June is over. What happened?

June is over. What happened?

July is here and we are now beginning to enter the slow news season. Fortunately for us, the digital industry does not stop which means we still have some stories to share with you.

From Fortumo’s side, we published our Western Europe market report in June and also shed some more light on how bundling is coming an increasingly popular way for digital companies to grow. Check it out.

Here’s what caught our eye in June:

General mobile



Digital content


Carrier billing in Western Europe: 2018 market report by Fortumo

Carrier billing in Western Europe: 2018 market report by Fortumo

This market report gives an overview of the mobile payments landscape of Western Europe. It covers 12 countries where Fortumo has coverage: Germany, France, United Kingdom, Italy, Spain, Netherlands, Belgium, Greece, Portugal, Austria, Switzerland and Ireland.

Traditional bank-based payment methods, such as credit cards and digital wallets, are widely available in Western Europe. So why is carrier billing relevant and the 3rd most popular payment method for digital content in the region, after bank cards and digital wallets?

Even though consumers have other payment methods to choose from, carrier billing is the preferred choice due to its simplicity and security. Consumers do not need to sign into additional accounts, payments are completed in a few clicks and no personal data is shared online. The last point is especially relevant in the context of new privacy regulations (GDPR).

In this market report, you will find information on:

  • Demographic and digital ecosystem data on each country
  • User spending behaviour with carrier billing
  • Overview of leading digital merchants active in the region

Leave your contact details below and access the report on Western Europe immediately!

Is it faster to launch carrier billing directly or through a partner?

Is it faster to launch carrier billing directly or through a partner?

Digital service providers usually start looking at alternative payment methods when growth with their existing payments setup is slowing down. This is usually the result of reaching a saturation point in their core markets, conversion rates not being satisfactory or after launching in new countries where KPIs are smaller than expected.

In these cases, carrier billing is usually the first choice, illustrated by the fact that it’s the only alternative payment method used by all the world’s leading digital companies, including Apple, Google, Spotify and Netflix. Carrier billing is the only payment method available by default to any phone owner which requires no additional information from the consumer. This leads to wider coverage, shorter checkout flows and eventually, more revenue.

With the benefits quite clear, how to go about launching it? The logical approach would be for the operations team to pick out additional payment methods to integrate and the in-house engineering team to launch them. After all, integrating Braintree can be done in 30 minutes so how difficult can carrier billing be?

The reason why companies like Fortumo exist is that doing launching telcos on your own is not scalable. One integration with credit card processing companies gives access to all bank card owners, but integrating one telco gives access only to the subscriber of that telco. Most countries have 3-4 telcos which means 3-4 integrations to achieve full market coverage.

For service providers focusing on one country, it can make sense to integrate directly with the local telcos and cut out middlemen. It doesn’t hurt to ask, but if you are planning on launching carrier billing on your own, here are a few things you should expect.

Prospection, negotiation and agreements

While relevant people at payment processing companies can be easily reached through their website and most also provide self-service set-up, with telcos each carrier billing launch is reviewed on a case-by-case basis.

With bigger telcos, different service provider segments (such as gaming, music and video) are often managed by different people and carrier billing is also managed by different teams (VAS, payments, marketing, business development etc.) so finding the right person to talk to can be tricky. LinkedIn will be your friend for finding the suitable contacts and reaching out to them.

When you initiate discussions, you may find yourself in a different role than you're used to. Credit card companies are vendors who offer a service to you, but in case of telcos, you may find the power role shifting and yourself in the vendor role who is being checked for eligibility.

How big is the estimated volume you plan to achieve through carrier billing? What is the value of the service to subscribers? How does your service help telcos grow their business? What sort of marketing do you plan to conduct for your service? Be prepared to answer these questions or better yet, anticipate them and put together a telco-focused deck about your service.

Once you do establish discussions, prepare to be patient. Telco organizations are huge which means decisions take a longer compared to what could be considered standard in the digital industry. At the end of the post, we have estimated negotiations to be the most time-consuming part of launching partnerships, as the initially proposed contract will likely be very different from what you've seen from other payment processing companies.

Integrations and on-boarding

If you successfully sign with a telco for carrier billing, next comes the part of connecting to their platform. Getting telco connections up and running needs to be done one-by-one. There are a few exceptions such as large telco groups with a single platform, but even with them subsidiaries in some markets operate their own platforms. Initiatives by multiple telcos to build a unified platform for carrier billing in the past have failed as they add more complexity instead of simplifying the process.

