YOUR ASSET MANAGEMENT COMPANY Mobile Payments Now entering mass adoption phase APRIL 2020 www.atonra.ch • sales@atonra.ch • +41 22 906 16 16 • 7 rue de la Croix d'Or, 1204 Geneva, Switzerland
MOBILE PAYMENTS – TOWARDS MASS ADOPTION Investment Case Mobile Payments Certifjcate details • Infrastructure and Services are in place — Mass adoption of Issuing bank SG mobile payments is now. ISIN CH0239657494 (USD Retail) ◦ Better user experience, enhanced security, enhancedv alue-added Ticker IND1AMPU services better ergonomics. Currency USD • Covid-19 acting as addition catalyst for digital payments. Fees 2.00% management fee+ 15% performance fee, HWM ◦ Fears of contamination from bank notes and coins, mobile-money as a public-health tool. Share classes in EUR for retail (CH0239656603) and institutional (CH0239656462) available • Governments pushing for a cashless society. ◦ Cash limits are increasing across the world, better oversight of money fmows. Issuing bank JPMorgan Chase Bank ISIN XS1668108845 • Total addressable market expands thanks to new forms of mobile payments. Ticker JMLNARMP ◦ In-car payments, personalized shopping (including VR) experience, Currency USD fjnancial services. Fees 1.50% management fee + 15% performance fee, HWM MOBILE PAYMENTS 2
MOBILE PAYMENTS – TOWARDS MASS ADOPTION The Ecosystem of Mobile Payments VIRTUAL & AUGMENTED REALIT Y HARDWARE VENDORS PROCESSORS & NET WORKS BIOMETRICS & SECURIT Y PROCESSORS & NET WORKS TECH GIANTS LOYALT Y PROGRAMS MOBILE PAYMENTS 3
MOBILE PAYMENTS – TOWARDS MASS ADOPTION Overview of the Payment Industry • The Global Payment industry generated revenues of $1.9tn in GLOBAL PAYMENTS REVENUE BREAKDOWN 2018. It is expected to generate $3.0tn by 2025 (CAGR of 6%)! ◦ Non-banking revenues account for more than 60% of this huge pie. 12% Cross-border ◦ Asia-Pacifjc is the largest region in terms of revenues (45%), transactions fuelled by commercial clients. AtonRâ Mobile Payments universe: 24% • All revenue verticals of the payment industry are today disrupted a $1.8tn total Domestic transactions addressable market by the use of smartphones and dedicated apps. (2025) 24% Credit cards revenues 40% Net interest income & Overdraft Revenue breakdown as of 2018 SOURCE: McKinsey, AtonRâ Partners MOBILE PAYMENTS 4
MOBILE PAYMENTS – TOWARDS MASS ADOPTION A $162bn Market by 2025 growing at 22% p.a. (2020-2025) AtonRâ Mobile Payments TOP DOWN ANALYSIS Industry experts internal quantitative market analysis CAGR 2020–2025 DRIVERS Mobile payments processing ($90bn¹) 25% • Reduced transaction costs • Surgein E - & M - commerce • Improved experience thanks to APIs and apps mPOS/hardware ($21bn) 21% • Rewards revolution • Impulse from the largest tech players NFC chips ($48bn) 17% • Gen Z, the largest population cohort globally mPOS software ($3bn) 12% Related markets RISKS Payment cards ($560bn) 14% • Security & fraud • Data privacy Loyalty programs ($220bn) 4% • Regulatory compliance BOTTOM UP ANALYSIS Public and Private companies’ guidance internal qualitative and quantitative companies’ analysis ¹Based on transactions volume of $4.5tn SOURCE: Nester Research, IHL Group, Market Research Future, McKinsey, AtonRâ Partners MOBILE PAYMENTS 5
MOBILE PAYMENTS – TOWARDS MASS ADOPTION By 2022, 1/3 Of Smartphone Users Will Use It For Mobile Payments • Mobile payments refer to all payment transactions made from or via a mobile device and debited either on a bank account or on a mobile operator bill. ◦ At the end of 2019, there were approx. 3.2bn smartphone users NFC <wireless worldwide. By 2022, 1.1bn people will use their smartphone to exchange data> make payments by 2022. • All smartphones currently allow contactless payments via an electronic mobile wallet. ◦ They can also become POS terminals for merchants. Mobile Mobile as a money point-of-sale (SMS) terminal MOBILE PAYMENTS CATEGORIES QR code Web/In-app Person-to-Person Mobile Proximity Purchases Payments Payments SOURCE: Statista MOBILE PAYMENTS 6
