GRUPPO TELECOM ITALIA

Italian Mobile Operators Enabling Digital Coupons

GS1 Global Standards EventRome. October, 7th 2014

PM of “Mobile for Retail Project” Strategy & Innovation, Telecom Italia

Jacopo Corridoni

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Summary

Mobile Payment is a Reality in Italy

Mobile Payments and Mobile Wallets Fostering Retail Services

How Mobile Network Operators are Enabling Digital Coupons

A Real Life Use Case of an End to End Digital Coupon Lifecycle

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EASY TO SAY: M-Payment Means Paying Using Your Smartphone What M-Payment is. Enabling customers to

pay at physical stores using the credit/debit

card “stored” in their phones.

The tech underneath. NFC is the proximity

technology certified by banks, CC circuits and

POS makers for its security

What Customers need to m-pay

An NFC-capable smartphone and a special NFC SIM

provided by the telco operator

An NFC POS at the store

A credit card issued by customer’s bank that has been

virtualized on the SIM’s secure element

A simple gesture

Easy, isn’t it?

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Complexity of M-Payment could be behind the curtain Moving a credit card on a smartphone theoretically implies:

Each Bank issuing the card needs an agreement and a technical integration

with each Mobile Operator to manage the virtualized credit card lifecycle.

Each Bank and each MNO should adopt their own Trusted Service

Management Platform (TSM) to manage the lifecycle

The certification process must be replicated every time a new issuer wants

to “go mobile”

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Bank 1 Bank 2 Bank n

SP-TSM…

SP-TSM SP-TSM

MNO 1 MNO 2 MNO n

MNO -TSM

…MNO -TSM MNO -TSM

Not scalable &Hyper fragmented

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Italian Telco’s Cooperate to Boost M-Services

Italian MNO’s decided to cooperate in order to avoid fragmentation and make m-payment

real.

They have chosen a hub approach to integration

Standard. The hub approach leverages on standards and reusability of interfaces

Scalable. Onboarding of new banks requires small effort in terms of engineering and testing

Multi-operator. Each operator can autonomously sign their own partnerships

The hub approach has proven its efficacy, since the onboarding of banks has become less

and less time consuming.

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Scalable &Standard

Bank 1 Bank 2 Bank n…

MNO 1 MNO 2 MNO n…

TSM-SP HUB

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All Components for M-Payment Success are in Place in Italy

1. Consumer Interest

2. Devices

3. Acceptance Network

4. Integration of Players:

Mobile Operators

Banks

Credit cards

Hub and Technology Integrators

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- 11 Millions NFC Smartphones

- 5 Millions SIM by end of 2015

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HUB Architecture

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200,000 NFC POS in Italy

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M-Payment Has Gone Live in Italy during 1H2014

Telecom Italia – TIM Wallet

– Mediolanum Credit Card (Live)

– Cobranded card TIM SmartPAY (Oct.)

– Cards by BNL, UBI, Intesa Sanpaolo (Oct.)

Vodafone – Vodafone Wallet

– Smart Pass (Live)

– Mediolanum Credit Card (Oct)

– UBI Cards (Dec.)

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The Mobile Wallet as the UI Metaphor

All Telecom Operators have adopted the

metaphor of Mobile Wallet as the container

for payment services, in order to provide a

consistent user experience.

The message is easy to convey: “move the

cards from your wallet to the m-wallet”

The M-Wallet is not simply a metaphor: it is a

technical container

It can host 3rd party applications

It provides 3rd party applications access to

secure storage on the SIM

It provides 3rd party applications access to NFC

standard API’s

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Mobile Wallet as Service Container

“Emptying the wallet to go mobile”, means that

the m-wallet is designed to become a real

container of services.

In the Retail Market it means

Coupons and Retailer Offerings

Digital Coupons are directly available in the wallet

Their redemption at stores is just one tap away

User experience is similar to payment experience

Loyalty Cards

We move loyalty cards to the phone.

Never leave the card home

Build an always on communication channel with the

customer

Coupons Loyalty

Tickets Digital ID

RETAIL

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Importance of Mobile for Retail Business

Prediction #5:

“$2.5B in online shopping will be

performed by mobile digital assistants”

Prediction #6:

“US mobile engagement behavior will

drive mobile commerce to 50% of US

digital commerce revenue”

Prediction #10:

“by 2018 retail businesses will utilize

targeted messaging & internal

positioning”

(Gartner Symposium - Oct, 6)

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Couponing

Coupons are mainly printed on physical supports, distributed through traditional

channels and redeemed at the stores belonging to the acceptance network.

Players

Brands (ex. Kraft, Nestlé, Ferrero): create the offer to promote their products

Clearinghouses (ex. Valassis): publish the coupon, collect the redeemed coupons

from the retail stores and refund them

Retail Stores (ex. Auchan): accept coupons and apply the nominal discount

Digitalization brings advantages

Consumers never lose their preferred coupons and have them in their m-wallet

Retailers demultiply the effort required by managing collection and delivery of

coupons and get refunded far earlier

Brands acquire knowledge about behaviors of coupon users. The coupon can

become profiled

Clearinghouses simplify their operations and develop a data warehouse service for

the brandsConfidential

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Digital Coupons: The Advantages of Mobile Distribution Coupons go digital and the smartphone becomes

the mobile always-on distribution channel

Coupons simply pop-up in the application hosted in

the wallet, or the customers can grab them using QR

and barcodes.