The vast majority of telcos will require a separate technical integration due to custom-built platforms. This means your payment engine will need to support multiple versions of platforms and APIs. Beside the payment processing part, make sure to also ask about what kind of analytics and reporting capabilities are available.

Your tech team will need to study the integration documentation of each telco separately and they will likely have additional questions, especially if it’s their first carrier billing integration. Once the integration itself is complete, UAT will also have to be conducted together with the mobile operator to make sure users are being successfully charged and receiving the access to the content they’ve paid for.

User checkout flows

In addition to integrating the telco back-end, the checkout flow needs to be displayed to your users as well. For most countries, the merchant is responsible for creating the checkout flow. Be cautious of telco-hosted flows as they are in some cases more complex than even card-based payment flows. While there are some standard requirements that all telcos usually ask for to be included, each telco is also likely to have some custom demands due to internal policies or country-specific regulations.

These can be related to how pricing is displayed, what kind of legal disclaimers have to be included, whether local language needs to be used, which customer support contacts to provide etc. Generally it’s a good idea to share mockups of how the payment flow is going to look like with the telco before starting actual development of the user interface.

Operational activities

In order to keep carrier billing up and running after launch, your team will have to allocate some time to operational activities as well. These processes should be reviewed with the telcos during the negotiation phase in order to have clarity on who is responsible for which activities. Here are the key things to check for:

  • What additional activities are related to changing the existing service setup or launching new services in the future?
  • What sort of fraud prevention measures are in place? Who is responsible for monitoring the payment traffic for any suspicious activity and what happens if it does occur?
  • In case of consumer payment issues, who handles customer support? What should the customer support SLA-s look like? How are refunds done, are they automated or is there a manual process in place?
  • How is platform maintenance communicated and done? Who are the technical and business contacts on both sides in case of escalations?
  • How does the settlement process look like? Who is responsible for paying taxes?

The answer for most questions is: the service provider will be the one required to manage the activities on a daily basis.

How much time does it take in total?

Based on our experience of launching more than 350 telcos for our merchants, here's an estimate on the average amount of time you should expect your very first direct telco launch to take:

  • Prospection and negotiations: 4-8 weeks
  • Agreement review and signing: 6-8 weeks
  • Integration, consumer UX, testing: 4-6 weeks
  • Daily operations: 2 hours per telco per week

From a people perspective and to ensure rapid launches, the minimum size of the carrier billing team should be:

  • A business development person for prospection, negotiation and agreements
  • A technical project manager to administer the integration process
  • 2-3 back-end developers for payments integration
  • A front-end developer for the consumer UX
  • An accountant for the reporting and settlements process
  • An operations specialist taking care of daily matters (fraud, customer support, refunds)

In total, you should expect your first carrier billing launch to take approximately 3-5 months. If that seems slow, the good news is merchants working with Fortumo do not have to deal with the majority of the activities listed. We are connected to most of the worlds telcos and the team working on operational matters is already in place. This means most merchants are able to launch carrier billing through Fortumo in less than 2 weeks, with global coverage and through a single integration.

If you are looking for new routes to growth and to expand your payment reach with the most widely available payment method as quickly as possible, get in touch.

Flexible payment options will help drive the next wave of game livestreaming growth

Flexible payment options will help drive the next wave of game livestreaming growth

Note: This is a guest post by Carter Rogers, Insights Team Manager at SuperData Research. SuperData Research is the world’s leading provider of market intelligence. Through proprietary data partnerships SuperData collects point-of-sale and event data from publishers, developers, and payment service providers. This allows it to base analyses on the monthly spending of over 160 million unique, paying digital gamers, worldwide.

The concept of watching others play video games is no longer confined to the periphery of quirky internet behavior. Amazon put game livestreaming on the map when it acquired game livestreaming site Twitch for $970M in 2014. Gaming video content (GVC), which refers to online videos and live streams related to all things gaming, has only grown from there.

In March 2018, streamer Tyler “Ninja” Blevins and rapper Drake made headlines when they exceeded 600K concurrent viewers on Twitch while playing Fortnite: Battle Royale. While the market for GVC continues to grow (up 9% from last year), platforms, broadcasters, and related businesses cannot rest on their laurels and assume the growth of the games industry itself will continue to propel GVC forward. Instead, platforms and content creators need to improve their monetization of a growing audience that is spending a significant number of their leisure hours watching other people play.

