• GDPR requires clear specific consent and active opt-in for using clients’ data.

• Carrier billing is the safest payment method in those terms, as it requires the least amount of data for processing payments.

• Merchants and consumers still need to be careful on where their data ends up.

• Fortumo only uses clients’ data to make payments. The data is always processed to the minimum extent necessary.

A year has passed from implementing GDPR and the upheaval that followed. 2018 was the year of regulations for the digital ecosystem. Both PSD2 and GDPR became active in the European Union. Other countries and regions of the world are following the lead to implement similar rules.

On the first day GDPR was enforced, digital giants like Google and Facebook were hit with lawsuits with claims piling up to billions of dollars. Of course Facebook has been accused of invading their users’ privacy non-stop for over a year now. For example Facebook misused the phone numbers people have provided for two-factor authentication. Basically if the user tried to enhance their security, they weakened their privacy, which is basically a lose lose situation for any user.

But user privacy was a rising concern even before GDPR. The United States people are more afraid of online identity theft than being robbed on the street. Big data breaches have resulted in huge lawsuit settlements for digital merchants. In the most sensitive cases, it can ruin or even end lives.

Most notable example of this comes from the dating segment, the Ashley Madison data breach: it is a site for enabling extramarital affairs. When it’s user data was hacked and leaked, it resulted in thousands of marriages and relationships breaking up, also at least few suicides have been linked to the incident.

The purpose of the GDPR is to make it easier for EU citizens to understand how their data is being used. GDPR requires clear particularized consent and justification for any personal data collected from users.

Specific consent requires a positive opt-in. To be valid, consent must be freely given, specific and informed, and involve some form of unambiguous positive action. The consumer should be asked to actively tick opt-in boxes to confirm using their data in a certain way.

For example this has made the practice of selling or using marketing lists a sketchy business - they can only be used if all the people on the list specifically consented to receive marketing messages.

Carrier billing and user privacy

For merchants using carrier billing, GDPR was actually a positive change as carrier billing is the payment method which requires the least amount of consumer data for processing transactions, while providing simplicity for consumers.

With a card-based transaction, the payment is always linked to the consumer’s real identity. With carrier billing users can choose to remain anonymous. In case of prepaid SIM cards, even the mobile operator does not know the identity of the user.

In light of this, carrier billing can be presented as a payment option to users who are afraid that their identity may be exposed online. Carrier billing is significantly more secure from the consumer perspective, because no personal data is transmitted or stored during the checkout process.

While carrier billing collects much less data, merchants and consumers still need to be aware of their rights. Merchants should do a thorough review of their partners so that the data doesn't end up in the wrong hands.

The gaming market has reached a tipping point with more than half of the total revenue coming from mobile games in 2018. Mobile gaming also continues to be the largest segment maintaining a decade of double-digit growth - this is quite an accomplishment for a whole industry.

With the audience shifted to mobile platforms, game developers should also overlook their payment strategy and what changes need to be made in monetization on mobile platforms. Here are the main trends in the digital ecosystem that explain why direct carrier billing is growing to be more critical than ever for developers.

Trend #1: The majority of new potential gamers are located in mobile-first emerging markets

Smartphone ownership is growing the fastest in emerging markets. While internet adoption is slowing down in Western markets, it is accelerating in growing economies like Malaysia and Indonesia.

How does it impact developers' ability to generate revenue?

Lower income markets are challenging for game developers. Converting users with less disposable income means additional resources need to be invested in localization, including payment methods. Traditional payment methods (credit cards) are simply unsuitable for gamers in emerging economies:

• US & US credit card ownership: approximately 65%
• India & Indonesia credit card ownership: approximately 2%

Where does carrier billing fit in?

Unlike bank cards or mobile wallets, carrier billing is by default available to any mobile phone owner, whether they are playing on their mobile, PC or on a console. Carrier billing is already deployed by a large number of game developers and is among the most popular alternative payment methods for digital gaming (SuperData Research):

• 17% in the Asia Pacific
• 21% in Eastern Europe
• 14% in Western Europe
• 21% in Latin America
• 15% in the Middle East & Africa

Trend #2: Mobile games have overtaken PC and console games

Mobile gaming accounts for more than half of the gaming market by now and shows no signs on slowing down, being the largest market with a decade of double digit growth.

