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MBA Thesis- The Growth & Future of Mobile Payments 2016
MBA Thesis
The Growth & Future of Mobile Payments
Submitted by
Guo Jian
Student no.10021507
Amsterdam Business School, University of Amsterdam
Supervisor: Dr. Jean Lynne Johnson
1
Contents
ABSTRACT............................................................................................................................... 4
Purpose: .................................................................................................................................................... 4
DESIGN/METHODOLOGY/APPROACH .............................................................................. 5
Findings ..................................................................................................................................................... 6
Keywords................................................................................................................................................... 6
EXECUTIVE SUMMARY ....................................................................................................... 7
INTRODUCTION ..................................................................................................................... 8
Different Types of Mobile Payments ...................................................................................................... 10
PURPOSE OF LITERATURE REVIEW ................................................................................ 11
LITERATURE REVIEW ........................................................................................................ 12
Understanding Mobile Payments ........................................................................................................... 12

Stakeholders Involved ............................................................................................................................. 15
Current Scenario on Mobile Payments ................................................................................................... 16
Advantages and Challenges .................................................................................................................... 19
Future Scope ........................................................................................................................................... 23
E-WALLETS ........................................................................................................................... 26
Introduction ............................................................................................................................................ 26
Types of E-wallets ................................................................................................................................... 29
Open Wallets....................................................................................................................................... 29
Semi-Open Wallets ............................................................................................................................. 29
Closed Wallets..................................................................................................................................... 29
Semi-Closed......................................................................................................................................... 29
Evolution of authentication and payment methods used in e-wallets................................................... 30
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Operational Apparatus........................................................................................................................ 32
Benefits of E-Wallets ............................................................................................................................... 33
Flexibility. ............................................................................................................................................ 33
Security. .............................................................................................................................................. 33
Reduces banking costs. ....................................................................................................................... 33
Facilitates E-Commerce ...................................................................................................................... 33
Boosts Economy .................................................................................................................................. 33
The Future of E-wallets ........................................................................................................................... 35
Online Shopping .................................................................................................................................. 35
Price Comparison Shopping ................................................................................................................ 35
Bill Payments ....................................................................................................................................... 36
Loyalty Rewards .................................................................................................................................. 36
Personal Information Access............................................................................................................... 36
Virtual Personal Organizer .................................................................................................................. 36
Wireless purchasing at physical stores ............................................................................................... 36
Pre-emptive Buying............................................................................................................................. 36
D2D/P2P Payments ............................................................................................................................. 36
SURVEY ANALYSIS ............................................................................................................. 37
Survey Results ......................................................................................................................................... 38

Inference, Findings & Conclusions .......................................................................................................... 47
APPENDIX 1 ........................................................................................................................... 49
Survey questionnaire .............................................................................................................................. 49
APPENDIX 2 ........................................................................................................................... 53
Survey Summary ..................................................................................................................................... 53
REFERENCE LIST ................................................................................................................. 57
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Abstract
With the digitalization of world economy, digital money- as a mode of payment is not only
catching up as a trend; but is also becoming a habit as a consequence of the convenience that it
offers.
The mobile payment industry has been under transition and boasts of a history of numerous
tried and successful endeavors. Mobile payments assure a future of promising yet uncertain
possibilities. At this point, this study analyses the current state of the mobile payment industry
from a literature review perspective and then moves on to a qualitative & quantitative analysis
of the present scenario by means of a survey with a sample size of 200 plus participants. The
report reviews literature on mobile payments presented by scholars and data scientists in the
immediate past; analyzing the various factors that impact mobile payment industry. The Survey
Analysis then describes the present scenario and gives an indication towards the future in this
field.
The report will discuss the impact of various social and cultural factors on mobile payments,
and present a comparison between mobile payments v/s the traditional payment methods.
Purpose:
The purpose of this report is primarily to identify the scope of this mode of payment and the
kind of shape it will progress into in the near future. We will also understand and analyze the
growth and future prospects of The Mobile Payment Industry.
4
Design/Methodology/Approach
The research is based on a qualitative& quantitative analysis. The study is strongly supported
by literature review of research conducted previously.
An extensive survey reveals the trends in which Mobile payments influence the paying behavior
of participants ranging from 18-75 years of age. The survey also highlights what are the factors
that are affecting the credibility and growth of Mobile Payments.
An online survey was conducted across multiple nationalities among people from varied age
groups and income groups. The participants were selected by a non-probability sampling
method.
The major drawback of the survey was that it did not allow estimation of the extent to which
the sample statistics are likely to vary from the population parameters.
This survey explored the current market and analyzed the global mobile payment market at
consumer level. The global mobile payment market is classified in terms of application, mode of
payment and age groups.
Classification by application
• Merchant purchases
• Money transfers
• Bill payments
• Cheque
• Others
Classification on the basis of modes of payment
• SMS
• NFC
• WAP
• Others
Classification by age group
• 18 to 24
• 25 to 34
• 35 to 44
• 45 to 54
• 55 to 64
5
• 65 to 74
• 75 or older
Findings
The research reveals that the trend of mobile payments is gaining popularity with all age groups
and it specifically shows a larger interest amongst the young adults. The research reveals that
mobile payment is not just instant; it is also extremely convenient and secure mode of
payments. The study clearly shows a positive inclination from consumers towards mobile
payments. Mobile payments have come a long way from the time of its inception and the
extensive engagement from a huge consumer base hints towards a promising future for this
medium.
Keywords
Mobile payments, e-wallets, e-money, online transactions, e-wallet
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Executive Summary
The key findings of the report “The Growth & Future of Mobile Payments”:
• Mobile payments led the e-commerce payment market in the first quarter of 2016, with
a market share of 53.8%; also expected to retain its dominance during the second &
third quarter.
• Based on application, online purchase segment dominated the mobile payment market
with 76.7% market share in the first quarter of 2016, also expected to retain its
dominance during the second & third quarter.
• Based on mode of payment, the Cash payments dominated the global payment market
in terms of convenience, with 82% market share the first quarter of 2016.
• Based on age groups, the 25-34 age group dominated the global mobile payment
market with 59.4% market share in the first quarter of 2016.
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Introduction
The 21st century can also be understood as an era of digital revolution where technology has
penetrated almost every aspect of our lives. With the invention of mobile technology in 1973
by Martin Cooper, no one had realized that such an innovative tool, over a period of time,
would offer much more than just being one of the primary sources of communication. Over the
years with the advancement in scientific technologies and integration of different ICT tools with
the mobile devices led to the inception of smartphone in 1992. The concept of personal data
assistance (PDA) came into existence where the mobile phones were given the potential of
managing various additional tasks of the individuals apart from offering connectivity. In
addition to that, with the coming of Web 2.0 and greater scope for interactivity between
multiple different users created numerous opportunities for the enterprises in the domains of
learning, commerce, entertainment and many more. What was witnessed was a convergence
between the physical and virtual space where virtual is gradually overcoming the challenges
which the physical tend to offer. One such important change was the launch of e-commerce
and the idea of market-at-doorstep. With multiple varieties of online stores offering a diverse
range of products to the user through a single window of operation was truly in itself a big
game-changer for the existing markets all across the globe. The consumer was no longer limited
to the geographical boundaries of his/her state rather was exposed to such a space where
knowledge on any kind of commodity situated anywhere across the globe, could be accessed at
any point of time via ICT.
Similarly, the idea of mobile based payments is seen as another big step in the global markets
as a means of exchange. History is the biggest proof on indicating how over the period of years,
with the change in the forms of technology and knowledge, man has sought to evolve the
means of exchange to such a progressive stage where sale and purchase of goods and services
have been made as easy and convenient as possible. From the traditional modes of barter
system to the gradual shift to minted coins and later on to gold and currency and plastic cards
are some of the clear indicators on how man has utilized the knowledge in making different
kinds of exchange of commodities and services within domestic and beyond, possible with
lesser complications.
In the present times, the rise of mobile based payments can be seen as the next revolutionary
step as it is a clear indicator of how the concept of ‘Global’ is expanding. Mobile phone, from
being an instrument for communication to a tool to allow monetary exchange, as a matter of
fact, complements the idea of a global wallet. The individual no longer is dependent upon the
physical forms of money. Today, the consumer can at any point of time access currency of any
value and of any region as quickly and conveniently as one can imagine. Mobile based
transactions, such as mobile banking, remote purchases, person to person [P2P] transfer and
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point-of-scale [POS] are some of the important features accessible to the individual in today’s
age.
The aim of this report is to basically offer an overview on how mobile payments are changing
the ways in which people are engaging in the sale and purchase of goods and services. The
study offers key highlights on the 4 primary categories of mobile based payments as well as an
introduction to the stages of evolution from physical forms of payments, i.e., currencies and
coins to a cashless mode of e-payments and also how in the near future the next generation
will be utilizing such mode of payments.
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Different Types of Mobile Payments