Flexible payment options will help drive the next wave of game livestreaming growth

GVC already has a massive footprint. This year, it is on track to earn $4.6B in revenue while attracting 843M viewers. Ads and sponsorships are set to make up roughly two thirds of GVC revenue this year while consumer spending on subscriptions and donations to content creators makes up the rest. What’s impressive is that GVC viewers will pay well over $1.0B to content creators this year not because they have to, but because they want to. Voluntary spending may have benefits like an on-air shoutout or access to special chat “emotes” but the core content is generally available for free.

Viewer donations to creators are the lifeblood of the GVC industry and companies that facilitate these payments stand to benefit. Donations and subscriptions are a viable monetization model for a huge variety of content because streamers can “microtarget” an audience that pays them directly instead of relying solely on ad revenue. They also don’t need to attract a gargantuan audience to make a decent living since their income will come from individual donors. What’s more, viewers are likely to show their appreciation for content that seems to be tailored specifically for them. Globally, 58% of livestream viewers (among those who are also game consumers) regularly donate or pay for subscriptions to content creators.

Viewers in mature markets like North America and Western Europe don’t mind spending a part of their disposable income to support their favorite live streamers, unlike those in emerging markets. That doesn’t mean it’s going to stay this way: From 2017 to 2020, GVC viewership numbers will grow by 16% in North America and 17% in Europe. In contrast, viewership in Asia and Latin America will grow by 23% and 26%, respectively, during the same period. It’s not hard to imagine a shift in consumer behavior once these markets have their own local GVC celebrities.

As GVC expands into new markets, video platforms and third party donation portals will need to look beyond incumbent payment methods like traditional eWallets and credit cards. Limited payment infrastructure already stunts the growth of digital games in many emerging markets. For example, in South Africa, 28% of game consumers regularly are unable to pay with their preferred payment method. In contrast, only 7% of consumers in the US face this issue.

The next wave of superstar streamers from emerging markets will favor the video platforms and donation platforms that make it easy for their fans to contribute small amounts to show their appreciation. Businesses that make payments as accessible as possible will be poised to reap rewards as GVC expands.

How does taxation impact digital content business?

How does taxation impact digital content business?

During the last months stories about taxation arguments between the EU and US have been hitting the headlines. While tariffs on steel and aluminium are unlikely to impact merchants selling digital content, it is nevertheless a good time to cover the topic from an angle relevant to digital service providers operating in international environments.

Most digital service providers start out with a simple approach to payments. Either they choose a credit card processing company to work with or the payments and distribution are delegated to a platform (apps hosted on the App Store or Google Play).

This approach is the simplest, as everything related to taxation is managed by the partner who acts as the Merchant of Record. As companies grow, they have more resources to expand their payment capabilities and optimize things on their own which means that usually the payment processing company becomes an Agent (technical provider) and the Merchant of Record is the digital provider themselves.

If you’re a company going through that transition, here’s what you should keep in mind:

  • Always do your own research: Taxation is different in each country and depends also on the country that you are located in (e.g. some countries have tax treaties), as well as the payment methods used and content sold; when entering a new market it makes sense to review what to expect with a tax consultant or contact the local authorities; PwC’s overview also provides a good starting point
  • Different countries, different taxes: Beside the standard value-added tax (VAT) that applies in almost all countries (at different rates), service providers also need to keep an eye out on business, sales, digital and telecommunication, excise and withholding taxes. While most taxes impact the service provider, some countries can also have consumption taxes in place which impact the price of the service (and how it should be displayed) to the consumer. Service providers selling content in Europe can simplify their lives through a Merchant One-Stop Shop
  • Digital content taxation is on the rise: As global companies without local presence dominate the digital entertainment industry, a growing amount of governments are looking to tax the industry, including Russia, India, Argentina, Brazil and Italy
  • Local entities simplify taxation: Opening up a local subsidiary involves paperwork and takes time. However, if you have a strong geographic focus on one region, certain countries are suitable for creating a “hub” in the area, creating more favourable tax conditions and also increase the likelihood of companies in the region being able to do business with you. Such countries include Singapore for South-East Asia the United Arab Emirates for the MENA region.

In any case, carrier billing supports both models, whether you want to delegate taxation to partners like Fortumo or handle them on your own. If you are interested in expanding your payments reach through the most widely available alternative payment method globally, get in touch.

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