How does it impact developers' ability to generate revenue?

Desktop game developers thus have two options if they wish to profit from mobile platforms: either create a completely new game for mobile or port their existing game. Fortunately, modern smartphones are becoming powerful enough to support lighter versions of traditional PC games as well which means both options are viable.

Where does carrier billing fit in?

As digital content is more and more consumed on the mobile devices, the payment solutions have to keep up with the users’ needs. Credit card checkout flows are inconvenient on mobile devices, negatively impacting conversion rates. With carrier billing, the user only needs to provide their phone number.

Trend #3: More casual spending in gaming

The Game Profitability Index reveals a major shift in the core business model in F2P games. There’s a trend towards a more balanced monetization model as the number of casual gamers is going up. As the game developers can’t rely only on a small number of “whales” for revenue, it’s even more important to make in-app payments and impulse spending as simple as possible.

Below, you can see typical price and revenue distribution for one of our game developers: as you can see, most transactions happen at lower price points:

How does it impact developers' ability to generate revenue?

The trend is positive news for developers but only if they are quick to harness its potential and offer convenient solutions to the casual players. 83% of U.S. PC gamers pick a payment method because of the ease of use.

Where does carrier billing fit in?

Carrier billing is a natural fit for mobile content because transactions can be initiated and completed on the mobile device without any payment cards or entry of additional details. It’s also universally accessible to people in emerging markets and its simplicity and convenience also makes it a popular in Western countries. It’s fast, safe and enables user to pay with just a few clicks.

Trend #4: Stricter regulations for card-based payments

The European Banking Authority started requiring stronger authentication process for card-based payments. The technical standards on strong customer authentication and common and secure communication under the PSD2 were implemented in September 2018.

How does it impact developers' ability to generate revenue?

Due to strong authentication requirements that PSD2 imposes on developers, conversion rates are negatively impacted because the checkout flow with credit cards becomes even longer.

Where does carrier billing fit in?

The regulations don’t apply to carrier billing. This means the simplicity of the process remain unaffected.

Want to learn more about carrier billing and its benefits for game developers? Download our recent special report on the topic below.

Our latest market report gives an overview of the mobile payments landscape in Latin America: Brazil, Mexico, Argentina, Colombia, Peru, Chile and Ecuador.

Latin America has historically been a strong region for carrier billing, thanks to fast adoption smartphones coupled with low access to traditional payment methods such as credit cards. As a result, carrier billing commands either the most popular or second most popular position amongst payment methods for digital gaming transactions in the region.

On the other hand, the region has somewhat lagged behind in deployment of modern direct carrier billing solutions by telcos, as well as the commercial terms offered to merchant. Complicated taxation further makes doing business in the region challenging. Partially due to these reasons, telcos have launched their own offerings in certain segments, such as Vivo with its Android app store in Brazil and Claro with its music streaming service across the entire region.

Despite these challenges, carrier billing should not be overlooked for Latin America by game developers and merchants selling virtual content, as 60%+ of the 640 million strong population owns a smartphone while bank-based payments remain inaccessible for many. Carrier billing solves this issue by allowing any telco customer to charge purchases to their phone bill instead.

In this report, we bring out data on Latin America is aimed at giving an overview of the local digital ecosystem as well as guidance on how to modify your payments strategy to maximize results in the region.

Download the report immediately by filling out the form below.

Nowadays, mobile phones are the lifeline of our society. Having a constant connection and access to different services has already revolutionized many fields and service delivery processes. The public transportation sector is not an exception - mobile solutions offer a single channel for transport providers to connect with their customers. This promises to change the overall travelling experience. Travellers could access real-time information, maps, timetables, share opinions and pay for their trips, but it also changes the way of how providers manage their resources.

Stanford University conducted a study on transportation which reflected the feedback of 19 000 consumers in 19 countries and identified significant challenges faced by the growing urban centers. It turns out that only about half of people use public transportation for their travel. Commuters choose transportation type based on three factors: convenience, reliability and overcrowding. Convenience and reliability are the most important traits for all age groups.

Complexity of the payments is often at the root of many common complaints. If it was easier to pay for public transport, average use would increase by 27%. About half the consumers also complain about needing different tickets for different means of transportation, finding the fare info or needing to pay in cash. These inconveniences are enough to make someone ditch public transport and use their own car.