Today we can use Mobile Payments to purchase innumerable goods & commodities from e-commerce
websites & online stores.
Post selection of the item that a buyer needs to buy, the most important aspect is making the payments.
All the e-commerce websites & online stores are integrated with a payment gateway by either
purchasing APIs or developing one themselves. These payment gateways integrate various options to
make these Mobile payments.
The most prominent options that are available at present are:
• Credit cards: Credit cards are like taking a short term loan that the consumer has to pay back
(usually within 30 days), failing which the consumer will be charged interest.
• Debit cards: Using debit card money is using money from your account. With a debit card, the
consumer can only spend the money that is available to them.
• Net Banking: Net banking is an electronic payment system that enables the customers of a
particular bank or any other financial institution to make transactions through the Bank’s or the
financial institution's website.
• E-wallets: It is an electronic feature that enables you to use the other Mobile payment modes
without passing on your information to third party websites. E-wallet payments are channelized
through payment gateways that keep the information completely encrypted.
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Purpose of Literature Review
Evolving from a small text message based transaction to an interoperable [UPI] model; mobile
based payments have come a long way. At present the proliferation of mobile wallets and other
mobile solutions have increased the trend of mobile transactions as a greater number of B2B
and B2C consumers are making the decisions to pay through their smart phones or through
cashless cards. The principle idea of this literature review is to understand how the mobile
identity of more than 3 billion people, across the world, would make this mode of payment
simple, instant and seamless as at the same time how will it be kept secure.
The purpose of reviewing the literature on mobile based transactions is primarily to identify the
scope of this mode of payment and the kind of shape it will progress into in the near future. It
will also help in identifying the pivotal questions such as the basic concept of mobile payments,
the kind of stakeholders involved, pre-conditions for the acceptance of such forms of payment,
the benefits and challenges as well as its future scope. It will help in providing clarity on how
the modes of exchange are getting shaped up through the inception of such forms of payment.
It will also help in understanding how different enterprises are making use of this mode of
exchange and how successful have they been in terms of their process of adoption. Through
review of literature, it will be possible to design a set of questions, influenced by already
established work, focused on key aspects, which may help in providing a new basis of
understanding on mobile based payments.
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Literature Review
Understanding Mobile Payments
The ISACA paper (2011) on “Mobile Payments: Risks, Security and Assurance Issues” offers an
understanding of the whole process as the payment made for different products and services,
where the realization of payment is made through any mobile based device such as
smartphones, etc. between two or more parties. The report highlights as to how mobile devices
have altered the functioning of everyday life and business specifically in terms of
communication and how financial transactions too are undergoing a change in the
contemporary scenario. Mobile device already has a mass appeal from different customers. The
moist important fact is that they are very open to learn/understand the technology in order to
fulfill multiple different needs like using web banking sites to make secured transactions 1. A
newer opportunity that has been seen to be emerging for the service providers and merchants
are the use of mobile phones as mobile wallets. Consumers are willing to utilize mobile phones
for payment purposes apart from various other infotainment purposes. Mobile phones are
already creating a space and opportunities for the growth of different financial activities in
different countries. There already exists a scenario where the number of phone users are
exceedingly more than the individuals having bank accounts2. This is a very important indicator
for interpreting the scope of growth of mobile based payments in the global market space.
The Oracle report “Simplicity is the Ultimate Sophistication: The Future of Mobile Payments
(2014)”, explains how mobile payments can be a revolutionary step in terms of transactions in
the same way as that of card-and-terminal systems. Mobile payments have been existing in
parallel with the electronic payment forms and internet banking facilities. However, the
technology itself was new and not mature enough to be accepted by a larger section of people.
As a result, the consumers’ adoption towards this technology was minimum 3. However, with
the evolution of technology over the coming decade, particularly in the direction of contactless
credit and debit cards along with advancement in RFID and NFC technologies has led to a
redevelopment of interests amongst the people towards mobile based payments as well as far
greater awareness in the market towards its future potential 4.
1
Mobile payments: Risk, security and assurance issues (2011). Retrieved from http://www.isaca.org/knowledge-
center/research/researchdeliverables/pages/mobile-payments-risk-security-and-assurance-issues.aspx
2
Ibid.
3
Simplicity is the ultimate sophistication: The future of mobile payments (2014). Retrieved from
http://www.oracle.com/us/industries/financial-services/future-mobile-payments-wp-2346929.pdf
4
Ibid.
12
In the past, the payment industry projected a lot of resistance in accepting credit cards. It was
far easier to promote the idea to the retailers and consumers because of the POS system and
exhibiting how credit cards were easy and convenient replacement for cash. In the current
scenario, the transactions made through cards only require seconds to process. Even with the
advancement of computer technologies, a far greater volume of transactional data can be
processed with ease 5. As a matter of fact, with the improvement in software tracking,
monitoring, and reporting, there is far better scope now to prevent any kind of financial risks.
Even the proliferation of credit and debit cards is also tremendous. Last year’s statistics indicate
that 175.6 million cards have been issued out of which 55.4 million are credit cards, 6.3 million
are charge cards, 95.7 million are debit cards, and 18.3 million are ATM-only cards. Despite this
transition, the financial industry’s overall process of growth has been rather slow. As a result,
the shift from the need for carrying physical wallet to digital money is taking much time than
what it was expected to, by different experts. However, this does not imply that mobile based
payments have no scope in the market 6. There exists an understanding that it holds immense
potential and can be a big agent for change in the financial markets.
Mobile payments have been categorized on the basis of the technology used. These mobile
based payments have been classified as proximity and remote 7. These two types of mobile
based payments drive the nature of the payment service model, the value proposition for both
the consumer and merchant, and the relevant technologies and infrastructure considerations
required to realize the type of mobile payment.
Proximity payment generally refers to contactless payments. The payment credentials of the
user are stored in the mobile device itself and, during any mobile based transaction, are made
accessible through NFC technology with the help of a compatible payment terminal. Here the
device itself is a contactless payment card. Contactless payment through mobile devices can
also be used remotely such as in making an online purchase. The user will only be required to
swipe his/her mobile device over a contactless NFC reader plugged onto a personal computer
(PC) or any similar device.
Remote Payment, on the other hand, involves payments done through a mobile web-browser
or a resident smartphone application. Here the mobile device is playing the principle role of
authenticating the personal information which is stored remotely. These kinds of payment
solutions can be both face to face or vending machine based 8.
5
Ibid.
6
Ibid.
7
8
Ibid.
13
The report further explains another kind of categorization for mobile based payments, namely,
bank-centric and non-bank centric. The bank-centric model is the one where the account
details of the customer are held with the bank. All the matters relating to laundering, fraud etc.
come under the local, national and international banking laws and regulations. Whenever the
customer initiates the payment, it is the responsibility of the respective bank to authorize the
transactions. Traditional payment networks such as Visa or MasterCard are used here.
However, the key differences that lie here are the endpoints of the transaction 9.
However, in the non-bankcentric model, the details of the customer’s account are held by a
non-financial organization like an MNO or any third-party payment service like PayPal. This
model raises a lot of questions pertaining to regulatory behavior, security and even profit
sharing.
However, there has been a change in the laws and regulations regarding mobile based
payments. Europe, for instance, has experienced a considerable ease in restrictions in
payments which can have an impact on the overall mobile payment scenario. New players like
mobile operators, department stores, etc. are getting recognized as potential Payment Service
Providers (PSPs) without having the status of a traditional credit institution (as defined in the
European directive 2000/12/CE). These players compete directly with the traditional
financial/credit institutions keeping in consideration, the compliance towards the requirements
that are set out in the directive. These players can also act as an Electronic Money Issuer (EMI)
or a PSP where they can offer services such as cash deposits, cash withdrawals, direct debits,
credit transfers, etc.
The European scenario is such that there are already a good number of competitors having
electronic money issuer licenses in Europe with the help of internet giants like PayPal and
Google. This has led to the emergence of start-ups like Crandy, Luup or Tunz. However, the
bank-centric NFC-based payment model seems to be more predominant. Although nonbank-
centric payment systems do exist and are in use, however, not many agencies have adopted the
model, thereby making its progress slow 10.
9
Ibid.
10
Ibid.
14
Stakeholders Involved
The mobile payment ecosystem is a large system and there are multiple key players involved.
The ISACA report (2011) identifies the stakeholders in terms of consumers, financial service
providers (FSPs), payment service providers (PSPs), in-service providers (merchants), network
service providers (NSPs), device manufacturers, regulators & application developers etc.
These stakeholders possess the ability of fulfilling variety of roles such as debit/credit card
networks, clearing/settlement organizations, software solution providers, third-party payment
processors, MNO/wireless operators, etc. 11 These stakeholders primarily engage to take their
share of the revenue through debit/credit card networks and MNOs compete for the role of FSP
and NSP as well as the associated transaction fees. Mobile based payment can be seen as one
such application amongst many other existing in the market.
Each stakeholder has a different value proposition which can be understood as under:
Mobile operators:They add value to their commercial offers through a new set of services that
can offer them to increase their average revenue per user (ARPU). This is due to the new
revenue streams that come from different sources, such as transaction fees, data traffic and
financial services etc. 12
Banks:Mobile payment can be an asset for the banks as it can create an opportunity to offer
more interactive services 13. For instance, providing credit at the point of purchase to various
customers.
Merchants:Mobile contactless payments can offer new opportunities to the merchants. For
instance, merchants can offer loyalty programs, through e-coupons that can be consumed by
swiping the phone during checkout 14.
Transportation operators: There already exists a system of cashless transaction within the
transit system of different international zones. Transportation sector can be an apt domain to
utilize mobile contactless services on a large scale. Through an e-ticket integrated within the
the mobile phone can help in making daily travel more convenient and raise consumer
11
Ibid.
12
Ibid.
13
Ibid.
14
Ibid.
15
satisfaction as well. Here mobile based applications for e-ticketing can help in reducing costs to
a considerable margin 15.
Ticket vendors: Multiple infrastructural locations like halls and museums can make use of
mobile based transactions in processing the entry fee for customers through NFC technology.
This can enable a lot faster sale of tickets and that too from diverse set of locations. In addition
to that, it can offer the purchasers to easily check-in for an event instead of waiting in the lines
and queues. Even the event organizers have far greater scope in sharing great details about the
event along with the ability to sell tickets for an event through mobile based applications.
However, there too emerge questions regarding the business model and how the process of
value sharing is taking place. This requires further analysis 16.
Under the NFC model, a new stakeholder has been introduced. This stakeholder is known as
Trusted Service Manager (TSM). It is a trusted third party which used to manage the mobile
based financial applications 17. With the involvement of a TSM the mobile payment cycle
includes a financial institution which has to curate account data and transfer the information to
a TSM. The TSM, then has to deliver the consumer’s account information over the air (OTA)
through the mobile network to a secure element in the mobile phone. Once the payment
account is transferred to the phone, the consumer can then make use of the phone as a virtual
payment card in places where contactless transactions are possible. The mobile operators’
network, is used here during the personalization of the device. The TSM also has the
responsibility of handling the life cycle of the device in order to administer the customer
account data federation between the mobile phones and also deactivate the NFC chip in the
case of theft.
Current Scenario on Mobile Payments
Accenture in its “North America Consumer Digital Payments Survey Report (2015)” has clearly
highlighted as to how consumers are gradually moving towards a kind of payment services
which are simple (the simplest form of payment), personal (payment options being as individual
as they can be) and can be utilized everyday (seamless everyday solutions). The current trend
as per the report indicates that there has been a considerable rise in the awareness in terms of
mobile based payments. However, the preference for using cash as a mode of transaction
followed by credit cards is still strong in the market. Although the consumers’ use of digital
forms of payment has not witnessed any stall, however, it has also not showed any dramatic
15
Ibid.
16
Ibid.
17
Ibid.
16
increase in the usage as per last year. Still the momentum has been quite steady 18. Common
mobile based payment applications are still in much use by a section of the population. The
existing pattern that is projected in the report is that a certain percentage of the population is
making use of mobile based payments for quick services like food and drinks, grocery shopping,
shopping from convenience stores etc. However, mobile based payments are not effectively
used for payment of household bills, taxi services and telecom services etc. in comparison with
the other services 19.
Even the study carried out by Total System Services (TSS) on “U.K. Consumer Mobile Payment
(2015)” presents some of the important facts such as the adoption of mobile based banking
applications is no longer exclusive domain of the “digital natives” and a good number of
individuals have been making use of mobile based payments during the last three months and
were quite satisfied with the experience. However, security being one of the biggest hurdles
has led to a slow progress in terms of adoption of mobile based payments. But given an
atmosphere where these challenges of security can be properly addressed, a good number of
people have shown interest in switching over to this modern approach of monetary
transaction 20.
The TSS report further indicates that around 59% of the total population was making use of
mobile banking applications for monetary transactions. From the socio-demographic angle,
there was a significant level of association between gender, income level and m-banking usage
level. The data showed that men were more likely to use m-banking applications and that with
the increase in the income levels, a rise in the use of mobile-banking was observed. The trend
was such that in UK, most of the users utilized mobile-banking services for the purpose of
purchasing items from e-commerce sites, purchase groceries, pay restaurant bills and etc.
However, at the same time, the group also pointed out the fact that features like the ability to
check the immediate balance, relaxation from PIN entry, choice in sharing of personal details
etc. can be some of the key measures, if implemented properly, can be a big game changer for
mobile based transactions 21.
According to the Accenture report (2015), a positive sign in terms of mobile based payments
that has been observed has been the rise in the level of population’s awareness about this
18
When it comes to payments today, the customer rules (2015). Retrieved from https://www.accenture.com/t20151021T165757__w__/us-
en/_acnmedia/Accenture/next-gen/na-payment-survey/pdfs/Accenture-Digital-Payments-Survey-North-America-Accenture-Executive-
Summary.pdf.
19
Ibid.
20
U.K. Consumer Mobile Payment Study (2015). Retrieved from http://tsys.com/Assets/TSYS/downloads/rs_2015-uk-consumer-mobile-
payment-study.pdf
.
21
Ibid.
17
mode of payment which in turn has complemented to the rise in the use of mobile based
payments as well. However, the rise in the number has not been very satisfying but still it
indicated the fact that mobile based payments have an immense potential in the coming future.
For instance, coming of Apple Pay, has been a very positive move as a majority of the
population has been extensively using it to fulfill any transaction via their mobile devices. In
addition to that, effective post-transaction customer measures, as in the case of plastic cards,
are also being witnessed in terms of mobile based transactions such as quick recovery in case of
fraud, immediate notification in case of suspicious activity as well as payment initiation etc.22
One of the most driving factors for the adoption of mobile payments has been the availability of
rewards. A greater share of the population has shown interest in using this mode of exchange if
they are offered discount pricing or coupons based on past purchasing behaviors of consumers
as well as offers through reward points. The similar strategy is also encouraging the non-users
as well. Consumers’ interest in rewards can be seen as an opportunity for mobile payment
providers to not only incent adoption, but to dramatically redefine how they can build
customer loyalty as well. Some of these offers involve point-based rewards combined with
merchant offers, product and fee/service relationship bundling, and tapping into a broader
ecosystem of providers to bring customers additional and advice driven services 23.
The report has further suggested that P2P payment applications have witnessed a considerable
attention as well as adoption amongst the consumers. These kinds of consumer behavior are
indicative of the ongoing discussions revolving around real-time payments. However, the
principle attention is towards creating banking systems that can offer the services which are
similar to what payment providers like PayPal offer within their eco-systems. These kind of
systems can not only promote mobile payment adoption within the market but also offer scope
for innovation of services within it 24. As a matter of fact, the people’s feedback indicates that
the consumers prefer having faster payment transactions or near real-time settlement, which is
a feature of mobile based payments that has led to rise in the number of mobile payment
adoptions amongst the people. Countries having the infrastructure for real-time payments in
place have exhibited a strong mobile payment adoption by the people. It has also led to other
mobile payment use cases such as consumer-to-business real-time payments. However, there is
an uncertainty as to what extent will this consumer adoption of the digital payments will
continue. Factors such as advancement in technology or new form of financial services offered
by banks and network providers or start-ups etc. can be the driving force for digital payments
