Ingenico, un acteur de la transformation mondiale des moyens de paiement May 20, 2011
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1
De Nouvelles Forces de Marché
Club CSA 20 mai 2011
L’industrie du paiement , une évolution toujours lente mais qui s’accélère Select Metrics Cards Worldwide
2003
2010
3 billion
6.1 billion (11% CAGR)
1.3 billion
>5 billion (21% CAGR)
Cards in Brazil
253 million
733 million (16% CAGR)
Cards in China
755 million
2.4 billion (18% CAGR)
CUP Footprint
China, mainly ATM volumes
Accepted in 104 countries / Issued by 60+ FIs outside China
~15
~9, and declining
€8.9 billion (13 mil active accounts)
€67 billion (94 mil active accounts)
Circa $25 billion
Dec 2010 - $191.5 billion
Non-existent
Complex, costly
EMV
In initial launching phase
> 1 billion EMV cards globally
SEPA
Non-existent
SEPA and PSD impacting the market broadly in the EU
Payments receives minimal regulatory attention
Broadly regulated
Calling, texting
>500,000 applications, full internet functionality
Early breakthroughs
Broad adoption
Mobile Phones Worldwide
Local Schemes in Europe PayPal Volume
Google Market Cap PCI-DSS
Regulation (interchange, etc.) Mobile Functionality Cloud Computing
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2010 : Une accélération du changement conjointement à l’explosion des services de mobilité Game Changing Announcements in the Past 18 Months: • • Payment PaymentServices ServicesDirective Directivetakes takeseffect effectininEurope, Europe,non-traditional non-traditionalmarket marketentrants entrantspile pileinto intothe the official world of Payment Institutions official world of Payment Institutions • • PayPal, PayPal,Visa, Visa,Amex Amexall allopen openup uptheir theirplatforms platformstotoopen opensource sourcedevelopment development • • Square Squarelaunches launchesand andsigns signscirca circa500k 500kmerchants merchantsininthe thefirst firstyear year • • Visa VisaInc. Inc.buys buysCybersource Cybersourceand andPlaySpan PlaySpanand andinvests investsininMonitise Monitise(MasterCard, (MasterCard,CUP, CUP,and andAmex Amex all pursue similarly aggressive expansion). all pursue similarly aggressive expansion). • • Google Googleannounces announcesthat thatititisisbuilding buildingan anNFC NFCwallet wallet(“Cream”), (“Cream”),enables enablesAndroid Androidfor forin-app in-appand and NFC payments, and enables the Nexus S handset for NFC. NFC payments, and enables the Nexus S handset for NFC. • • Apple Appleannounces announcesits itsinterest interestfor forPayment Payment • • Starbucks Starbuckslaunches launchesmobile mobilepayments paymentsand andregisters registers33million milliontransaction transactionininthe thefirst firstthree threemonths months • • ISIS ISISlaunches launchesininthe theU.S., U.S.,quickly quicklyadapts adaptstotoan anopen opennetwork networkbusiness businessmodel model • • PayPal PayPalm-wallet m-walletvolumes volumesgrow grow435% 435%inin2010 2010 • • European EuropeanCommunity Communitypushes pushesfor formore morecompetition competitionininSchemes Schemes( (Lawsuits Lawsuitsagains againsVisa, Visa, Mastercard, etc…) Mastercard, etc…) • • Durbin Durbinamendment amendmentre-shapes re-shapesU.S. U.S.debit debitcard cardlandscape landscape • • Facebook FacebookCredits Creditsprojected projectedtotogrow growtotoan anestimated estimatedUSD USD600 600million million 20 mai 2011 Club CSA
PCI creates burdens for merchants, who look to service providers for relief SEPA continues to re-shape European payments, including standardized terminal protocols
Business Model or Structure Disruptions
ePOS (integrated systems) gain POS market share
Vertical integration of acquirers into Ingenico’s core business
POS market increasingly driven by "thin" client, cloud deployment
Internet Disruption
Drive for financial inclusion among the unbanked in developing markets
Mobile Technology Disruption
Gen C (the "Connected" generation) is quick to adapt to new technologies, digital inclusiveness Mobile technologies (apps) change the way in which consumers and merchants engage in commerce beyond just payments
Mobile wallets change the consumer payments landscape
Consumer mobile devices (smart phones, iPads) become POS acceptance devices
Mobile payments leapfrog cards in emerging markets