In addition to inconvenience, there’s also fear included. People mostly pay for transportation with cash or credit cards. But the high risk of credit card fraud makes the consumers wary about giving our card information. A growing amount of people (young audiences and underbanked in emerging markets) do not have access to card based payment methods at all. This means users want and merchants need to implement alternative payment methods.

All in all modern transportation system needs an on the go payment system that matches the consumers’ actual needs and travel patterns. As transportation usually means smaller and casual payments, it should be a universal on the go solution that doesn’t require physical money, hand out sensitive information or intersect the commute into illogical pieces. Mobile payment methods are an answer to all those concerns.

Mobile payments for mobile people

Mobile payments are financial transactions authenticated, authorized and confirmed by using a mobile device (e.g. mobile phones, tablets or smart watches). Technological innovations have also grown the mobile payments market and it keeps on growing. Direct Carrier billing is an online payment method which allows users to make purchases by charging payments to their mobile phone bill.

Direct carrier billing offers a seamless alternative to the card-based payment methods, as the payment device is always with the customer. Some of its strong suites are the following.

• There are 25x more people with access to carrier billing than credit cards. Yes, 25x more. In the emerging markets of Latin America, Central & Eastern Europe, Middle East, Africa and Asia, credit card ownership is usually in the low single digits (2-5%). At the same time, almost everyone has a mobile phone and more than 50% of these phones are smartphones by today.This creates a huge gap between users who are able to access digital content from their mobile devices, but are unable to pay for it. Carrier billing resolves the problem by making online payments available to any phone owner, both prepaid and postpaid.

• Seamless and quicker payment journey for the customer. With carrier billing the customer journey decreases from average 8 steps to only 2 - the customer has to only type in his mobile phone number and confirm the payment compared to inserting the numbers of the credit card.

• People are more responsible with their phone bills than their credit cards. In carrier billing, bad debt either doesn’t occur at all or is below 1% of the transaction volume. In comparison, 7% of credit card users in the US have a balance overdue for more than 90 days and 3% of debts are completely written off by banks.

• There is less risk for fraud. People fear credit card number theft; they don’t fear phone number theft. In the United States, 6.5% credit card owners fall victim to identity theft each year. In these cases, consumers can dispute payments and demand their money back, which also puts the merchant at risk of having their account closed. Every carrier billing purchase requires physical access to the device which means identity theft is significantly more difficult.

How can Fortumo support the transportation ecosystem of 21 century?

In order to perform competently on the market, companies need to challenge their thinking on how to design the transportation ecosystem that works for everyone. There’s no point in betting on the customers patience and willingness to work around a clunky system. On top of that the next generation has grown up using technology and expect the most effortless and seamlessness solutions from all services.

Uncomfortable systems alienate customers and neither the companies or our growing cities can afford that. As direct carrier billing also reduces the operational cost for the provider and brings more customers on board, it really is a simple answer to this complex equation.

Fortumo can help build seamless payment solutions, penetrate new markets quickly and generate growth in both the number of customers and revenue. We provide a flexible one integration hosted direct carrier billing (Hosted DCB) solution that you can start using right away. In addition to web-based direct carrier billing, we also provide a fallback option for paying through text messages, in case the user does not have internet access or uses a feature phone. Fortumo platform also includes messaging API that enables direct communication with the customers and advanced reporting tool for measuring and monitoring the process.

If you’re interested in taking your transportation payments to the next level or want to find out more, get in touch and let’s get you started.

“Good design goes unnoticed”, claims an unsourced quote. Nowhere else is it more true than online payments, where the user experience directly impacts conversion and revenue. The same can be said for bundling: telcos and digital merchants expect bundle partnerships to bring new subscribers to them. If the partnership fails due to service design, nobody is happy. So how to make bundle launches smooth?

In order to convert as many people as possible through bundles, telcos and merchants need to get four steps of the consumer journey right:

• Discover: creating awareness about the offer

• Authentication: identifying consumers to validate their eligibility to participate

• Provisioning: giving consumers access to the service

• Billing & termination: converting the consumer to a paid plan or terminating the offer

Discovery

In order for consumers to participate in a bundle offer, they first need to know that such an offer exists. We have covered what channels telcos use for promotional campaigns in a previous blog post. We recommend merchants to request a written marketing plan from telcos with a commitment on the budget that will be spent on the promotion.