adoption by the people. What is certain is that the whole payment scenario will continue to
22
Summary.pdf
23
Ibid.
24
Ibid.
18
evolve and involve more and more digital based transaction services thereby creating immense
scope for mobile based transactions in the future 25.
Taking the case of Starbucks (PYMNTS, 2016) in terms of understanding mobile based
transactions, it was found that the enterprise through its rate of earnings over the years, has
earned the title of “undisputed leader in mobile commerce.” Howard Schultz, CEO of Starbucks,
in the news segment “Starbucks Transactions Now 21 Percent On Mobile (2016)” confirmed
that during the company’s first quarter earnings call with analysts, the numbers indicated that
more than 21% of Starbucks transactions were mobile based, either in the store at the point of
sale through a mobile app or by using Starbucks’ custom app for mobile based ordering and
payment. In December, the sales figure through mobile based transactions witnessed a rise
upto 22%. Starbucks has effectively utilized its greatest strengths of loyalty and customers’
dedication to a daily habit and has monetized it with a service aimed at making the transaction
and ordering process easier. All this is being done through effective use of mobile devices26.
The strategy of Starbucks offering reward points to its customers supports the argument made
in Accenture report (2015) 27 as the daily Starbucks customers are rewarded with points
whenever they are engaging in mobile based monetary transactions and that in a way is
promoting further use of this mode of exchange. On the Mobile Order & Pay front, Starbucks is
now seeing around 6 million transactions/ month and has started developing plans to expand
the model to more cities and even more countries 28.
Advantages and Challenges
The Oracle Report (2014) stats that consumer behavior has witnessed a tremendous change
with the rise in the penetration levels of smartphones. The ability of rapidly communicating
with anyone at any point of time along with the feature of accessing information at any point of
time, smartphones have played a significant role in shaping the people’s lives in a new way. This
has also impacted different forms of businesses and pushed them to adopt to the new ways to
suit the consumer behavior. There has been a shift loyalty-based purchasing behavior to making
logical, information-based buying decisions. Smartphones have been largely responsible for this
25
Ibid.
26
Starbucks transactions now 21 percent on mobile (2016, January 22). Retrieved from http://www.pymnts.com/news/mobile-
payments/2016/starbucks-transactions-now-21-percent-on-mobile/
27
Summary.pdf
28
Starbucks transactions now 21 percent on mobile (2016, January 22). Retrieved from http://www.pymnts.com/news/mobile-
payments/2016/starbucks-transactions-now-21-percent-on-mobile/
19
shift as there is a concentration of wealth and information witnessed with the advent of
smartphones 29. As a result, with the advancement in the technological forms these behavioral
adaptations to technological advancements are gradually shaping up the transactions in a more
organized and consistent manner.
A trend has been observed where consumer’s experience, both offline and online experiences
are merging together and sharing more or less similar shopping and payment interaction.
Consumers in fact, are developing strong interest in having different business forms which are
way less complex and require less degree of actions. These measures can ultimately help in
shaping a universal commerce experience. All of this is only possible through development of
ICT, specifically stable mobile based platforms for transaction and an effective online database
for consistent information flow 30.
Analysis of the global markets indicate that around US$ 4.6 billion worth of transactions are
made through mobile based payments from a total of 224 million monthly transactions. With
over 30 million active mobile money users, 520,000 registered agent outlets, and 150 mobile
money services, the people making use of this technology have access to a wide variety of
options. However, facilitation of all these options requires a wallet that can easily offer quick
value and currency at any point of time. Mobile payments, therefore, have the potential to
address all of these major concerns. Although recent developments in terms of innovation of
mobile based services clearly show how mobile based payments are truly brining about a
positive change in the global markets 31. However, in order to have a far greater attraction and
support of the users, the service providers are using the strategy of introducing a variety of
value-adds to the process which is proving to be very advantageous to the consumers. These
include highly-targeted, relevant, location-based offers; real-time updates of receipts and
account information; and real-time customizable alerts etc. All these tactics are being used to
ultimately convince the users about the simplicity and convenience of this technology that can
help in giving the consumers more compelling reasons to change their modes of transaction 32.
For example, African markets which have the potential, the process of proliferation of mobile
devices and smaller spread of bank accounts is one of the key driving factors for growth by
offering far greater access to financial and payment services33. In contrast, in developed
markets like Japan and South Korea, mobile payments have been introduced through RFID to
ease the payment process during mass transit. Around 59% of consumer electronics merchants
29
30
Ibid.
31
Ibid.
32
Ibid.
33
Ibid.
20
have shown support to mobile payments, 53% in digital goods, 50% in apparel and jewelry, 45%
in travel and event ticketing, with 32% in other physical goods. This is indicative of the fact that
mobile based transactions are not simply a phenomenon of the developed regions, rather
shaping up rapidly in the developing parts of the world as well 34.
It is evident that a new form of technology will gain acceptance of the people across different
parts of the globe if and only if it has a substantial number of advantages to offer. The ISACA
report on “Mobile Payments: Risk, Security and Assurance Issues (2011)” reflect upon the
benefits that mobile based payments have to offer. The report suggests that mobile based
transactions offer an advantage of speed and convenience to the customer. Customers can
conduct any cashless transaction at any point of time through their mobile device. The
technology is also cost-effective and has the potential to cover different parts of rural areas
where financial institutions are not in place. It can enable any user to transfer the funds to any
account through mobile device at any point of time without the need to visit any financial
institution such as a bank. Incase if an individual has access to multiple credit cards, he/she can
consolidate the on a single mobile wallet thereby eliminating the need to carry the physical
cards. Even from security point of view, PIN based authentication can be seen as far more
effective and convenient. The geo-location feature of smartphones can help in improving
security of the transaction as well as the capabilities of detecting fraud. Also service providers
do not have to face the burden of handling too much of the user data as most of the
information is stored in the mobile itself. Any seller, be it small or large can utilize mobile based
transaction system without the need of having point-of-sale (POS) terminals as mobile devices
will be far cheaper alternative to investing in hardware to accept electronic payments.
However, this modern technology does have certain challenges which may require some cost-
value considerations from business perspective. If mobile based payment services are being
used in different forms of business, then it is pivotal that certain agreements such as business
model for revenue sharing, customer ownership, retooling costs to support mobile payments
and regulatory measures etc. are all well in place 35.
There are, however, risks involved. Fraudsters in the past have targeted different kinds of
payment mechanisms and this is likely to be the case for mobile payments as well. Therefore,
there is a dire need to have the countermeasures and security well in place in order to mitigate
the risks 36. The risks can be broadly classified as either traditional or emerging. Traditional risks
can include denial or theft of services and loss of revenue, brand reputation and customer base.
Emerging risks, on the other hand, include the use of mobile payments in money laundering
34
Ibid.
35
36
Ibid.
21
and terrorist funding. Risk for the participants in the mobile payments eco-system can depend
upon the role of the entity user, network or communication provider, or payment service
provider. The mobile payment transaction can be exposed to risks because the payment service
involves several parties to perform jointly. This may worsen if these truncations based services
are outsourced to potentially unregulated third parties without clear lines of accountability and
oversight. As a result, if the security and regulatory measures are not well in place then there is
a greater possibility of having fraudulent activities due to the consumers’ information being
accessible by the third party agencies 37 . With careful planning that includes all the
stakeholders, processes and technologies involved, it is critical to make sure that security is
given the utmost importance for all mobile payment systems.
Lack of clear regulation should not be used by an organization as an excuse for not being
proactive. There even exist possibilities of the information of the consumer getting misused by
authorized users such as money laundering and risk of illegal use. Each organization involved in
this modern method of transaction should have strong measures to protect the user data which
is in their custody 38. Also it is to be ensured that the transaction carried out should be by an
authorized or a registered individual. Even the use of two-factor authentication can help in
offering more effective identity protection for the consumers and higher identity assurance to
the merchant. In the case of bank-centric NFC transactions, dynamic card verification values
(CVVs) can be made use to ensure protection from transactions originating from unauthorized
users or bogus mobile phones. NFC chip-enabled mobile phones support dynamic CVVs as
compared to the static CVVs. therefore, if a bogus mobile phone is used, the transaction will
not be processed further due to the wrong CVV being presented. Similarly, the same type of
assurance to the consumer can be established at the merchant side as well. Also to ensure that
legitimate POS or service providers interact with the mobile phone users for future
transactions, techniques like secure sockets layer (SSL) can be made to use in the given
scenario 39.
Another important factor to consider is the data classification during the transmission and
storage of the data at the various nodes. It is important the organizations that are dealing with
financial data have the ability to identify the information which are personal and sensitive and
should ensure that appropriate mechanisms are in place for its protection. In case if the mobile
payment data is being used for marketing services, strict measures should be taken against the
organizations that are following unfair business practices of revealing or manipulating personal
data of the customer without his/her notice 40. Organizations should also ensure that the third
37
Ibid.
38
Ibid.
39
Ibid.
40
Ibid.
22
parties with which they are interacting and sharing financial data of the consumer should have
robust security measures in place to avoid data theft. Additionally, specific attention should
also be given to the TSM, which acts as the entity that “personalizes” the TSM-compatible chip
on the vendor supplied mobile devices. BMIS can also be used to help the organization address
the context and protection of mobile payment data within the organization itself. The COBIT
and Risk IT frameworks can be utilized to ensure effective risk control mitigation processes can
be established for the use, collection and governance of mobile payment information not only
within the organization, but also with the third party service providers41.
Apart from this, the users should be well informed and educated about the risks regarding this
modern mode of transaction. The device manufactures should not just collaborate with the
payment industry for the development of platforms to ensure a secure environment for mobile
transactions, but should include the feature of interoperability between different smartphone
models. This is to ensure that if the user is replacing his/her device, then there are minimum
hurdles involved in transferring the financial data as well as avoiding the situation of
subscribing to too many financial applications for the respective mobile devices. In order to
ensure the success of mobile based payments, it is pivotal that interoperability is given utmost
importance. In addition to that, advance notification and know-how on proper operation of
applications should be shared with the customers for them to enjoy easy and safe cashless
transactions42.
Future Scope
Sarah Silbert in her article on “How mobile payments will grow in 2016” reflects on how mobile
transaction are gradually shaping up as well as the future scope of this modern mode of
payment. Proliferation of in-store terminals now cannot be a difficult as retailers now have a
financial incentive to support EMV “chip and PIN” technology. When consumers will have
access to opportunities to use more of the NFC- powered services, the awareness and usage of
applications such as Apple Pay will expand automatically in the future. However, consumers
need to have a clear value proposition even if the mobile payments are readily accepted at
most retailers. Companies have started taking notice to these changes and are adding loyalty-
minded features accordingly. Android Pay, for instance, is collaborating with Coca-Cola KO
0.91% to award user points for future purchases when consumers tap their smartphone to
purchase Coke at any vending machine, equipped with that technology. Samsung Pay, another
NFC based mobile app is providing support through loyalty cards and offering push coupons
41
Ibid.
42
Ibid.
23
directly to the users’ accounts. However, there are certain security concerns as well which can
be a major inhibitor to mobile payment adoption. Apple has taken effective measures like extra
layer of security offered through Touch ID in Apple Pay that can help in reassuring customers in
terms of financial security and safety. Despite the hurdles such as fragmentation and point-of-
sale compatibility exist, the process of change within the mobile based transaction is evident
has an immense potential in the coming future 43.
Rian Boden (2016) under “Global mobile payment markets to hit $620billion in 2016” highlights
as to how consumers worldwide will be utilizing their mobile phones to spend a total of USD
620billion on all forms of mobile based transactions in the coming year. By 2017, the volume of
mobile based payments will rise upto $780billion and is expected to become $1.08trillion by
2019.
Companies like Apple and Samsung are focusing their attention towards the regions where this
technology has not been introduced but the market has the capacity of initiating an expansion
of the very service. Countries like China are seen to be potential locations for upcoming market
for mobile based payments. Chinese iPhone and Samsung phone users can enjoy the ability of
making mobile payments provided that their devices are of the latest generation equipped with
upgraded software. Hardware and software industries will have to play a significant role in
developing the tools through which third-party payment platforms can enjoy the enormous
business opportunity in the mobile payment market. This process will also lead to a rise in the
biometric based technologies that will be integrated with the smartphones. It is expected that
over 40% of the smartphones worldwide will have a fingerprint reading feature which can be an
important security measure for mobile based transactions44.
According to the article, “Mobile Payments Will Triple in the US in 2016”, 2016 will be a
significant year for the growth of technology. Taking the case of US, the rise in the number of
people making use of mobile based transactions to pay for goods and services is a very positive
indicator that this behavior will very soon witness a rise in the future. The total value of mobile
based payment transactions in the US will witness a growth of 210% in 2016. Last year mobile
payments accounted to total $8.71 billion in the US, with users spending an average of nearly
$376 annually through their mobile phones as a payment method. However, by 2016, total
mobile payment transactions is expected to reach $27.05 billion, with users spending an
average of $721.47 annually. Total mobile payment sales will witness a faster growth due to an
43
Silbert, S.(2015). How mobile payments will grow in 2016. Retrieved from http://fortune.com/2015/10/29/mobile-payments-grow-2016/
44
Boden, R.(2016). Global mobile payment market to hit $620bn in 2016. Retrieved from
http://www.nfcworld.com/2016/02/04/341939/global-mobile-payment-revenue-to-hit-620bn-in-2016/
24
exponential rise in the number of mobile users which to an extent will complement the mobile
based transaction usage 45.
Merchants too will start adopting point-of-sale systems that can accept mobile payments. They
too will, over a period of time make use of the incentives like promotions and loyalty programs
that can help in attracting new users. Demographically, by 2017, 37.0% of the younger age
group will successfully adopt the technology, compared with just 6.3% of the 65 and over
group. However, strong security measures and transaction tracking systems will have to be
place for mobile wallets in order to attract more users across all demographics in the long-term.
There will be a rise in the medium-priced purchases to 63.9% by 2018, however low-priced
transactions will witness a decline 46.
The Oracle report (2014) also supports the above arguments and indicates that around 54% of
all shoppers would prefer having touchscreen device in stores to explore and purchase items.
This would also enable them to make use of their mobile devices to carry out the transactions.
Around 80% would prefer to have mobile optimized product information when shopping. This
would help in consumers having far greater clarity about the products and making better
informed choices. Mobile based checkout systems will offer transactions far greater
transparency and convenience. Tablets will be seen to replace the conventional POS systems in
order to offer far more user-friendly and sleeker devices to the users for transactions 47.
From all the above facts, it is clear that mobile based transaction market already exists and is
gradually taking shape with more and more users adopting the technology. Mobile payment
transaction values are predicted to increase to US$ 90 billion by 2017. In the coming future the
success of mobile payments will be a powerful milestone for reshaping the overall global
payment industry 48.
45
Silbert, S.(2015). How mobile payments will grow in 2016. Retrieved from http://fortune.com/2015/10/29/mobile-payments-grow-2016/
46
Ibid.
47
48
Ibid.
25
E-wallets
Introduction
E-wallet refers to an electronic, internet based payment module which stores financial value as
well as personal identity related information. It is a feature that allows an individual to make
transactions over Internet. This includes online shopping and making payments using
Smartphone or a computer. The wallet allows you to stock a number of credit, debit & prepaid
cards and bank account numbers in a secured environment to facilitate payments. An E-wallet
is a combination of both, software and information component. Security and Encryption of the
personal data and the actual transaction is done by a customized software. These wallets are
stored on the client site and are easily maintained. They are also fully compatible with most e-
payment websites. An E-wallet is considered to be a component of the payment module, which
includes the systems that enable various operations like credit card, debit card, smart card,
money transfer or many other similar operations.
After the formation of the World Wide Web by Tim Berners-Lee in 1990, it opened for
commercial use in 1991.
Fast food giant Pizza Hut, which is famous for manufacturing pizzas, was the first open a system
for online payments. Then after the security of the payment systems were more intensified,
more companies started coming up with the initiative. Amazon did not delay their entry into
this and was soon followed by E-bay in the same year[1995.]
As E-commerce and Online shopping gained popularity, payment methods also had to be
modified and simplified with a wider coverage of consumers. That was when payments also
went digital.
26
The following flow chart tells us how we changed our approach towards handling money:
Cash Pre-paid
E-Wallets
Payments Cards
Debit/Credit Internet Digital

