GRUPPO TELECOM ITALIA
GS1 Global Standards Event
Rome. October, 7th 2014
Italian Mobile Operators
Enabling Digital Coupons
Jacopo Corridoni
PM of “Mobile for Retail Project”
Strategy & Innovation, Telecom Italia
Confidential
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
A simple gesture
 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
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”
Bank 1
Bank 2
SP-TSM
SP-TSM
…
Bank n
SP-TSM
Not scalable &
Hyper fragmented
MNO -TSM
MNO -TSM
MNO 1
MNO 2
MNO -TSM
…
MNO n
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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.
Bank 1
Bank 2
…
Bank n
Scalable &
Standard
TSM-SP HUB
MNO 1
MNO 2
…
MNO n
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All Components for M-Payment Success are in Place in Italy
 1. Consumer Interest
-
 2. Devices
-
 3. Acceptance Network
11 Millions NFC
Smartphones
5 Millions SIM by
end of 2015
200,000 NFC
POS in Italy
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 4. Integration of Players:
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 Mobile Operators
 Banks
 Credit cards
 Hub and Technology Integrators
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HUB Architecture
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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
RETAIL
Coupons
Loyalty
 “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
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Digital ID
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 brands
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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
Coupon Issuers
Coupon Issuers
(Brands,
RetailIssuers
Store)
Coupon
(Brands,
Retail
Store)
Coupon Issuers
(Brands, Retail Store)
(Brands, Retail Store)
Coupon Validator
Coupon Distributor
& Aggregator
Retail backend
system
We need a standard format for coupons
MNO’s Tech Platform
(HUB)
Standard
NFC I/F
Mobile customer
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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.
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Real Life Trial
 Telecom Italia has launched a real life trial in order to proof all the
aspects of the ecosystem.
 Technical Aspects
 Usability
 User Feedback
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
Coupon Issuers
Coupon Issuers
(Brands,
RetailIssuers
Store)
Coupon
(Brands,
Retail
Store)
Brands (Nestlè,
Kraft,
(Brands, Retail Store)
Ferrero,…)
Coupon Validator
Coupon Distributor
& Aggregator
MNO’s Tech Platform
(HUB)
Retail backend
system
Standard
NFC I/F
Mobile customer
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The new user experience for m-couponing
Select the Coupons
directly on the Wallet
Find the nearest Store
Redeem the coupons directly
at the cashier by tapping on
the NFC POS
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All Italian Operators are Performing Trials
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.
Coupon Distributor
Mobile Operator
Retail System Integrator
Retail Store
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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