Q:

How to manage a developer with poor work ethics

Background:
I am the PM / Scrum master in a development team, we follow a semi-agile framework for app development. The team (which is newly formed) consists of 3 developers. I am not the line manager of the developers but only the PM/Scrum master.
Problem:
There is a developer on the team (let's call him Tom) who is constantly missing out on his deliverables. Tom, for example, delivers only 70% of the story points that were estimated at Sprint planning. Those were the stories that he personally estimated and volunteered to take on during the sprint planning session.
Analysis:
My analysis is that he is capable of delivering 90-100% of the story points however he has not been engaged enough to work on this.
Evidence - I sit close to him and notice that he spend a large amount of his time doing 'lesiure stuff'. We are in the Tech department of a MNC, there are barely any overtime so the average productive hours is about 7 hours per day (9 hrs minus 2 hrs of breaks). The amount of leisure hours he spent is close to 3 hours per day.
For these 3 hours, he would walk around the office and discuss anime with the other colleagues, or watch downloaded movies, or do online shopping. It is only at the last few hours of the day then he would only sit down and rush to finish the work.
Question:
How do I manage such a person? The department itself has quite a relax working culture so I don't want to be the person who is creating conflicts unnecessarily. However, I am worried that he will spread his working attitude to the other team members who are so far still performing. Tom's coding skills is considering slightly above average and is more experienced than the rest of the team. He can rush his code pretty quickly (completing 70% of the deliverables despite working for only slightly above 50% of his time) so I also don't want to let him go.
Additional info:
We are in the Tech department of an MNC so salary wise it is not as competitive as big Tech companies, but it is at least market median.

A:

I can share a dialog schema that I use to solve issues such as the one that you have.
The schema consists of four essential parts.

Prepare your arguments well.
Agree on the problem definition.
Work on the solution.
Follow-up.

Let me go through these steps one-by-one.
First, your preparation. This is the most important step, so invest time and effort into making sure you are well prepared. A few principles first. 
p1. Your conversation has to be done at the right time. You will want to do it when there are no urgent things to do in the next 60 minutes, when the person is not upset, and when the problem is still actual.
p2. Your conversation has to be fact-based. You have to tell exactly what the commitment of Tom was (and back it up with objective evidence), what was the result, evidence of procrastination and so on. Always rely on concrete facts only. DON'T: "You are always procrastinating". DO: "Yesterday I asked you to finish task N. I noticed that by the end of the day you could not finish your task, and I also saw two times that you could not focus on your work because you were browsing Internet".
p3. Focus on the problem, and never on the person. Your goal is to solve the problem, not to change Tom (which he can only do himself, and only if he wants to).
In preparation focus on the following:
1a. The problem definition. Work on the importance and urgency first. Importance = whether/how it influences the business. (if it does not, then it's not a problem, stop right here). Urgency = what will happen if the problem is not solved now. (if nothing happens, then you will want to use a different method than this one, stop right here and look for another solution).
1b. Empathy. Think of why this is a problem for you (and explain this later on the meeting), and why it is a problem for Tom (important! you will want to attach the problematic situation to Tom's personal goals - career, reputation, respect from team members etc.)
1c. What could be the point of view of Tom. Normally people do not do bad things intentionally. There is likely a good intention in everything. For example, Tom may give too optimistic commitments to make his manager happy? 
Explore other options as well, definitely the following: 

Goal is not clear enough. Does Tom understand that the goal is to consistently deliver to the commitments? Why is it even a goal?
No skill. Does Tom have skill / experience / training to give realistic estimations?
No resources. Does Tom have everything he needs to provide the result?
No will / motivation. Check this one only after you checked other possibilities?

1d. Think of when did it start. Imagine for example that Tom is going through difficult times in the family. Putting more pressure on him may not do any good. You may want to support him instead and agree on how you collaborate in the meantime.
----- START OF THE CONVERSATION -----
Second, agreeing on the problem definition.
Do not take 100% of time for your speech. Instead go for a dialogue. State the situation and a supporting fact, then make a pause, and let Tom respond. Do not go into argument (if you feel you need to, then you did not prepare well - wrap up the conversation and go back to step 1). The first goal of your conversation is to have a mutual agreement on the problem. If there's no agreement, do not go further.
Third, working on the solution.
Depending on the skill / will apply different tactics here (see Situational leadership). Try to have Tom develop and own the solution, help when needed. Make an agreement in the end on what the solution will be.
Fourth, the follow-up.
Provide feedback - both positive (managers often overlook this!) and negative. 
Example of positive = "Thank you, I see that you've been working on this!". 
If something is not going right, you should appeal to the agreement that you've made before. "We had an agreement, is there anything that's not working?"
Good luck, hope you are able to solve your issue!