Cards Banking
Currency
As the concept is ever evolving, a wide variety of names are used inter- changeably for such
transactions such as e-money, digital money, micro-payments etc. Both, ‘terminology’ and
‘technology’ for operation of the wallet are continuously evolving.
An Important point to take from E-wallets is that they are composed of both digital wallet
devices and digital wallet systems. Dunhill has launched a dedicated digital wallet device.
Samsung Galaxy Series and the Google Nexus series running on Google's AOS and Apple Inc.
Iphone6 and 6+ are exploring the smart phones with NFC digital wallet capability.
E-Wallet systems facilitate the widespread use of digital wallet transactions between various
retail vendors in the form of mobile payments systems and digital wallet applications.
Over time the methods of making payments have changed and evolved to provide effective
means for exchange of value. This has constructed the business world we have come to view as
an essential part of our daily routine and lives.
The emergence of E-world and the rise of E-commerce have made us invent a new payment
mechanism. Without monetary exchanges there can be no business and E-commerce wouldn't
survive without proper and effective means of value exchange.
Most of the payment mechanisms that exist today have remained in one shape or another.
However, a number of them haven't been able to transition themselves into the electronic
world in their present state. The barriers and requirements of the electronic world enable both
sophisticated and simplified ways of value exchange.
27
For example: The concept of Electronic Cheques is contradictory to our study. They are
designed for the physical world as a physical instruction which is valid after being signed then
delivered. Similarly, physical currency that represent value will not be able to move into the
digital world.
From this we infer that a generic digitized payment instruction could/can replace many, if not
all,of its physical counterparts. In future, we would just make payment. After authentication,
the e-payment instruction will be executed. The concept of an E-Wallet is simply a familiar and
logical way of providing the means of authentication and payment.
28
Types of E-wallets
There are around 4 types of e-wallets which are accepted and recognized all around the globe.
1. Open Wallets
2. Semi-Open Wallets
3. Closed Wallets
4. Semi-Closed Wallets
Open Wallets
These wallets can be used for purchasing goods and services, including financial transactions such as
fund transfer at merchant locations or point-of-sale terminals that accept cards, and also cash
withdrawals at automated teller machines or business correspondents. Only banks issue such wallets.
Semi-Open Wallets
These can be used to purchase goods and avail services at any merchant outlet where these are
accepted. Gift card is one such instrument. These, can’t be used to withdraw cash.
Closed Wallets
A closed wallet is one that a business house issues to its customers for in-house goods and services only.
These instruments do not provide the leverage of cash withdrawal or redemption.
Examples: Calling cards and gift cards. These have a limit to which they can be loaded with money and
these too cannot be used to withdraw money.
Semi-Closed
A semi-closed wallet can be used for goods and services, including financial transactions, at selected
merchant locations or establishments. They get into a contract with the issuing company to accept these
payment instruments. These wallets do not permit cash withdrawal or redemption by the holder as well.
29
Evolution of authentication and payment methods used in e-wallets