Card volumes increasingly shift from POS to internet (distance)
Merchants demand an integrated, multi-channel (internet, mobile, POS) payments acceptance and processing services
Natural shifts in the demand and delivery of value-added services Developed cards markets migrate to contactless payments, first to cards but primarily to mobile Authentication technologies evolve towards biometrics or mobile technologies, away from PIN or signature
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Disruptive Market Entrants
Regulatory Disruptions
Socio-economic Disruption
Les principales forces du changement – les disruptions
Entrance of Google into the payments marketplace
Entrance of Apple into the payments marketplace
Une Génération “C” au comportement radicalement nouveau La Génération “C” sera connecté en permanence, socialement en réseau, apte à intégrer toute innovation très rapidement y compris le e- et m- commerce
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Une nombreuse population en marche vers la bancarisation Ces individus seront nécessairement bancarisés par des usages modernes et d’un cout minimum . Il est fort a parier que les modèles existants ne seront pas appliqués (“leapfrogging “ )
% of households with a deposit account in a formal financial institution < 25% 25% - 49% 50% - 74% >= 75% Not Available Source: CGAP, World Bank
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PCI createsfinancier burdens for croissant merchants, who look to service providers for PCI, l’impact d’une sécurisation relief pourtant incourtournable PCI compliance représente un poids considérable et croissant pour les commerçants, qui recherchent donc des compensations par ailleurs et un rédéfinition des règles structurelles Merchant-facing Compliance Cost Distribution (in USD) Level 1
Level 2
Level 3
$2.7 million
$1.1 million
$155,000
Firewalls / Anti-virus software
23%
10%
14%
Quarterly scanning
6%
2%
3%
Not applicable
2%
7%
On-site assessment / audit
11%
7%
Not applicable
Web application assessment*
9%
5%
14%
Remediation
23%
31%
35%
Process implementation
6%
21%
14%
Log monitoring
23%
21%
14%
Cost of data breach*Potentially addressed by value-added services offerings.
~$305 per card
~$305 per card
~$305 per card
Cost of non-compliance
$25K per month
$15K per month
Increased trans. charges
Average annual cost
Questionnaire (PCI-SAQ)
Source: The Compliance Authority website, Gartner, PCI Knowledge Base.
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SEPA reformera l’Europe des paiement Les objectifs affichés de SEPA vont inéluctablement redéfinir les périmètres des acteurs traditionnels et les obliger à prendre des initiatives pour certaines sans garantie de succès Processor Responses to Demise of Local Schemes Player
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Situation
Response
Demise of Dutch PIN system and competition for switching
Local switching role threatened Equens has re-positioned as a broadly diversified processor, including strong traction in bank transfer Also repositioned as an acquirer (Montrada)
Demise of local switching roles
Local switching threatened, also local processing role Response has largely been to consolidate
Demise of Bancontact Mister Cash scheme and competition for switching
The business was already integrated into acquiring which it also maintains a dominant position Atos now competes directly with MasterCard and MasterCard acquirers, outcome is TBD, but will likely result in share losses over time
Encroachment of Visa and MasterCard into PIN debit market
Local switching market share threatened, not due to regulatory mandate, but due to encroachment of Visa and MasterCard First Data has competed aggressively on pricing and product innovation, but still suffered share losses
Les Systèmes Integrés se développent (1/2) Les systèmes intégrés se développent de manière à permettre la connexion des infrastructures de paiement avec les autres composants du SI marchant. Cette approche ne se fera pas sans appréhender les risques inhérents Merchant
Large Corporate
POS
POS Hardware
license POS d Software
Gateway
Acquirer
license d Trans. Host
ePOS
Corporate
Medium
Small
POS Hardware
POS Software
Pre-Accredited Solution
Managed Service