The second part of bundle discovery is where the offer is activated. The standard approach is to direct users to a (mobile) landing page where the offer details are provided, and the offer can be activated. However, additional channels can also be used depending on the telco’s subscriber base and what they are comfortable and familiar with. This means SMS, USSD, IVR based solutions can complement web channels.

Another aspect to consider is that telco employees (customer care agents, repairmen, store employees) and resellers can also be involved in marketing the offer. In such cases, it doesn’t make sense for these employees to direct the consumers to a website; instead, there should be a process in place for how the employee can activate the bundle for the subscriber after receiving their consent.

Authentication and eligibility check

Once the consumer has the bundle offer in front of them, they somehow need to identify themselves to the telco to prove that they are eligible for it. For web-based scenarios, the following authentication methods can be used:

• If the user is on a mobile device, telcos can detect their phone number automatically (something called header enrichment)

• If header enrichment cannot be used, the consumer instead needs to enter their phone number, after which they receive a PIN code with a text message, which they then enter onto the website

• In case the bundle offers are presented in an environment where the subscriber’s identity is already known (e.g. telco self-service portal), their existing identity can be used instead

Once the subscriber is identified, it’s possible to validate whether they are actually eligible to participate in the offer. There are a number of reasons why this may not be the case: they already have activated the bundle offer, they are not a subscriber of the telco etc. If they are eligible, they are directed to the service provider to connect their telco and digital service accounts.

Provisioning

The goal of the next step is to link up the subscriber’s telco account and their digital service account. For this, the subscriber either needs to create a new account or sign in to their existing one.

As with activation channels (SMS, USSD, IVR), alternative provisioning solutions can also be considered. For example, if the goal of the digital service provider is to increase their app installs and have subscribers activate the offer inside the mobile app, a text message with a link to the app, combined with a unique PIN code for activating the bundle offer, can be used instead.

Once the subscriber has successfully registered or logged in to the digital service account, the two identities can now be coupled up. This means the digital merchant can give users access to the content that was promised, and in the future, it becomes possible to check the status of the bundle and whether the subscriber is still eligible for it.

Billing & termination

Eventually, merchants and telcos expect to make money out of the bundle partnership, so the last component of payments is the most critical in the consumer journey. The standard approach for converting free trials from bundle partnerships to paying subscribers is through carrier billing.

While merchants can also use card-based payments (e.g. collecting the subscriber’s credit card details during the provisioning process or once the trial is about to expire), this adds substantial friction to the flow and makes the partnership unattractive for telcos as they will not receive any revenue from card-based payments.

Carrier billing provides a seamless transition from free to paid accounts as the same identity used for activating the bundle offer can also be used to start charging the subscriber for paid access, without additional steps required by the subscriber.

If carrier billing is used, the bundle partners need to sort out who takes care of which parts of the process: who triggers charges to the subscriber’s account, who manages the notifications, what happens if the user’s phone number changes, who moves the subscriber from the free trial to paid plan, how trials or subscriptions can be terminated by the companies themselves or the consumers.

In conclusion…

Telco bundles have shown to be an effective marketing tool for digital merchants to grow their audience and revenue: music streaming services are working together with telcos in over 60 countries and video streaming services in over 80 countries.

In the future, the segments which telcos work with is likely to grow: any digital service with a subscription-based model is suitable for bundling. The opportunities are substantial: productivity software bundled together with telco B2B packages, game passes for the younger audience or monthly bus tickets for the commuters.

What’s important is that both partners committing to the bundle deal think through how the discovery, authentication, provisioning, billing and termination processes are going to like from the consumer perspective. If any key technical features are not supported once a bundle deal is already signed, the entire process can come to a standstill. If corners are cut and easier solutions used that impair the consumer journey, the partnership can lead to lackluster results.

For merchants and telcos alike, Fortumo provides a scalable solution through our Trident Bundling Platform. Our Bundling API takes care of the missing components, whether they are on side of the merchant and the telco, and provides access to our global telco network for digital merchants looking for new channels of growth. If interested, get in touch.