The following table contains a brief evolution of the means of identification.
Methods of Description
authentication
Names Names have always been a convenient way for identification of individuals. An
individual's name has been linked with reputation and it acted as a bond while
entering transactions. When dealing with people outside of community using
names became a problem. This led to uncertainties and duplication.
Seals Affixation of a seal to an envelope lend certainty that the contents were
confidential and the information it carried was directly from the sender. Seals
eliminated the duplication of name but were vulnerable to themselves being
copied.
Fingerprints Fingerprints are unique identification for every individual. They are very
difficult to be impersonated. They have widespread use in criminal cases and
passport issuance. But, they are very complex to be compared and need to be
checked individually.
Signature Signature are considered as an effective means of identification in today's
world. They are unique and easily identifiable. They have certain drawbacks as
well like they require physical presence, being an imprint on a paper it renders
them unsuitable for use as online identification.
Username & Emails to E-banking they accept the Username and password. These
password/Pin passwords do not require physical presence at the point of sale. They too have
certain drawbacks like remembering multiple passwords and its security is
totally dependent on the individual.
Digital These certificates were specially designed for online identification. They are
Certificate effective in a closed system. These certificates are issued to a physical
hardware device which makes them nontransferable to multiple Internet
points of access. They are also difficult to maintain and taken care of as they
need to be periodically followed up. The value of a digital certificate is
determined by the credibility of the holder.
Biometric, Biological measurements are the new identification techniques. Fingerprint
Retinal Scan, and retina scanning have already
Voice been deployed into various industries. Other biological measurements are
Recognition currently not readily available and in excess use. These require expensive
hardware devices to record and function which makes them unviable for
30
extensive usage.
In one of the initial surveys, where credibility and loyalty towards E-wallets was put to test,
gave us the following results: 49
70%
65%
60%
57%
55%
50%
47%
46%
40%
30%
30%
21%
20%
10%
10%
0%
Payment Managing Incentives Search and Ratings and Places to go Create and Sharing
choice Receipts Shop reviews share Wish purchases
lists
• 65% of respondents rated the payment making option as the most valued E-wallet service.
• 57% of respondents chose E-wallets for managing their Receipts
49
• 55% of respondents used E-wallets for its real-time Incentive disbursement.
Mobile Wallet Reality Check: How Will You Stay Top of Wallet? [An NTT DATA Consulting study finds banks at risk
• 47% of respondents opted for Searching and shopping via E-wallets.
of losing market share as new mobile wallet competitors emerge (July 2012)]
• 46% of respondents gave Ratings and Reviews through E-wallets.
31
• 30% of respondents chose E-wallets for selecting which outlet to visit.
• 21% of the respondents created and shared their wish-lists on E-wallets.
• 10% of respondents used E-wallets for splitting expenses to make purchases.
Operational Apparatus
• Online
I. Load Cash • Handing out Cash
• Convenience Charges
II. Pay Charges • Registration Charges
• Cash Back
III. Attractions • Reward Points
I. Loading of cash can be done either by transferring funds online through the
bank accounts or by handing out cash at dedicated kiosks or through door
to door collection.
II. The charges for either registering with a service provider or transferring
money from a bank account are levied to the user.
III. E-wallets have certain attractions to accompany them with Cash back and
redeemable reward points topping the list. A Consumer readily opts for
online purchase because he gets a pre decided cash back on his
transactions. Sometimes they earn reward points which can be used for
purchasing as well.
32
Benefits of E-Wallets
Flexibility.
a. Transfer value by phone.
b. pay person to person
c. For low and high values
d. Multi-Currency capability
e. Suitable for all age groups
Security.
a. Spend as per your capacity
b. Always aware of your balance
c. Load value from home
d. Lock your card or wallet
e. Keep track of your spending
Reduces banking costs.

