Telemedia Month June 2014

Issue 51 • JUN 2014

Bill Mobile set to make telemedia billing a viable option for all

News

THIS MONTH...

• World Cup to yield £38m mobile spending bonanza in UK 3 • 40% of online and mobile ads fail to reach target audience

4 • Awareness and use of contactless NFC payments starts to grow 5 • 96% of worlds mobile media users are using apps, says MEF 6 • Video callers opt for MNOs despite boom in OTT services 7 • Ringo brings cheap international calling to smartphones with app 8 • Italy Europe’s direct carrier biling powerhouse, study finds 8

Analysis EDITORIAL Time to shout about payments The launch this week of Bill Mobile should be the starting gun for a telemedia boom – but there needs to be more ambition to push the tech out there into the wider world, argues Paul Skeldon

9 OPINION The good, the bad and the ugly Alex Kinch, CEO of Ziron, continues his paen to SMS with a look at some of the key developments around SMS this month – and some of it ain’t pretty 10

TELEMEDIA BILLING HAS entered the burgeoning mobile payments market with a simple and cost effective carrier billing based payment solution that finally makes using the phone bill to pay for stuff attractive to both consumers and merchants – with out payment rates that are finally competitive.

BillMobile (www.billmobile.com) – run by ImpulsePay – doesn’t require consumers to download an app, meaning any UK mobile phone owner can pay for goods and services with a phone number. While for merchants integration is quick and easy and the transaction fees are surprisingly affordable.

The transaction fees for BillMobile of only 9.9% mean that adding mobile to the checkout process is now a genuine option for merchants. The fees for mobile payments are now comparable to the fees charged for credit card or PayPal transactions and have moved a long way from the 30% transaction fee charged by app stores.

BillMobile is quick and easy for consumers to use – they just need their mobile phone number. It requires no new behaviour to be learnt, or apps to download. And on top of that it can be up 7.5 times quicker than paying with a credit card. By offering BillMobile at the checkout, merchants dramatically increase the number of potential online customers.

“Charge to Mobile is a new way to buy digital content with your mobile -

continued page 3>>>

ANALYSIS App, App and away PPP wants to regulate carrier billing for apps stores and has started a pilot.

Paul Skeldon takes a look at how this is because the two things fit together perfectly – as shown by what Bango is up to in the developing world 11 ANALYSIS Charging with convenience The key to making mobile payments for real world goods work for consumers is to make it easy and convenient to use.

Paul Skeldon takes a look at what is on the table currently and how it will shape telemedia payment thinking 12

DIRECTORY

The leading industry directory of services 14

Latest news at www.telemedia-news.com Catch our blog at www.telemedia360.blogspot.com

NEWS #SPORT World Cup set to yield £38m mobile bonanza in UK THE IMPENDING World Cup Finals in Brazil will see some £38 million being spent through mobile in the UK, if England makes it to the second stage, according to research from VoucherCodes.co.uk. If the team make it to the finals, that number is expected to jump to £79 million.

So £38million it is then.

Internet retailers are also expected to do well during the World Cup as fans take advantage of home delivery to avoid missing any of the action. In fact, fans are set to spend an additional £174.71 million online by the second stage, increasing by 110% to £367.49 million if England make the final. Mobile sales are expected to make up 21.5% of online sales.

Combined, mobile sales will make up 21.5 per cent of the predicted £38m which will be spent online during the tournament if England make the top 16 (£79m if they make the final), or 2.9 per cent of the total £1.3bn (£2.6bn if they make the final). VoucherCodes estimates that every goal scored by the England team is worth £198.5m for retailers and the leisure industry.

But this is part of a much larger spend

around the festival of football (carnival of kicking?). According to vouchercodes, the upcoming tournament will trigger a £1.3bn spending frenzy if England make it through to the second round.

Over 23 million fans will splash out on everything from new TVs, sportswear and drinks to celebrate according to an independent report by VoucherCodes. co.uk, which also reveals happy fans will blow a staggering £2.58bn at shops, pubs and restaurants should the Three Lions make it all the way to the final.

Every goal scored by the England team will trigger a £198.5m spending frenzy in shops, pubs and clubs as fans buy sports memorabilia and food and drink to get into the spirit and cheer on the national team. With just 5,000 people expected to fly out to Brazil to watch their team, £165.3m of this will be spent in the UK, as fans celebrate on home soil.

The biggest spend will be on food and drink to enjoy at home, as people get into the spirit with garden parties and barbeques during the evening matches. £508m is set to be spent if England emerges from the group stage, with

£280m of this to be splurged on drinks, as footie fans stock up on refreshments to toast their team’s success. This figure will rise to over £1bn (£1,041m) should England make it to the final.

“As excitement for the 2014 FIFA World Cup reaches fever pitch, UK retailers can expect to see a huge boost to sales,” says Claire Davenport, Managing Director, VoucherCodes.co.uk. “More than 23 million fans will celebrate England’s successes by heading to the pub, upgrading to the latest TV, or buying England memorabilia.