Gateway
Gateway
Terminal
Value-add Services
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Schemes
Les Systèmes Intégrés se développent (2/2) ePOS Penetration by # Terminals
ePOS Penetration by Card Turnover
The U.S. and the U.K. show the highest ePOS penetration, and we can expect other markets to trend in this direction as well. 20 mai 2011 Club CSA
Une tendance de fond vers le Cloud Computing Le modèle client/serveur offre de nombreux avantages pour les utilisateurs et modifie profondément l’ordre de la chaine de valeur . Ce “shift” n’est pas pour autant trivial Stone-Age
Early Days
Secure
Valueadding
Thin-Client; Flexible, Adaptable Touch Screen
PED
PED GUI
EFT Client Raw System
Analog
EFT Client
EFT Client
Basic System
Operating System
EMV Kernel
EMV Kernel
Encryption Application
Encryption Application
Analog
Value-added Services
GPRS
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Comms Software IP / SSL / 4G Model Advantages: • • • • •
Lower unit POS costs Lower maintenance costs Reduced PCI burden Centralized IT management Ability to market and push services to POS • Instantly multi-channel • Easy to switch or add acquirers/vendors
Les Services à Valeur Ajoutée: une évolution naturelle Les nouvelles technologies et l’ouverture naturelle des systèmes d’information sont les moteurs . Les VAS peuvent être envisagés de multiple façons mais redistribuent profondément les offres de services du marché VAS Types Challenge
How VAS Fit With Market Evolution
Details High
Prepaid card loading Mobile air-time top-up Money transfer Bill payment Luncheon Customer recognition Loyalty-Based Services
Recording of purchases, earning of rewards Redemption of rewards Targeted offers (instant couponing)
Market Adoption / Demand
Cash-Based Purchase of Virtual Goods/Services
S. Africa
UK
Loyalty Services
Medium
Cash-Based Services Payment-ProcessingBased Services
Dynamic currency conversion Payments Processing-Based Services
Cash-back VAT refund receipts
Low
Enriched data services (e.g., odometer readings) Benefits processing (e.g., food vouchers)
Low
Medium Market Development Stage
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High
Le Sans Contact décolle – Le paiement suivra Le paiement sans contact finira par s’imposer sous l’impulsion du développement des usages mobiles et de ses acteurs clés . La bataille sera toutefois rude et déstructurante Contactless Penetration
Contactless Growth& Players
(Selected Markets) Chin a
UK
Brazi l
USA
Polan d
Turke y
Size of the Bubble = # of Contactless Cards
Sources: Eurosmart, Euromonitor, Banco Central do Brazil, European Central Bank, Visa Europe, Nilson, First Annapolis Consulting analysis
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05-09 ContactMarket less Cards CAGR
US
19%
UK
6%
Brazil
25%
Turkey
21%
The Market Is Likely To Be Close To An Inflection Point
Key Contactless Stakeholders and Innovators
+other banks Poland
45%
China
27%
+ various banks & acquirers
De nouvelles technologies d’identification et de sécurisation Identification and Authentication Types
Biometrics Is Already Used In The Payment Industry
• • Japan: Japan: -
There are ~80,000 biometric ATMs out of 195,000 There are ~80,000 biometric ATMs out of 195,000 (~41% of total) (~41% of total) The technology became particularly popular after The technology became particularly popular after the passing of legislation in 2006 that made banks the passing of legislation in 2006 that made banks liable for withdrawals by criminals using stolen or liable for withdrawals by criminals using stolen or counterfeit bank cards counterfeit bank cards -
• • Poland Poland -
•
•
BPS plans to have a biometric ATM in each BPS plans to have a biometric ATM in each branch by the end of 2011 branch by the end of 2011 Using double verification for now (PIN + finger) Using double verification for now (PIN + finger) Nigeria First Bank of Nigeria (fingerprint verification only) Nigeria First Bank of Nigeria (fingerprint verification only) -
• • South SouthAmerica America(e.g., (e.g.,Brazil, Brazil,Mexico, Mexico,Middle MiddleEast, East, US and Canada) US and Canada) • • Ingenico Ingenicopartnered partneredwith withIL&FS IL&FSETS ETStotodeliver deliver smart smartcard cardbased basedbiometric biometricfinancial financialinclusion inclusion solutions solutionstotoIndia Indiaunbanked unbanked •