MOBILE PAYMENTS – TOWARDS MASS ADOPTION Growth To Accelerate In Every Part Of The World ANNUAL TRANSACTION VOLUME OF MOBILE PAYMENTS ($BN) • The annual transaction volume via mobile payments crossed 3500 TRANSACTION VOLUME ($BN) the $1tn mark in 2019. 3000 2500 ◦ By 2024, this volume should reach $3.7tn , implying a growth 2000 rate of 30%! 1500 • Disparities between countries are wide but growth is 1000 accelerating everywhere. 500 ◦ Highest penetration rates in Asia-Pacifjc, as early adopters of the 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 technology. ◦ Growth potential in North America and Europe remain important. MOBILE PAYMENTS USERS (% OF SMARTPHONES USERS) 60% 54.2% 50% 45.7% 40% 31.7% 30% 23.1% 22.9% 19.6% 20% 15.7% 13.8% 12.4% 11.0% 8.8% 10% 6.8% 0% Asia–Pacific North Werstern Central & Latin Middle East America Europe Werstern America & Africa Europe 2017 2022 SOURCE: MordorIntelligence, Statista, eMarketer, Newzoo, AtonRâ Partners MOBILE PAYMENTS 7
MOBILE PAYMENTS – TOWARDS MASS ADOPTION Digital Transactions To Overtake Cash Transactions By 2022 ◦ Mobile payments and e-wallet transactions will overtake cash • Mobile payments use is increasing at the expense of cash transactions mostly for traditional point of sale (“POS”) and credit cards by 2022 . transactions, according to Worldpay. ◦ The use of cash varies by region In Europe, approx. 75% of retail transactions are still done in cash. GLOBAL POINT OF SALE PAYMENT METHODS (%) 35% 31% 30% 28% 25% 20% 17% 16% 15% 10% 5% 0% Cash Debit Card Credit Card Wallet/Mobile Other Payments 2018 2022 SOURCE: Worldpay, AtonRâ Partners MOBILE PAYMENTS 8
MOBILE PAYMENTS – TOWARDS MASS ADOPTION Best Days of E-commerce are ahead of us SHARE OF E-COMMERCE IN TOTAL RETAIL SALES (%) 70% • E-commerce , as a percentage of total retail sales, is globally on the rise. 60% 50% ◦ In China over 60% of retail sales could be done online by 2022. 40% 30% ◦ COVID-19 shock likely to accelerate the online shopping 20% transition everywhere in the world. 10% 0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 • The switch from traditional POS to e-commerce benefjts mobile GLOBAL CHINA UNITED STATES payments. MOBILE PAYMENTS USE FOR POS & E-COMMERCE (%) • By 2022, e-wallet and mobile payments will account for 47% of 70% global e-commerce transactions. 60% 50% 40% 30% 20% 10% 0% POS 2018 POS 2022 eCom 2018 eCom 2022 NORTH AMERICA LATIN AMERICA EMEA ASIA-PACIFIC SOURCE: eMarketer, Statista, Fred, Worldpay, AtonRâ Partners MOBILE PAYMENTS 9
MOBILE PAYMENTS – TOWARDS MASS ADOPTION E-Wallets Becoming Mainstream • E-wallets in China benefjt from high penetration rates of mobile ACTIVE USERS ON TOP MOBILE PAYMENT PLATFORMS (MN) payments in the country. 900 • In developed countries mobile payments are approaching an 800 infmection point. ◦ P2P digital services like Venmo and Square Cash will reach 700 $574bn by 2023 in the U.S. ACTIVE USERS (MN) 600 500 400 300 200 100 0 WECHAT PAY ALIPAY PAYPAL PAYTM UPI G PAY AMAZON PAY VENMO CHASE PAY APPLE PAY STARBUCKS M_PESA SQUARE CASH SAMSUNG PAY Non-exhaustive list of eWallets. Latest data availableas of November 2019. SOURCE: Company Statements, AtonRâ Partners MOBILE PAYMENTS 10
MOBILE PAYMENTS – TOWARDS MASS ADOPTION The Mobile Payment Landscape Hardware & Issuance Merchant Services Connection • Payment card • Acquiring services • Payment networks ◦ Card issuance ◦ Route the encrypted transaction to ◦ Credit & debit cards ◦ Security the card network ◦ Most large acquirers do the • Connectivity ◦ Semiconductor processing part ◦ Internet, Phone line • POS / ATM terminal • Processing ◦ Technological side – clearing & settlement Markup Fees Total Fees Interchange Fees Assessment Fees (to (to the processor) the merchant pays (to the issuing bank) the credit card company) MOBILE PAYMENTS 11
MOBILE PAYMENTS – TOWARDS MASS ADOPTION The Payment's Processors Landscape • Payment processor represents the best way to capture the volume growth of digital transactions . ◦ Highly scalable business models hint at signifjcant earnings NETWORKS leverage . Identify which financial 2 ◦ High barriers to entry. institution issued the card and re-route ◦ Strong balance sheets and cash-fmow generation give ammo for M&A in a highly fragmented industry. REQUESTS THE 3 AUTHORIZATION 1 CAPTURES BANKING DATA PROCESSING THE AQUIRER AND PROCESSOR Identify the appropriate network POINT OF SALE corresponding to card CARD ISSUING BANK 5 4 Verification ISO (independent sales organizations) TRANSACTION (fraud, balance, etc.) resell the processing services APPROVAL OR REJECTION MOBILE PAYMENTS 12
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