WORLDLINE_REGISTRATION_DOCUMENT_2017

Worldline positioning and strategy Industry andmarket overview

Mobile payments cover both remote use cases (paying on a web shop or merchant mobile app) and proximity use cases (paying in a physical store). Consumers are getting used to and educated about this new possibility. For example, a study from Accenture (2016 North America Consumer Digital Payments Survey) indicates that in 2016, 56% of US citizens were “extremely aware” of the technology. The support of NFC mobile payment by Apple as part of Apple Pay launched in 2014 is a strong signal for reality of this use case, which has a positive effect on other mobile payment systems. Immediate Payments Immediate payments (also referred to as instant or real-time payments) have a very strong potential for both retail and corporate payments and the long-term impact on the payment ecosystem will be significant. Throughout the world, the number of real-time payment initiatives of one form or another has grown substantially over the last 12 months and will continue to increase. In Europe, The EPC’s (European Payment Council) SEPA Instant Credit Transfer scheme is now operational and although optional, it is expected that it will change payments as more and more new use cases appear. equensWorldline is among the first CSMs to support this. Immediate Payments have many advantages over cash and cheques and are thus ideally suited to replace these instruments. Also, driven by mobile applications, they could take a market share over the debit card. The key success factors are based on ubiquity, interoperability, enhanced user experience and price.

Blockchain is a distributed ledger, and it used in all Bitcoin transactions for example. Blockchain has many applications beyond cryptocurrencies and has the potential to improve the efficiency of financial transactions worldwide and to transform the global financial network. Each blockchain network is based on a unique ● cryptographic algorithm and protocol that allows secure and direct digital transfers of value and assets (such as money, contracts, and stocks, etc.) via open or closed networks that are backed by exchanges. While traditional ledgers are owned and maintained by one institution and access is restricted, a blockchain is hosted on a worldwide peer-to-peer network of computers. A key feature of blockchain technology is the distributed ● ledger, which enables the participatory model of the blockchain. Banks could adopt this technology to replace some existing payments infrastructures. Indeed payments have been identified by EBA as one of the use case of crypotechnologies. Existing platforms for payment services processing have developed over time, generally as iterations of a series of platforms, each designed to handle only specific parts of the payment services value chain. This “silo” approach results in inefficiencies (lack of standardization, redundant or conflicting features, higher maintenance costs, longer waiting periods for introducing new products to the market, etc.) and lost opportunities to share and make use of data generated in one part of the value chain with applications in other parts of the value chain. According to a Capgemini/RBS study, the current payment engines and infrastructure used by most banks do not meet today’s requirements in terms of functionality, capacity and flexibility, leaving banks at risk of customer erosion in the face of innovative offerings by non-banking firms that rely on new technology. To respond to these issues, an increasing number of banks and payment service providers are investing in fully-redesigned, integrated end-to-end platforms that cover the full range of payment processing and related functions, with the ability to share payment information throughout the system. These integrated new platforms are expected to enable new services, speed time to market, and create new economies of scale that allow payment service providers with the new platforms to offer more and improved services at lower costs and across geographies. According to a Capgemini/RBS study, while both large and small banks recognize the benefits of redesigning their systems, the significant costs and complexity involved in a redesign are difficult to justify for firms with smaller transaction volumes. This may create additional outsourcing opportunities for payment processing firms that can offer payment service hub enabled services on an outsourced basis.

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Key developments in technology will sustain the growth of electronic payments

Tomorrow, smart watches will be a one-stop-shop handy device for identification, to open a hotel door, to receive contextual messages/notifications or to easily pay services or goods. Coupled with the right privacy protections, mobile devices will offer retailers opportunities to collect, on an opt-in basis, a vast amount of contextual data about consumers that can then be analyzed and shared with other brands to offer consumers (ideally in real-time) compelling targeted and personalized offers or products and services. The data collected by mobile sensors will also lead to the rise of “quantified self”, meaning services relying on self-evaluation of behavior for providing advices or services around health, insurance, nutrition, and many other domains.

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Worldline 2017 Registration Document

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