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•
Innovitive supplies POS terminals which Innovitive supplies POS terminals which authenticate authenticatetransactions transactionsthrough throughfinger fingerprints prints
Les apps Mobiles vont accélèrer les changement du comportement des consomateurs et des retailers (1/2) Les E- et M- commerce ont des répercussions bien au delà du paiement qui n’est qu’une de ses fonctions . Le CRM sera le point de convergence de toutes ses applications . Le paiement restera pour de bonnes ou de mauvaises raisons à la traine bien que central dans toute transaction commerciale Mobile Commerce Use Cases
Proximity Payment
Remote Payment
Acceptance
Social (Media & P2P)
Couponing Value Added Services
Loyalty
Information Discovery
Source: First Annapolis Consulting analysis; National Retail Federation
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Status of Mobile Capabilities Among U.S. Retailers in 2010
Les apps Mobiles vont accélèrer les changement du comportement des consomateurs et des retailers (2/2)
CRM apps In a Connected World
Players
Ingenico
MobileSpecialists
M-Wallets / Payment Schemes
Positioning Advantages / Disadvantages •
POS terminal
•
Limited expertise and customer intelligence
•
Innovation
•
Well positioned to serve in-house oriented merchants
•
Limited channels to market
•
M-wallet owner strongly positioned to influence loyalty Increasingly competent in loyalty God customer intelligence Limited (B2B) channels to market
• • •
•
Broad and deep positioning (AdWord, Android, etc.) Investment capital Adwords synergies, but not deep loyalty expertise
•
Existing merchant footprint
•
Loyalty experts
•
Ability to adapt to the technical questionable
•
End-to-end control
•
Customer intel will be limited to internal line of sight
•
Increasingly technical means increasingly expensive
•
Google
Merchant Coalition Loyalty Schemes (nectar, etc.)
Merchants (in-house)
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•
Les applications M Wallet modifient profondément le paysage traditionnel Les M-wallets ont un pouvoir de profondément modifier la chaine de valeur existante en faisant converger différents canaux de distribution et en désintermédiant les émetteurs financiers M-Wallet Disruption
Potential Impact on Payments Value Chain
Mobile wallets sit in-between the account issuer and the user for the mobile payment device
M-Wallet owners cede control from the financial account issuer
Mobile wallets provide a point of entry for mobile players to enter financial services
Intensified competition in retail financial services
Mobile wallets enable internet payment schemes to jump into F2F
New competition for card schemes in F2F channel
Payments become deeply imbedded within the broader commerce experience, almost imperceptible to the consumer
Ability to influence market and drive revenue diminished
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Les appareils mobiles deviennent des outils d’acceptation Examples Of Devices Enabling The Mobile Phone To Accept Payments Integrated mPOS Launched 9/2010 Canada
EMV mPOS Launching 6/2011 Sweden
iPad POS Launched 4/2010 Japan Encrypted mPOS Launched 8/2009 USA
mPOS S/W & H/W Launched 4/2010 Taiwan
mPOS Participated by Visa, Inc. USA mPOS for iPhone Launched 7/2008 Australia mPOS Launched in 2009 USA
mPOS for iOS Launched 11/2010 Brazil
Source: First Annapolis Consulting analysis
Ingenico Management Offsite 2011 _ Disruptive Forces Intro_12May
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Mobile phones leapfrog cards in emerging markets payments
Percentage Of Unbanked And Mobile Phones Per Capita
Russia
Mobile Phones Per Capita 2009
Singapore
Portugal UK
Germany
Leapfrog potential
Italy Malaysia
Poland
Spain
S. Africa Brazil
France Canada
Argentina
USA
Turkey India
% of Unbanked 2008
Source: CIA World Fact Book; Honohan 2008, First Annapolis Consulting analysis
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Indonesia China
Philippines Mexico
Les e - revenu depasseront les revenus physiques en 2020 dans certains pays Online vs. Offline Merchant Services Revenue Pools in Selected Markets U.S.
