.

2. Enable a range of innovative new business models and service

offerings.

3. Push distributed computing intelligence into the physical world.

4. They drive economic growth.

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Classifying Contactless Mobile Payment Applications

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Which Counties Lead in Contactless Mobile Payments?

Metric Japan South Korea United States

Mobile phone 87% 93% 88%
penetration
Number mobile wallet 78 million 12 million Only in trials
capable phones
Number citizens using 17 million phones; 3.6 million phones; Only in trials
mobile wallets 68 million smart cards 18 million T-money
smart cards
Number merchants 608,000 merchants/ 500,000 POS 140,000 merchants
deploying POS readers/ total number POS readers deployed deploying/500,000
Total number deployed readers greater POS readers

Explaining International Leadership in Contactless Mobile Payments:

http://www.itif.org/files/2010-1-27-ITS_Leadership.pdf

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Mobile Payment Users By Region

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 Why U.S. has lagged in contactless mobile payments

1. Supply-side factors
ƒ Chicken-or-egg terminal/handset adoption paradox
ƒ Challenge of developing mutually satisfactory business models
ƒ Technological inconsistencies

2. Demand-side factors
ƒ U.S. has well-established & widely adopted electronic payment
system
ƒ “Installed base” of payment options have met most consumer
needs to date.

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 What Can the United States Learn from Global Leaders?

1. Need for a fully-open, interoperable mobile payments system.

2. Opportunity is missed if electronic wallet is not a multifunctional device with
cash, information storage and transaction, ID, and communication features.
3. Government engagement is crucial to catalyze demand, set conditions, and
facilitate ecosystem development.
ƒ Participation of mass transit systems is critical.

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Thank you!
Stephen Ezell
sezell@itif.org
202.465.2984
www.itif.org