a. No KYC issues until you cross INR10000
b. Seamless transfers without additional costs
c. Top-up through credit cards.
Facilitates E-Commerce
a. Easy payments
b. Pre-stored Information
c. Discounts
d. Cash Backs
Boosts Economy
a. History of all Debits and credits
b. Collaboration with bank accounts provide virtual tracking of money flow.
c. Taxes included in price of product or services
d. Every penny accounted for
e. Comfort encourages more purchase
33
The issues that are faced by customers due to different payment options, which puts E-wallets
on the podium:
Not always carrying cards
10%
Too many cards
13%
Tracking payment dates
30%
Tracking Offers
58%
0% 10% 20% 30% 40% 50% 60% 70%
34
The Future of E-wallets

The E-wallet is on the track of becoming a personalized portal for every Individual. The
following are some of the benefits Individuals can expect from their E-wallet.
Online
Shopping
Price
D2D/P2P
comparison
payments
Shopping
Pre-emptive
Bill payments
Purchasing
E-Wallets
Wireless Loyalty
Purchasing addition
Personal
Personal
Information
organizer
access
Online Shopping
The E-wallet facilitates buying from smart phones and PDAs. Issues of user input via keypad was
considered as a barrier to m-commerce. The E-wallet minimizes the number of key clicks required to
shop from these devices by automating the online purchasing process.
Price Comparison Shopping

The E-wallet facilitates comparison shopping at all points. It can be used for both online and offline
purchases. It is now possible for a consumer to compare services and prices on a mobile device while
shopping at a physical location. This enables price transparency and consumer control.
35
Bill Payments
The E-wallet has the capability to make bill payments on behalf of the user. This includes payment
scheduling for electronic bills and invoices and receiving bills
Loyalty Rewards
The E-wallets provide real time points tracking, accumulated over time by shopping, recharges etc.
Personal Information Access

The Electronic wallet has the capacity to hold all your personal information at a single registered
account. It can include medical, motor vehicle, Insurance, Investment reporting, mortgage and
superannuation. It will act as a personal financial portal. This information aggregation can also extend to
online gaming and auction monitoring.
Virtual Personal Organizer

The E-wallet has the capacity to store user's Calendar, Contacts, to-do lists and tasks allowing it to be
accessed on any system for updation or changes.
Wireless purchasing at physical stores

The wallet would allow purchasing at stores when the wallet is supported by Bluetooth or Infra-Red
device. The wallet will have the capability of retrieving the User's credit card number from the pre-
stored account details and then transmit the credit card number to the point of purchase.
Pre-emptive Buying
The Wallet while allowing purchases also records your transactional history. It will analyze your
purchasing patterns and remind you itself about making a purchase.
D2D/P2P Payments
Device to Device and Person to Person money transfer will change how the world looks today at money
exchange. Once installed on a device it will be possible to transfer payments from one person to person
without much hassle.
36
Survey Analysis
The survey was conducted to answer the following questions:
1. What is the impact of age, education and income on the tendency of making payments using
mobilewallets or E-wallets?
2. What is the classification of Mobile wallets based on application, mode of payment, age group
and income of the consumer?
3. How much trust has the e-commerce industry,leveraging Mobile payments, instilled in its user
base in the first quarter of year 2016?
The survey was conducted to understand the consumer behaviour towards Mobile Payments based on
various factors. The survey was conducted on an online platform, Survey Monkey. The results were
collected via. Emails invitation, URLs shared on social media, survey links shared on messages and direct
invitation on the survey portal.
The survey was based on convenience sampling, which is a nonprobability sampling. The participants
were chosen due to easy accessibility, availability at a given time and the will to participate. With a
sample size of 200, the data contributed to a better understanding of the acceptability and feasibility of
Mobile Payments.
 Sampling : Convenience
 Sample Size: 200
 Results acquired through: Emails, social media, messages, portal invites
 Age groups: Variable
 Geographies: Variable
37
Survey Results
Question 1.
1,4% What is your age?

2,9%
0,0% • 59.5% of the
2,4%
18 to 24 respondents were from
the 25-34 age bracket.
10,1% 23,7% 25 to 34
• 1.4% of the respondents
35 to 44 were from the 65-74
45 to 54 age bracket.
55 to 64
59,4% 65 to 74
75 or older
38
Question 2.
1,9% What is your highest level of

1,9% 0,0%
education?
1,4% Less than high school • 43% of the respondents
8,2%
degree were Post graduates.
High school degree or Only
19,8% equivalent • 1.4% of the respondents
43,0%
Some college but no had Associate degrees.
degree
Associate degree
23,7%
Bachelor degree
Question 3.
What is your approximate

average annual income? • 59% of the respondents
0,5% had average annual
1,5% 1,5%
3,1% income less than
1,5% $24,999.
$0-$24,999
5,6%
$25,000-$49,999 • Only 0.5% of the
respondents had
$50,000-$74,999
8,7% average annual income
$75,000-$99,999
between $175,000-
$100,000-$124,999 $199,999.
18,5% 59,0%
$125,000-$149,999
$150,000-$174,999
$175,000-$199,999
$200,000 and up
Question 4.
39
Have you ever purchased

goods & services using your
Mobile?
12,5% • 87.5% of the

respondents purchased
goods & services using
their mobiles.
Yes
No
87,5%
40
Question 5.
How do you prefer to pay? • 53.8% of the

respondents used
mobile payments as the
Cash on Delivery option to pay for good
& services purchased
46,2%
using their mobiles.
• It is significant to note
53,8% Mobile payment
that a huge 46.2% of
[Credit card, Debit
card, Net banking, e- the respondents used
wallets etc.] cash on delivery to
make these payments.
Question 6.
If your answer to Question 5 was 'Cash on Delivery', please

select the reason for not choosing Mobile payments. (Please
select all that apply.)
50,0%
45,0% 42,5%
38,7%
40,0% 34,9%
35,0%
30,0%
25,0%
20,0%
13,2%
15,0%
10,0% 7,5%
5,0%
0,0%
Lack of trust Uncertainity Fear of not receiving Lack of awareness Other (please specify)
what you ordered about mobile
payments
• The most prominent reason for NOT choosing Mobile payments was the ‘fear of not
receiving what you ordered’ [42.5%], followed by ‘lack of trust’ [38.7%].
• Around 13.2% preferred cash on delivery dues to lack of awareness about mobile payments.
[Note: respondents chose multiple reasons for not choosing Mobile payments.]
41
Question 7.
If your answer to Question 5 was 'Mobile Payments', please

select the products & services that you have purchased using
Mobile Payments. (Please select all that apply.)
90,0%
80,0% 76,7%
71,9%
67,8%
70,0% 62,3%
60,0% 52,7% 52,7% 54,8%
50,0% 42,5%
40,0%
30,0%
20,0%
10,0% 6,8% 4,8%
2,1%
0,0%
Booking Train tickets

