William Hoyle

1
William Hoyle Charity Technology Trust Virtual
Money CFDG Conference April 2005
2
Contents

• Virtual money. Facts Figures
• Internet use e-Commerce
• What are charities doing?
• Virtual Payment services what is available?
• Mobile as an online donations channel

3
Payments Market Place Today

• Plastic cards are the most heavily used non-cash
  payment method in the UK, with around 123
  million multi-function payment cards in issue at
  the end of 2002.
• There were a further 23 million cards whose sole
  function is to withdraw cash and 22 million
  store cards.
• Approximately 90 of adults hold one or more
  cards.
• The number of transactions on UK-issued cards
  increased by 9 in 2003 to reach 7.2 billion.
• Total plastic card spending was 211 billion
  during 2002, or 86 per adult per week.

Source Association For Payment Clearing Services
APACS
4
Payments Market Place Today

• Card Fraud in the UK reached 505m in 2004 up 20
  on 2003. Fraud is growing rapidly in many
  countries around the world, highlighting the
  importance of a global card security system
• Chip cards provide the basis for this as they are
  built to an internationally-agreed standard, with
  many countries around the world already
  implementing chip systems.
• Chip technology uses highly sophisticated
  processing to identify genuine cards and make
  counterfeiting extremely difficult and hugely
  expensive.
• Over the next two years all debit and credit
  cards in the UK will be reissued with embedded
  microchips, identifying cardholders using a
  personal identification number (PIN).

5
Card Payments Processing how it works
6
Internet Use

• There are now nearly 60 of UK households with
  access to the internet.
• 66 of adults have used the internet at some time
  and of these 85 are regular users and half use
  the internet every day
• Broadband take-up in the UK is around 6m
  connections and speeds of 2-4mb are now available
  at around 40 per month
• Broadband connections should overtake dial-up by
  mid 2005
• Internet email traffic levels over Christmas
  2004 were similar to that of a normal weekend
• Beyond web browsing, the fastest growth in
  internet use is in the e-commerce arena

Ofcom Ofcom/LINX
7
Internet Use
8
Internet Use e-Commerce

• 46 of adults spent over 200 on the web in the
  three months prior to Oct 2004
• 3.5bn spent online in the UK over Christmas
  2004, an increase of 40 on 2003
• 10 of all UK credit card spending now takes
  place online
• tesco.com claim to have taken 750,000 online
  orders for Valentines Day roses in 2005!
• 18 consumers do at least part of their banking
  on the internet
• A growing proportion of 16-44 year olds prefer
  self service facilities

NS Omnibus Survey Source IMRG NFP
Synergy/nVision
9
Card Payments Processing via the Internet
10
Online Payments - What are charities using?

• 55 of charities accept online credit card
  donations
• Over half of these charities outsource this
  function
• 70 of charities not accepting online donations,
  plan to develop this function in the future.
• Back office processing often handled separately
• Only 19 of charities offer an online direct
  debit donation facility.

SourceGiving (in) to the Internet - Jan 2005 -
Goatman.
11
Direct Debits

• 35 million people in the UK now use Direct Debit
• People pay an average of five bills by Direct
  Debit
• Since 1990 the proportion of people who actively
  prefer to pay their bills by Direct Debit has
  risen from 11 to 48
• In 2004, over 2.6 billion Direct Debits were
  processed by the high street banks and major
  building societies
• 48 of all regular bills are paid for using
  Direct Debits. This is the most popular method
  compared to cheques (16), cash (11), credit
  cards (4) and debit cards (2).

Source BACS
12
Online paymentsCharity Sector Trends
Website Purpose Mean Scores Ranked Order
Source Giving (in) to the Internet, Goatman 2004
13
Charity Sector Trends
Differences Between Website Purpose Mean Scores
(Fundraising Income)
Source Giving (in) to the Internet, Goatman 2004
14
Virtual Money What is available?

• online card donations systems
• online direct debit payments systems
• combined online and back office processing,
  administration and collection management systems
  for
• credit and debit cards (single and repeat
  donations)
• - direct debits (combining paper and paperless)

15
Virtual Money What is available?
online Card Donations systems
16
Virtual Money What is available?
online Card Donations systems
17
Virtual Payment Services - What is available?
online Direct Debit systems
18
Virtual Payment Services - What is available?
online Direct Debit systems
19
Virtual Money - What is available?
Integrated Administration and Management systems
-Cards
20
Virtual Money - What is available?
Integrated collection management systems - Direct
Debits
21
Mobile Payments

• There are more mobiles in the UK than people
• More interesting perhaps is the growth of mobile
  data
• 2.5bn text messages in January 2005
• 133bn WAP pages in 2004
• 72 of women prefer to text than talk!
• One third of over 65s with a mobile use text on
  a regular basis

Source MDA 2005 Source ICM
22
Mobile Payments

• Traditionally viewed as high cost, low ticket.
  i.e. SMS
• High Speed Mobile Data networks 3G create a new
  payments channel
• Colour screens, higher bandwidth, compelling
  content
• Wireless protocols will enable proximity
  payments
• Major inhibitor is consumer perception of
  security
• Individual schemes already in place
• Vodafone m-pay
• Standards the key to acceptance
• Mobile Payments Forum
• Simpay

23
Mobile Payments- typical transaction
24
Summary

• E-Commerce is growing rapidly and accounting for
  a significant element of consumer purchasing
• Charities are slowly catching up with the
  exception of online direct debit
• There are tools available that enable these
  services, simply and efficiently
• Growing consumer acceptance of interactive
  services will have wider implications for
  charities over time
• E-Commerce will extend to the mobile channel
  (m-commerce) as 3G rolls out and will cease to be
  a low value/high cost option