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The Smartphone Payment Scheme for Europe

Periodic Reporting for period 1 - Bluecode (The Smartphone Payment Scheme for Europe)

Reporting period: 2018-08-01 to 2018-11-30

Cash has been the most popular payment method for centuries, but it is quite cumbersome. Decades ago, the payment possibilities were broadened with cheques and debit/credit cards, and recently a new generation of alternatives brought by FinTech companies is disrupting the industry with eWallets, contactless payment, etc. However, most of these new payment tools inevitably involve resorting to USA-based card networks (Visa and MasterCard) and electronic payment tools (PayPal, Apple Pay, Google Wallet). This represents a dramatic situation for the European financial industry, threatened to lose the revenues generated by the transactions but also the ‘emotional’ link with customers and even the whole payment process (consumers migrating to USA banks). In Europe, 130 billion non-cash transactions are performed each year and this number is growing 6.5% annually. The alternative payment methods like Blue Code are increasing its relevance and are estimated to process 20% of the total cashless transactions by 2020, taking one third of the total revenues generated, thus a total addressable market of €22 billion. Our Fintech consortium consisting of Secure Payments Technologies GmbH and Bluecode International AG, have developed BLUECODE. Our goal is to become the first European mobile payment system where users can make anonymous mobile device payments. We ensure ‘security by design’ through an innovative payment technology based on barcodes (Tokens) that keeps all the process anonymous, so no sensitive data like name, address or bank account is managed, and thus there are no possibilities of hacking of misuse.
This project has had as main goals to assess the technical feasibility of the objectives listed above, the commercial viability of our value proposition and the financial requirements of adjusting our working prototype to better serve the needs of all the stakeholders in the payment ecosystem, compulsory requirement to launch successfully BLUECODE in the market.
During the Execution period, we performed several tasks to ensure BLUECODE is viable from different perspectives:
Market Analysis identified the most open-minded European mobile payment markets. Countries differ in their approach and the demand for mobile payment solutions. We mapped out different strategies for each of the selected countries to account for their payment preferences.
In Partner Definition, we described specific partner groups that are crucial to the Bluecode network and how each one can contribute to its further evolution, identifying the most suitable ones to become our partners
Performing the Freedom-to-Operate Analysis gave us the green light to implement Bluecode in our target national markets without infringing any intellectual property rights (IPR). Additionally, we obtained valuable insight into existing solutions that already have IPR protection.
Relying on the feedback from the previous stages of this study, we documented a Technical Roadmap consisting of specific technical and commercial steps necessary for the development and distribution of Bluecode. The entire study concludes with a profit-driven Business Plan.
The Financial Roadmap describes our many sources of income and the assumptions behind them. Based on those parameters, we modelled forecasted sources of revenues and costs to arrive at a break-even point in the third year of Bluecodes’s operation. The project’s total direct and indirect costs are estimated to be € 2,953,071.
Our business expansion strategy covering Ireland, Spain, Portugal in 2019, and France, Italy, Belgium, the Netherlands, Denmark and Sweden in 2020, is laid out in the Business Plan. We have defined the necessary market entry conditions that will to ensure our market success of winning the first 10,000 customers as the foundation for further growth in the mobile payment segment of a given country.
The reviews from Consumers are highly positive as they appreciate from an emotional point of view the Security by Design feature where no personal information is managed or transferred.
The encouraging results of the study convinces us that the Bluecode project is feasible. We will pursue the Phase 2 of the SME Instrument by requesting funding assistance from the European Commission to progress our solution’s development and commercialization.