Open Case Structure (Total 20 marks)

Requirements-

1. Industry analysis- Porter's five forces model ( Total 5 marks)

• Threat of new entrants (why threat of new entrants is high or low? Show the logic.)
• Bargaining Power of Supplier (why Bargaining Power of Supplier is high or low? Show the logic.)
• Bargaining Power of Buyer (why Bargaining Power of Buyer is high or low? Show the logic.)
• Threat of Substitutes (why Threat of Substitutes is high or low? Show the logic.)
• Industry Rivalry (why Industry Rivalry is high or low? Show the logic.)

2. Company analysis: SWOT analysis ( Total 5 marks)

• Strengths (You can give maximum 3 strength, Such as What are the strengths and why in the case? write down in a complete sentence, 1 or 2 or 3 line)
• Weakness (You can give maximum 3 Weakness, Such as What are the Weakness and why in the case? write down in a complete sentence, 1 or 2 or 3 line)
• Opportunities (You can give maximum 3 Opportunities, Such as What are the Opportunities and why in the case? write down in a complete sentence, 1 or 2 or 3 line)
• Threats (You can give maximum 3 Threats, Such as What are the Threats and why in the case? write down in a complete sentence, 1 or 2 or 3 line)

3. Problem identification (Total 5 Marks)

(a) Primary problem (what is the primary problem in the case and why?)

(b) Secondary problem (only point out the problem)

4. Problem solutions (Total 5 Marks)

A Battle Emerging in Mobile Payment

In 2012, 75% of the world population was using mobile phones, and 80% of those mobile users accessed the mobile Web. Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2012, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding.

In the United States, several large players, including Google and a joint venture called ISIS between AT&T, T-Mobile, and Verizon Wireless, were developing systems based on Near Field Communication (NFC) chips that were increasingly being incorporated into Smartphone. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity. The systems being developed by Google and ISIS would transfer the customers information wirelessly, and then use merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of using credit cards, but enabled completion of the purchase without contact.

Other competitors, such as Square (with Square Wallet) and PayPal, did not require a Smartphone with an NFC chip, but instead used a downloadable application and the Web to transmit a customers information. Square had gained early fame by offering small, free, credit card readers that could be plugged into the audio jack of a Smartphone. These readers enabled vendors that would normally only take cash (street vendors, babysitters, etc.) to accept major credit cards.

By mid-2012, merchants were processing over $6 billion a year using Square readers, making the company one of the fastest growing tech start-ups in Silicon Valley. In terms of installed base, however, PayPal had the clear advantage, with over 100 million active registered accounts. With PayPal, customers could complete purchases simply by entering their phone numbers and a pin number, or use a PayPal-issued magnetic stripe cards linked to their PayPal accounts. Users could opt to link their PayPal accounts to their credit cards, or directly to their bank accounts. This meant that of the systems described so far, only the PayPal system offered the possibility of excluding the major credit card companies (and their billions of dollars in transaction fees) from mobile transactions.

In other parts of the world, intriguing alternatives for mobile banking were gaining traction even faster. In India and Africa, for example, there are enormous populations of unbanked or underbanked people (individuals who do not have bank accounts or make limited use of banking services). In these regions, the proportion of people with mobile phones vastly exceeds the proportion of people with credit cards. The opportunity, then, of giving such people access to fast and inexpensive funds transfer is enormous.

The leading system in India is the Inter-bank Mobile Payment Service developed by National Payments Corporation of India (NPCI). NPCI leveraged its ATM network (connecting more than 60 large banks in India) to create a person-to-person mobile banking system that works on mobile phones. The system uses a unique identifier for each individual that links directly to his or her bank account.

In parts of Africa, where the proportion of people who are unbanked is even larger, a system called M-Pesa (M for mobile and pesa, which is kiswahili for money) enables any individual with a passport or national ID card to deposit money into his or her phone account, and transfer money to other users using Short Message Service (SMS). By mid-2012, the M-Pesa system had almost 15 million active users.

By early 2013, it was clear that mobile payments represented a game-changing opportunity that could accelerate e-commerce, Smartphone adoption, and the global reach of financial services. However, lack of compatibility between many of the mobile payment systems and uncertainty over what type of mobile payment system would become dominant still posed significant obstacles to consumer and merchant adoption.