Transfer Money (e.g. Net banking,
Other (please specify)

Amazon, Alibaba, Snapdeal)
Bookings hotels
Pay for a ride-sharing application
Make online purchase (e.g.
(e.g. Lyft, Uber, Sidecar)

e-Wallet transfer)
• Most of the respondents use Mobile payments for making online purchases from e-
commerce website like Amazon, Alibaba etc.
• This majority is closely followed by paying bills, booking movie tickets & making money
remittances.
42
Question 8.
How often do you make online purchase using

Mobile payments?
9,9%
13,8%
Almost everyday
10,8%
Once a week
Once a month
26,1%
Once yearly
Not at all. I do not trust online

39,4% payments.
• 39.4% of the respondents make a Mobile payment at least once every month.
• 9.9% of the respondents do not trust Mobile payments.
43
Question 9.
Rank the following payment methods in ascending order from

the MOST convenient to the LEAST convenient.
300
250
200
150
100
50
0
Extremely Slightly Moderately Least
Very Convenient
Convenient Convenient Convenient Convenient
Credit cards 47 50 41 29 41
Debit cards 55 80 55 36 15
Cash 83 44 48 34 52
Net Banking 51 42 45 45 34
E-wallets 27 37 36 51 49
E-wallets Net Banking Cash Debit cards Credit cards
• In the decreasing order of preference, the respondents chose Cash > Debit cards > Net
banking > Credit cards > E-wallets as the mode of making payments.
• E-wallets is a trend that is still in its infancy and is catching up with the traditional modes of
payments. The number is smaller than the number for Cash payers, but has significantly
increased from the time of its inception, which points towards a positive response towards
this mode.
44
Question 10.
How confident are you that your payment

information is kept secure when buying products
using Mobile Payments?
10,2% 7,8%
14,1% Extremely confident

24,9%
Very confident
Moderately confident
Slightly confident
Not at all confident
42,9%
• Only 7.8% of the respondents were ‘extremely confident’ that their information is kept secure
while buying products using Mobile payments.
• 42.9% of the respondents were only moderately confident about it.
• 10.2% of the respondents were not confident at all about their information being kept secure.
45
Question 11.
What are the issues you face while making mobile

payments?
5,4%
12,3%
29,4%
Slow internet
Security issues
Mobile app glitches
24,0% High convenience fee
28,9%
• 29.4% of the respondents consider ‘slow internet’ to be the major issue that they face while
making Mobile payments followed by ‘security issues’ & ‘mobile app glitches.’
• Only 12.3% of the respondents consider ‘high convenience fee’ as a constraint to using
Mobile payments.
46
Inference, Findings&Conclusions
The inference that we derive from this survey, which was diverse in nature and was spread
across various age groups, income groups & educational backgrounds, are as follows:
We found that Mobile payments are a very popular trend amongst the Millennial generation
[25-34 years of age].
We also see that education also influence the ease with which people try new technologies. The
survey clearly shows that 43% of 208 respondents were Post graduates of which 87.5% of the
respondents purchased goods & services using their mobiles. This indicated that education
influences the usage of Mobile payments.
The survey reveals that a very small number of people use E-wallets as the mode of making
payments. The possible reason for this can be that, E-wallet is a trend that is still in its infancy
and is catching up with the traditional modes of payments. The number is smaller than the
number for Cash payers, but has significantly increased from the time of its inception, which
points towards a positive response towards this mode.
The survey reveals that there is still a major lack of confidence that has been created in the
psyche of the consumer. Only 7.8% of the 208 respondents were ‘extremely confident’ that
their information is kept secure while buying products using Mobile payments, whereas, 42.9%
of the respondents were only moderately confident about it. 10.2% of the respondents were
not confident at all about their information being kept secure.
The survey highlights other aspects that are holding back the culture of Mobile payments. Some
of the prominent reasons include slow internet, security issues, mobile app glitches, high
convenience fee among various others. These issues lead to bad user experience and ultimately
causes loss of potential consumer. Approximately 30% of the respondents consider ‘slow
internet’ to be the major issue that they face while making Mobile payments followed by
‘security issues’ & ‘mobile app glitches.’ Around 13% of the respondents consider ‘high
convenience fee’ as a constraint to using Mobile payments.
Growth in the number of users of smartphones and mobile internet users are the major drivers
of growth in the global mobile payment industry.
The major players operating in the mobile payment industry include Amex, PayPal, Google,
Visa, Square, LevelUp, Apple, MasterCard, BlackBerry and Samsung to name a few.
47
Research Summary
The research reveals that Mobile payments led the e-commerce payment market in the first
quarter of 2016, with a market share of 53.8%. The report also highlights that online purchase
segment dominated the mobile payment market with 76.7% market share; Cash payments
dominated the global payment market in terms of convenience, with 82% market share; and
25-34 age group dominated the global mobile payment market with 59.4% market share in the
first quarter of 2016. All the dominant aspects highlighted in this report are expected to retain
their dominance during the second & third quarter of 2016.
48
Appendix 1
Survey questionnaire
1. What is your age?

18 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65 to 74
75 or older
2. What is your highest level of education?

Less than high school degree
High school degree or equivalent
Some college but no degree
Associate degree
Bachelor degree
Graduate degree
Post Graduate Degree
Doctorate
3. What is your approximate average annual income?

$0-$24,999
$25,000-$49,999
$50,000-$74,999
$75,000-$99,999
$100,000-$124,999
49
$125,000-$149,999
$150,000-$174,999
$175,000-$199,999
$200,000 and up
4. Have you ever purchased goods & services using your Mobile?
Yes
No
*5. How do you prefer to pay?

Cash on Delivery
Mobile payment [Credit card, Debit card, Net banking, e-wallets etc.]
6. If your answer to Question 5 was 'Cash on Delivery', please select the reason for not choosing
Mobile payments. (Please select all that apply.)
Lack of trust
Uncertainty
Fear of not receiving what you ordered
Lack of awareness about mobile payments
7. If your answer to Question 5 was 'Mobile Payments', please select the products & services
that you have purchased using Mobile Payments. (Please select all that apply.)
Make online purchase (e.g. Amazon, Alibaba, Snapdeal)
Pay bills (e.g. Mobile, Utility, Rent)
Transfer Money (e.g. Net banking, e-Wallet transfer)
Split bill
Pay for a ride-sharing application (e.g. Lyft, Uber, Sidecar)
Booking movie tickets
50
Bookings hotels
Booking Flights
Booking Train tickets
I do not do any of the above activities and/or do not own a mobile device
8. How often do you make online purchase using Mobile payments?

Almost everyday
Once a week
Once a month
Once yearly
Never. I do not trust online payments.
9. Rank the following payment methods in ascending order from the MOST convenient to the
LEAST convenient.
Credit Mobile
cards Debit cards Cash Net Banking payment
Extremely Convenient
Very Convenient
Slightly Convenient
Moderately Convenient
Least Convenient
10. How confident are you that your payment information is kept secure when buying products
using Mobile Payments?
Extremely confident
Very confident
Moderately confident
Slightly confident
51
Not at all confident
11. What are the issues you face while making mobile payments?
Slow internet
Security issues
Mobile app glitches
High convenience fee
*12. If you could change one thing about Mobile Payments, what would it be?
52
Appendix 2
Survey Summary
W ha t is y o ur a g e ?
R e s p o ns e R e s p o ns e
A ns we r Op tio ns
P e rc e nt Co unt
18 to 24 23.7% 49
25 to 34 59.4% 123
35 to 44 10.1% 21
45 to 54 2.4% 5
55 to 64 2.9% 6
65 to 74 1.4% 3
75 or older 0.0% 0
a ns we re d q ue s tio n 207
s k ip p e d q ue s tio n 1
W ha t is y o ur hig he s t le v e l o f e d uc a tio n?
A ns we r Op tio ns
P e rc e nt Co unt
Less than high school degree 0.0% 0
High school degree or equivalent 1.9% 4
Some college but no degree 8.2% 17
Associate degree 1.4% 3
Bachelor degree 19.8% 41
Graduate degree 23.7% 49
Post Graduate Degree 43.0% 89
Doctorate 1.9% 4
W ha t is y o ur a p p ro xima te a v e ra g e a nnua l inc o me ?
A ns we r Op tio ns
P e rc e nt Co unt
$0-$24,999 59.0% 115
$25,000-$49,999 18.5% 36
$50,000-$74,999 8.7% 17
$75,000-$99,999 5.6% 11
$100,000-$124,999 1.5% 3
$125,000-$149,999 1.5% 3
$150,000-$174,999 1.5% 3
$175,000-$199,999 0.5% 1
$200,000 and up 3.1% 6
53
H a v e y o u e v e r p urc ha s e d g o o d s & s e rv ic e s us ing y o ur Mo b ile ?
A ns we r Op tio ns
P e rc e nt Co unt
Yes 87.5% 182
No 12.5% 26
H o w d o y o u p re fe r to p a y ?
A ns we r Op tio ns
P e rc e nt Co unt
Cash on Delivery 46.2% 96
Mobile payment [Credit card, Debit card, Net banking, 53.8% 112
If y o ur a ns we r to Que s tio n 5 wa s ' Ca s h o n D e liv e ry ' , p le a s e s e le c t the