2010
2020
Total revenue Online revenue
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U.K.
France
Germany
Brazil
China
India
Une demande croissante pour le multi-canal Merchant
POS
Gateway
Acquirer
Scheme
Web developers & Online shopping carts
E-commerce Pure Play
Multi-channel
Currently, multichannel gateway plays are not pervasive in the market Bank Acquirers
ELV
Face-to-Face Pure Play
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Apple et Google rentrent dans la danse Recent moves and positioning suggest an expansive role for Google in the merchant services/acceptance value chain for payment. Apple appears more focused on its core consumer businesses.
Online Payment Scheme In-App Payments
Smart Phones
App Mktplace Mobile Operating Systems
Low
Likelihood of Future Adaptations
Contactless Enabled Phones
Google & Apple Possible Moves Into Payments = Google & Apple = Apple = Google
Expanded Merchant Acquiring Online Payment Scheme
M-Wallet
M-Wallet
High
In-Market 20 mai 2011 Club CSA
Expanded Merchant Valueadded Services
Expanded Gateway Processing
Contactless Enabled Phone
Near Term (1-2 years)
Long-term (10 years)
Les forces disruptives de notre environnement Interactions of Disruptive Forces
Legend Internet Disruption
Merchants demand integrated multi-channel
Socio-economic Disruption
Developed markets migrate to NFC (cards, mobile)
Google/Apple enter and disrupt payments markets
Acquirers integrate into terminal OEM
Disruptive Market Entrant
Mobile Technology Disruption
Card volumes shift from POS to Internet Standard mobile devices become POS terminals
Regulatory Disruptions
Business Model or Structure Disruptions
Thin-client deployment enables new product and business models
Mobile technologies (apps) change the way in which consumers and merchants engage in commerce beyond payments
Authentication technologies evolve towards bio and mobile
Gen C adapts to new technologies Evidenced Trends
Uncertain Outcome
Dependenc y Enabler / Accelerant
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Financial inclusion in developing markets
Mobile phones leapfrog cards in emerging markets
Mobile wallets change the consumer payments landscape
ePOS systems gain POS market share
SEPA reshapes the EU market PCI creates burden for merchants
Shifting Demand and Delivery of VAS
Le positionnement d’Ingenico dans la chaine de valeur Fournir des outils et services sécurisés de gestion des transactions électroniques au commercçants Current position of Ingenico in the transaction value chain Merchant Services
VALUE CHAIN
REVENUE TYPE
MARKET
Hardware
One off
Terminal services
Monthly fee
POS terminal market
Connectivity
Monthly fee
Processor
Acquirer
VAS provider
Preprocessing
Processing
Settlement
Value-Added Services
Monthly fee
Fixed fee per transaction
% of transaction in value
Monthly fee+ charge / transaction
Financial institutions mostly
VAS
Payment Transaction Services
INGENICO ENTITIES
Ingenico mostly provides POS terminals to either directly (large retailers) or indirectly (banks, distributors) – Revenue business model mostly relies on one off fees
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Easycash operates payment & VAS services for merchants Revenue business model relies on recurring revenue through a per transaction payment type of business
La transformation d’Ingenico est en route Leader mondial des terminaux de transactions sécurisées , Ingenico cherche aujourd’hui à trouver de nouveaux relais de croissance dans le monde des services Easycash integration & growth in Value Added Services through targeted acquisitions / investments: Transfer To, Roam Data, Payzone France, First Data Iberica and Korvac
Acquisition of Easycash : acceleration of strategic development towards services
Acquisition of Sagem Monetel (best-in-class R&D in France) Acquisition of a 55% stake in Fujian Landi (#2 in China) : Investing in fast-growing countries
2010 2009
PHASE 2 : 2008-2009 Consolidating POS leadership Business model resilience 2009 Revenue: €701m 2009 EBIT margin: 8.7%
2008 2006 PHASE 1 : 2006-2008
Transformation to profitable group 2008 Revenue : €728m (vs €506m in 2006) 2008 EBIT margin : 9.9% (vs 6.5% in 2006)
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2013
2011
Moving to a fabless model : terminal manufacturing fully outsourced MoneyLine acquisition : preprocessing solutions for tier1 retailers in France
