Carrier billing deployment tracker: June 2018

Our carrier billing deployment tracker provides a quarterly overview of carrier billing launches by the biggest digital media companies across the world. Where have Facebook, Apple, Google, Spotify, Netflix, Riot Games and Amazon been active recently?

Below is the full overview, see if you can spot the two new launches. Click on the image for a bigger version: Carrier billing deployment tracker: August 2017

Merchant Risk Council: busting myths on carrier billing

Merchant Risk Council: busting myths on carrier billing

Fortumo recently had the pleasure of presenting at MRC Dublin, Europe’s leading event for payment professionals. We are now glad to share with you the content of that presentation, given together with our good partners over at Badoo.

The audience of digital service providers is bigger than ever before. Smartphone ownership globally exceeds 2.5 billion users. But getting these users to make online payments has become more challenging, because proportionally less people have access to traditional online payments.

In the UK, 74% of people own a smartphone while 61% have a credit card. In India, there are 12x less credit card owners than smartphone users (340M). In Russia, the difference is three-fold and in Brazil two-fold. Unlike the UK, emerging economies are seeing rapid digital user base growth but the majority of new users are unable to pay for digital content.

The situation is further complicated by other factors impacting the digital ecosystem in these countries:

  • Lower income which effects both eligibility for bank accounts and the amount of disposable income available
  • Shift towards mobile-only consumption which makes some existing marketing and acquisition channels redundant
  • Lack of access to cheap and fast mobile data which creates a contradiction for how service providers intend their service to be used and actual consumption patterns
  • Significant digital content piracy which has created an expectation in consumers that online content should be free

How then to monetize the growing proportion of 2.5 billion smartphone users who not only lack payment access but are also less prone to spend and engage with online content differently from consumers in Western markets?

One way is through alternative payments, more specifically carrier billing. By today, all of the world’s leading digital companies - Apple, Google, Amazon, Spotify, Netflix and Facebook - have begun to resolve the payments challenge by adopting carrier billing and other localized payment methods.

But many other digital service providers remain skeptical about carrier billing, which is caused by myths related to its past:

  • Commercials are low. When talking about digital content, the standard payouts in most countries to merchants today are above 70%. In case of physical services and goods where volumes are huge, telcos are willing to discuss commercial terms equal to credit cards
  • Technology is outdated. In the past, Premium SMS (PSMS) was the primary technical solution for charging with carrier billing. Today, there is essentially no difference between the technology used by card providers and the server-to-server, token-based charging that direct carrier billing (DCB) supports
  • The user experience is not great. Related to the previous, consumers needed to go through several steps to complete Premium SMS payments. Today, 2-step charging allows service providers to authenticate users once and charge them again without repeated authorizations in the future

Another important aspect to consider is customer data. While GDPR focuses on the EU market, companies are being pushed towards adopting it as a global standard. In this context, collecting the information that is necessary for processing card-based payments can become a headache.

With carrier billing, the issue is mitigated as only the user’s phone number is needed to process transactions. Direct carrier billing has also moved towards tokenization in many markets, which means service providers do not even have to worry about processing, storing or potential leaks of customer information.

Working together with telcos also gives additional opportunities for user acquisition and engagement. As telcos have marketing channels in place through which to reach consumers, partnership with them means the opportunity to run co-marketing campaigns.

We at Fortumo are of course slightly skewed towards the payment method that we provide, so it’s also important to understand that carrier billing is not the only option. In digital gaming, here is how the payment mix breaks down globally:

2017 Digital Gaming Sales

Our co-presenter Badoo recommended merchants not to stick with just the current payment solution (which for most today means credit cards) and not to assume the same approach will work in each country. As an example, they showcased two countries with extremely different user spending behaviour (click for bigger):

Payment method share difference between countries

Here’s what they recommend when thinking about alternative payment methods:

  • Is my current payment solution in the country I’m analysing good enough?
  • How do the monetisation KPIs of this country look like compared to my top markets?
  • Is there a big gap?
  • Is the gap because of the wrong pricing strategy or wrong payment methods?
  • Ask your PSPs to provide insights on the market and check what PSPs other popular service providers from the same category merchants are using
  • Consider your pricing, average transaction value and compare them with the market averages

After deciding which new payment methods to implement, Badoo recommends to test heavily and look at all performance metrics, not just payout:

  • Don’t be afraid of lower payouts of some payment methods, the end result (payout + conversion + total revenue) is what matters
  • A/B test adding a new payment method vs not adding it with your users, and test replacing the new payment method with your current, lowest-performing one
  • If the new payment method works, create healthy competition between your PSPs and keep A/B testing for flow optimisations and payout improvements
  • Don’t underestimate the importance of traffic balance between your key PSPs; it might make sense to accept slightly lower commercials with a PSP in a specific country or with a specific payment method to get the most out of your partnership in other countries

One topic we at Fortumo often debate with merchants is the risk of cannibalization from adding new payment methods - existing users switching to another method, rather than new users starting to make payments. Data shared by Badoo indicates this concern is often overrated. In countries with low card penetration (countries A and B), alternative payments substantially boost revenue while in mature markets (country C), the effect of cannibalization is minimal, especially with smart segmentation of users (click for bigger):

Payment cannibalization of direct carrier billing

Want to explore carrier billing as an additional path to revenue? Get in touch.