re a s o n fo r no t c ho o s ing Mo b ile p a y me nts . (P le a s e s e le c t a ll tha t a p p ly .)
A ns we r Op tio ns
P e rc e nt Co unt
Lack of trust 38.7% 41
Uncertainity 34.9% 37
Fear of not receiving what you ordered 42.5% 45
Lack of awareness about mobile payments 13.2% 14
Other (please specify) 7.5% 8
If y o ur a ns we r to Que s tio n 5 wa s ' Mo b ile P a y me nts ' , p le a s e s e le c t the

p ro d uc ts & s e rv ic e s tha t y o u ha v e p urc ha s e d us ing Mo b ile P a y me nts .
A ns we r Op tio ns
P e rc e nt Co unt
Make online purchase (e.g. Amazon, Alibaba, 76.7% 112
Pay bills (e.g. Mobile, Utility, Rent) 71.9% 105
Transfer Money (e.g. Net banking, e-Wallet transfer) 62.3% 91
Split bill 6.8% 10
Pay for a ride-sharing application (e.g. Lyft, Uber, 42.5% 62
Booking movie tickets 67.8% 99
Bookings hotels 52.7% 77
Booking Flights 52.7% 77
Booking Train tickets 54.8% 80
I do not do any of the above activities and/or do not 4.8% 7
54
H o w o fte n d o y o u ma k e o nline p urc ha s e us ing Mo b ile p a y me nts ?
A ns we r Op tio ns
P e rc e nt Co unt
Almost everyday 13.8% 28
Once a week 26.1% 53
Once a month 39.4% 80
Once yearly 10.8% 22
Not at all. I do not trust online payments. 9.9% 20
Rank the following payment methods in ascending order from the MOST convenient to the LEAST convenient.
Mobile Response
Answer Options Credit cards Debit cards Cash Net Banking
payment Count
Extremely Convenient 46 53 82 50 26 199
Very Convenient 49 79 42 41 36 196
Slightly Convenient 40 54 47 43 35 189
Moderately Convenient 28 35 33 44 49 171
Least Convenient 39 14 51 33 48 173
answered question 205
skipped question 3
H o w c o nfid e nt a re y o u tha t y o ur p a y me nt info rma tio n is k e p t s e c ure whe n
b uy ing p ro d uc ts us ing Mo b ile P a y me nts ?
A ns we r Op tio ns
P e rc e nt Co unt
Extremely confident 7.8% 16
Very confident 24.9% 51
Moderately confident 42.9% 88
Slightly confident 14.1% 29
Not at all confident 10.2% 21
55
W ha t a re the is s ue s y o u fa c e while ma k ing mo b ile p a y me nts ?
A ns we r Op tio ns
P e rc e nt Co unt
Slow internet 29.4% 60
Security issues 28.9% 59
Mobile app glitches 24.0% 49
High convenience fee 12.3% 25
If y o u c o uld c ha ng e o ne thing a b o ut Mo b ile P a y me nts , wha t

wo uld it b e ?
R e s p o ns e
A ns we r Op tio ns
Co unt
208
56
Reference List
• Boden, R.(2016). Global mobile payment market to hit $620bn in 2016. Retrieved from
http://www.nfcworld.com/2016/02/04/341939/global-mobile-payment-revenue-to-hit-620bn-
in-2016/
• Dahlberg, T. and Mallat, N. Mobile payment market and research – past, present and future.
Retrievedfrom
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.103.5202&rep=rep1&type=pdf
• Mobile payments will triple in the US in 2016 (2015, October 26). Retrieved from
http://www.emarketer.com/article.aspx?R=1013147&RewroteTitle=1
• Mobile payments: Risk, security and assurance issues (2011). Retrieved from
http://www.isaca.org/knowledge-center/research/researchdeliverables/pages/mobile-
payments-risk-security-and-assurance-issues.aspx
• Payments cards and mobile research. Retrieved from
http://www.paymentscardsandmobile.com/research/
• Silbert, S.(2015). How mobile payments will grow in 2016. Retrieved from
http://fortune.com/2015/10/29/mobile-payments-grow-2016/
• Simplicity is the ultimate sophistication: The future of mobile payments (2014). Retrieved from
http://www.oracle.com/us/industries/financial-services/future-mobile-payments-wp-
2346929.pdf
• Starbucks transactions now 21 percent on mobile (2016, January 22). Retrieved from
http://www.pymnts.com/news/mobile-payments/2016/starbucks-transactions-now-21-
percent-on-mobile/
• U.K. Consumer Mobile Payment Study (2015). Retrieved from
http://tsys.com/Assets/TSYS/downloads/rs_2015-uk-consumer-mobile-payment-study.pdf
• When it comes to payments today, the customer rules (2015). Retrieved from
https://www.accenture.com/t20151021T165757__w__/us-en/_acnmedia/Accenture/next-
gen/na-payment-survey/pdfs/Accenture-Digital-Payments-Survey-North-America-Accenture-
Executive-Summary.pdf
• http://www.gpayments.com/pdfs/GPayments_eWallet_Whitepaper.pdf
• http://thefinancialbrand.com/50720/mobile – payments – digital – wallet-analysis/
• https://www.about-payments.com/knowledge-base/markets
• https://www. Chasepaymentech.com/mobile_wallet_technology.html
• http://www.livemint.com/Industry/36uXHTf6QUJdr2dEpen8yJ/Are-ewallets-beginning-to-
worry-banks.html
• http://www.financialexpress.com/article/personal-finance/e-wallets-offer-a-secure-and-easy-
payment-mode/231434/
• http://www.slideshare.net/sohilgupta/digital-wallet?next_slideshow=4
• http://blog.paylane.com/everything-you-need-to-know-about-online-payments-providers/
• http://www.iliumsoft.com/dl/doc/eWallet.pdf
• http://www.iliumsoft.com/dl/doc/eWallet.pdf
57

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MBA Thesis- The Growth & Future of Mobile Payments 2016

Amsterdam Business School, University of Amsterdam

Supervisor: Dr. Jean Lynne Johnson

EXECUTIVE SUMMARY ....................................................................................................... 7

Different Types of Mobile Payments ...................................................................................................... 10

PURPOSE OF LITERATURE REVIEW ................................................................................ 11

LITERATURE REVIEW ........................................................................................................ 12

Understanding Mobile Payments ........................................................................................................... 12

SURVEY ANALYSIS ............................................................................................................. 37

Survey Results ......................................................................................................................................... 38

Survey questionnaire .............................................................................................................................. 49

Survey Summary ..................................................................................................................................... 53

REFERENCE LIST ................................................................................................................. 57

Classification on the basis of modes of payment

Classification by age group

Different Types of Mobile Payments

The most prominent options that are available at present are:

Purpose of Literature Review

Understanding Mobile Payments

Current Scenario on Mobile Payments

Advantages and Challenges

Debit/Credit Internet Digital

Evolution of authentication and payment methods used in e-wallets

Reduces banking costs.

Not always carrying cards

Too many cards

Tracking payment dates

0% 10% 20% 30% 40% 50% 60% 70%

The Future of E-wallets

Price Comparison Shopping

Personal Information Access

Virtual Personal Organizer

Wireless purchasing at physical stores

1,4% What is your age?

1,9% What is your highest level of

What is your approximate

Have you ever purchased

12,5% • 87.5% of the

How do you prefer to pay? • 53.8% of the

If your answer to Question 5 was 'Cash on Delivery', please

If your answer to Question 5 was 'Mobile Payments', please

Booking Train tickets

Other (please specify)

(e.g. Lyft, Uber, Sidecar)

How often do you make online purchase using

Not at all. I do not trust online

Rank the following payment methods in ascending order from

E-wallets Net Banking Cash Debit cards Credit cards

How confident are you that your payment

14,1% Extremely confident

What are the issues you face while making mobile

1. What is your age?

2. What is your highest level of education?

3. What is your approximate average annual income?

*5. How do you prefer to pay?

8. How often do you make online purchase using Mobile payments?

Not at all confident

W ha t is y o ur hig he s t le v e l o f e d uc a tio n?

W ha t is y o ur a p p ro xima te a v e ra g e a nnua l inc o me ?

H a v e y o u e v e r p urc ha s e d g o o d s & s e rv ic e s us ing y o ur Mo b ile ?

If y o ur a ns we r to Que s tio n 5 wa s ' Ca s h o n D e liv e ry ' , p le a s e s e le c t the

If y o ur a ns we r to Que s tio n 5 wa s ' Mo b ile P a y me nts ' , p le a s e s e le c t the

H o w o fte n d o y o u ma k e o nline p urc ha s e us ing Mo b ile p a y me nts ?