Strategic deployment
PHASE 3 : 2010-2013 Changing company's profile through Point of Service offering By 2013, VAS = 45% of total revenues vs. 20% in 2010 Revenue from transaction x3
Une stratégie autour de 3 axes différents mais indiscociables Covering the full spectrum of secure transaction services…
…To end up with a 50% hardware / 50% services business profile in 2016E
Value-Added 3 Value-
2010E
2013E
2016E
Total net revenues €820 m
Total net revenues €1,097 m
Total net revenues €1,421 m
Services
Loyalty
2 Transaction
14%
Management Services
37% 13%
42% 50%
53%
1 POS
73%
terminals
10%
8% Total Services : 50%
Managed Services
Maintenance Services
Hardware
Managed Services
4 Mobile / On Line Payments Note : 2010 financials as per the business plan (at constant 2009 foreign exchange rates)
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Ingenico, un leader mondial Français #1 player in the world for POS terminal shipments (36% market share in 2009) #1 installed base in a highly concentrated market N°1 global POS player
Strong presence in all key regions
Competitive landscape – Share of POS terminal shipments (2009)
40 offices & subsidiaries Commercial presence in more than 125 countries
36% Ingenico Others 64%
North America
Europe
N°2
N°1
Source : Ingenico estimates
China
Competitive landscape – Revenue-based market shares (Q2/Q3 2010) 12% 14%
39%
Ingenico VeriFone Hypercom Others
35% Note : VeriFone Q3 ended 31/07/2010 ; Ingenico and Hypercom Q2 ended 30/06/2010 ; Assumed constant market share for “Others”
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N°1 (MS>30%) Latin America
N°1
Middle East / Africa
Asia Pac. / Australia
(Brazil, Colombia, Mexico)
N°1
N°1
Les innovations permanentes des terminaux Ingenico 2011 new product roadmap
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une infrastructure complete permettant la redéfinition des transactions électroniques chez les commerçants A multi-product capability
Worldwide infrastructure
• • • • •
Connectivity Management Axis & Transaction Management Terminal Management VAS Management Centralized reporting capability
A global platform
•
6 data centers WW – Paris, New York, Sydney Global common processes Hubs and gateway based architecture
Process for service delivery
• •
PSTN, GPRS, IP capabilities Global platform Connection to third parties PCI DSS certified
•
Level 3 expertise: Production and Network Engineering team
•
Customer Care Center • • • •
•
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• • • •
Network Operating Center (NOC) for services monitoring and trouble ticket management Customer Service Management Service Deployment ITIL modules Incident & Change Management implemented
Security Officer & Infrastructure Deployment Manager
Recentes acquisitions …….. Une approche vertueuse et éducative Transaction Management Services
Payment services leader in Germany Acquiring, processing, Loyalty ► The deal enabled Ingenico to Expand its operation in German market ► Strengthen the services business - foraying into a per transaction payment type business model ► ►
Mobile Payment
►
Forayed into mobile payment solutions through acquisition of Roam Data, a US-based Mobile Application Service Provider
Value-Added Services
France based mobile top-up distributor for all French mobile network operators ► Forayed in to mobile top-up as well as a number of other value added services ►
►
Entered into loyalty card payment business through acquisition of First Data Iberica, a Spanish company focusing on Petrol vertical market
►
Entered in to mobile airtime remittance business through an acquisition of Transfer To
Acquired 49% stake in Korvac, Singapore based Payment services provider ► Under Ingenico’s strategy to tap the large & growing payment market opportunity in Asia ►
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Business Review : 1. Business overview
Assez bavardé ….place aux questions
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Merci pour votre attention et intéret dans
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Les innovations permanentes des terminaux Ingenico • • • •
A global platform
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PSTN, GPRS, IP capabilities Global platform Connection to third parties PCI DSS certified