Enough about GDPR: what else happened in May?

Enough about GDPR: what else happened in May?

Hope you’ve cleared your inbox from GDPR notifications and have managed to get back to business by now. So what happened in May, other than the new European data regulation?

Stories on digital content services (especially streaming) caught our eye the most. By chance, we published two research materials during the month on the subscription business model that these merchants so depend on. Make sure to check out our subscription retries case study as well as the white paper on user acquisition, verification and churn. In other news, we also shed some light on Latin America with our 42-page report on carrier billing in the region.

But enough about us. For an overview of May, check out the monthly news summary of the biggest stories from the industry below.

General mobile



Digital content


User verification, charging & churn: improving retention with carrier billing

User verification, charging & churn: improving retention with carrier billing

Recently we published a case study explaining how subscription retries help digital merchants increase retention of their users.

However, the topic of getting users to stick around with your service is broader. Users can already drop out during authentication or during the first charge attempt and they may also decide to abandon the service voluntarily. What to do in those cases?

Today we are happy to share with you a new white paper, giving an overview of what both merchants and telcos can do to keep users engaged.

Sounds interesting? Leave your contact details below and find out how carrier billing retention can be improved.

10 steps to increasing your sales in emerging markets

10 steps to increasing your sales in emerging markets

Digital content merchants whose services can also be consumed in emerging markets usually notice that after their content becomes available, traffic to the service is significant but metrics related to sign-ups, conversions and loyalty are far below those of Western countries.

The main cause of this is not adapting to local market specifics and using a global approach to user acquisition, monetization and retention. There is no single “emerging markets strategy” that works for all countries, as the same approach and tactics used in Brazil might completely fail for India. But localisation is the key to success, as recently also highlighted by our good partner iflix.

If you see a large amount of users from emerging markets interested in your service but metrics being worse than in your core markets, consider these 10 ideas to improve your results:

  • Language. English is likely to be the default language of your service, but your value proposition remains unintelligible to many users if that’s the case; review your user base language preferences from Google Analytics and consider translating your service content and advertising materials for the most popular languages other than English
  • Localized content. Besides providing services in a language users can understand, giving them with content that is familiar to them is important to. Recently, the livestreaming record for most concurrent viewers was recently broken in India with cricket, which on a global level can be considered a niche sport
  • Promotional channels. In addition to existing advertising and social media channels, user acquisition in emerging markets can be targeted to locally popular channels, such as WeChat, Line and Kakao; co-marketing partnerships with mobile operators are also an additional way to grow your audience
  • Timing of campaigns. Consumers in emerging markets have less expandable income, which means it makes sense to aim campaigns to periods where users are more willing to spend (immediately after paydays, local holidays like Ramadan, Chinese New Year, Diwali etc.)
  • Data and device capabilities. Smartphone prices (and as a result, their technical capabilities) and mobile data costs differ significantly across regions; reaching users on low-cost devices with less money for mobile data can be done through creating lighter, less data-heavy versions of your service, on the example of Facebook Lite
  • Free alternatives. Piracy remains a significant channel of entertainment, especially in countries where income is lower. It makes sense to think critically about markets with high piracy rates: how realistic is it to compete with free alternatives to your service, and what convenience do you give to the paying users?
  • Pricing and packages. Lower disposable income levels in emerging markets mean users have less money to spend at once. While a $9.99 transaction might seem negligible for a US consumer, it’s significant money for someone who lives on $50 per month. If possible, localise your pricing to account for user income and sell content in smaller chunks (for example, daily and weekly packages). In case of carrier billing, you can check out consumer payment behaviour differences from our data map
  • Free, freemium or premium? The app economy is dominated by the freemium model. But similarly to the issue with piracy, this model may not justify itself in case of lower income markets - most users might actually be happy to never spend any money if you give away too much of the content for free
  • Choice of payment methods. Globally, bank-based payments only account for 31% of all digital gaming transactions. For countries with a low amount of paying users, seek out alternative payment methods that are more available of users: prepaid cards, digital wallets and carrier billing
  • Customer communication channels. Similar to using localised promotional channels, your existing customers can also be reached through means other than traditional newsletter marketing and social networks; for example, SMS-based communication can be used for activating passive users and notifying them of ongoing campaigns

Seeing a lack of growth with your digital content in emerging markets and need additional ideas how to increase your sales? Get in touch.

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