Coupons never get lost or forgotten at home

Frauds decrease because coupons are secured and

not replicable and personal

Coupons not only reach a specific retailer’s customer

base but also prospect clients.

Geolocalization helps retailers to drive customers to

their stores

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Digital Coupons: The Advantages of NFC Redemption Coupon redemption is easy at the teller: just one tap

at the POS

No big infrastructural change, since we use the same

NFC POS that most large retail chains have already

in place

Check out time does not increase

Using NFC we bypass physical problems like

barcode readers not reading smartphone displays

User experience of coupon redemption becomes

identical to payment experience. The customer will

only use his phone

Redemption will have no fraud issues since the

coupon will be encrypted and associated to user.

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Digital Loyalty Cards: The Advantages

Loyalty cards go mobile by exploiting the features

that mobile operator offer to app developers: Security

and standard NFC Interfaces

The m-wallet adds visibility to retailer’s loyalty app,

because customers get used to access the wallet

Digital Loyalty Cards become secure since they use

security features provided by the m-wallet

Easy to use at the cashier

It becomes the channel to communicate with

customer

Combining Digital Identity, MNO’s and Retailers can

create a trust mechanism to ease customers’

subscrition to loyalty programs.

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The Building Blocks for Mobile Digital Coupons

Standard

NFC I/F

Retail backendsystem

Coupon Issuers(Brands, Retail

Store)

Coupon Issuers(Brands, Retail

Store)

Coupon Issuers(Brands, Retail

Store)

Coupon Issuers(Brands, Retail

Store)

Coupon Distributor& Aggregator

MNO’s Tech Platform(HUB)

Mobile customer

Coupon Validator

We need a standard format for coupons

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The Italian Mobile Operators’ Contribution to Couponing The Italian MNOs decided to cooperate with GSMA in order to deliver a

common technical solution and user experience for the national retail scenario.

The joint work is aimed at providing standard building blocks that each player

can exploit for their commercial purposes. The building blocks are:

NFC standard applet on the phone that hosts coupon id’s

NFC standard app on the POS that receives coupon id’s

An optional disintermediation hub enabling apps on the phone to dialogue

with couponing backend servers

Telecom Italia has proposed a standard for the NFC interface between the

smatphone and the POS used to convey the coupon and loyalty card codes

First implementation have been agreed to start 4th Quarter 2014

As of October 2014, the interface between phone and POS has been proposed

and implemented in the trials that will be described later

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The MNO’s Role

MNO’s simply propose themselves as a technological enabler for

the digital couponing ecosystem, by:

Defining how every smartphone transmits the coupon or the loyalty id to the

POS

Providing certification for devices and SIM that ensure adequate security

level

Commercially, the large amount of customers using operators’

wallets will enable a privileged display channel for coupon

providers.

Operators’ goal is not gathering usage profile information, which

must remain the business of retailers.

Telecom Italia has launched a real life trial in order to proof all the

aspects of the ecosystem.

Technical Aspects

Usability

User Feedback

Real Life Trial

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TIM Mobile Couponing Service

In June 2014 TIM has started a real life trial of mobile

couponing: “Gli sconti di TIM” (TIM Discounts)

The trial is active in all Bennet stores in Lombardy and

Turin and has been opened to internal trialists

The TIM Wallet includes the new couponing app that

receives digital discount coupons issued by Valassis

TIM customer can redeem the coupons when checking

out at Bennet supermarkets by simply tapping on their

NFC POS

The system has been developed in partnership with

major Cashier System Provider NCR

The solution can be rapidly deployed at other retail

stores.

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The Valassis Trial mapped onto the General Architecture

Standard

NFC I/F

Retail backendsystem

Coupon Issuers(Brands, Retail

Store)

Coupon Issuers(Brands, Retail

Store)

Coupon Issuers(Brands, Retail

Store)Brands (Nestlè, Kraft, Ferrero,…)

Coupon Distributor& Aggregator

MNO’s Tech Platform(HUB)

Mobile customer

Coupon Validator

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The new user experience for m-couponing

Select the Coupons directly on the Wallet

Find the nearest StoreRedeem the coupons directly at the cashier by tapping on

the NFC POS

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All Italian Operators are Performing Trials

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Coupon Distributor

Mobile Operator

Retail System Integrator

Retail Store

All Italian Operators have agreed on - same technical approach - Same user experience They have started testing the digital coupon solution with different players as shown below.

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What’s Next

Telecom Italia has successfully tested its NFC application with

both NCR and Konvergence powered till systems.

In 4Q2014 Telecom Italia will broaden its trials to other retailers

than Bennet.

Before 1H2015 Italian MNO’s plan to launch the commercial

solution within their mobile wallets.

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Thank You