Pubs, clubs and shops are putting some great offers on for footie fans to take advantage of.”

>>>from page 1 Bill Mobile launch everything from apps, games, music and videos to films, ebooks and many more. It’s fast, easy and safe,” said Danny Barclay, Head of Commerce Sales at Telefonica Digital.

“Mobile is the most widely available form of online payment and consumers love it, so it makes sense for merchants to add a mobile option at checkout,” said Chris Newell, CEO of BillMobile. “For online retailers to avoid checkout abandonment they need to make it as easy as possible for customers to pay, and BillMobile is very easy.”

For sectors as varied as content publishing through to car parking, paying by mobile is a smooth and painless process that makes it easier for consumers to buy. With the new, lower transaction fees of only 9.9% that BillMobile offers (compared to 25% or higher previously), combined with the simplicity of the payment

process for consumers, mobile payments can be expected to grow into more and more sectors as merchants see the value that it offers them.

“The UK’s mobile operators have worked really hard to make this happen,” continues Newell. “That’s because they see the long-term opportunities that charge to mobile provides. Consumers want to use it and now merchants can offer it knowing that the transaction fees are the lowest they’ve ever been.”

Running on the Payforit technology and launched by Payforit specialists ImpulsePay, BillMobile officially launched on June 1st with advertising in The Sunday Times. Offering the lowest ever transaction fees for charge to mobile payments, more marketing will follow as BillMobile is expected to be an option on almost every online checkout.

Easy and cheap BillMobile payments require a maximum of 16 keystrokes; many credit card payments require up to 120 keystrokes.

It is also affordable: • A £2 payment costs 26.8p on PayPal, 60p on App Store and 19.8p on Bill Mobile • A £3 payment costs 30.2p on PayPal, 90p on App Store and 29.7p on Bill Mobile • A £5 payment costs 37p on PayPal, £1.50 on App Store and 49.5p on Bill Mobile

NEWS #ADVERTISING More than 40% European online ads fail to reach their intended audience SOME 41% OF online ad impressions are not reaching their intended audience across Europe’s four biggest online ad markets - UK, Germany, France and Italy – according to Nielsen, a leading global provider of information and insights into what consumers watch and buy.

Comparing countries, more online ad impressions reach the advertiser’s intended audience in the UK than in the other measured markets, but campaigns in the UK tend to have slightly broader intended audiences. However, wastage remains high among all these countries.

The findings are based on a measure of more than 1,000 campaigns across Europe’s four biggest economies, which together account for more than two thirds of European online ad spend.

They are collected using Nielsen Online Campaign Ratings (OCR) - a highly accurate, continuous data collection tool that helps the media

industry identify and measure realtime audience exposure to online ad campaigns. The efficiency of a campaign is determined by the proportion of impressions reaching the advertiser’s intended demographic, based on age and gender.

Nielsen European managing director of digital, David Gosen explains: “With consumers spending more time online, the investment in online advertising has naturally grown, and there is now an increased expectation for online advertisers to fully understand the efficiency of their campaigns. But 41% of online ad spend across Europe is not being seen by its intended audience. If online advertisers had better visibility of the ‘reach’ of their campaigns, while their ads are still running, they could optimise placements and performance, and dramatically reduce wastage.”

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Gosen continues: “Wastage is of course inevitable across all media, but the greatest opportunities for advertisers, publishers and agencies to reduce it exist online. The tighter targeting that is inherently achievable through online advertising, combined with real-time insights and optimisation through Online Campaign Ratings, means that far greater accuracy and efficiency is possible.”

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NEWS #PAYMENTS Awareness and use of NFC starts to boom ahead of big push later this year THE NUMBER of consumers making contactless payments via their mobile will reach 300 million globally by 2017, up from just over 110 million last year as many markets find that they are being seeded with contactless cards for a push into mobile NFC payments later this year, finds a study by Juniper Research.

This is backed up by figures from eDigitalResearch, which finds that consumer awareness of contactless and NFC is now accelerating. More than half (58%) of consumers now report seeing a contactless payment point or symbol, an increase from just 15% in 2012, its study finds. It also finds that 55% of respondents now own some sort of contactless payment card, 38% of whom have used the technology to make a payment. 1 in 10 (9%) of the UK population now have access to an NFC enabled smartphone device – 49% of whom have made a contactless mobile payment.

Of those that are yet to make a payment using a contactless card, eDigitalResearch finds that 57% expect to do so within the next year – and the same can be said for mobile. With that in mind, it’s not awareness anymore that banks and technology providers need to be working on, but opening up the technology so that more can take advantage of the benefits that contactless payments have to offer.

Interested parties must also challenge people’s perceptions of the technology, as well as alter consumer behavior, warns eDigitalResearch’s findings. Almost three quarters (71%) of the 43% who said that they’re not interested in using contactless cards felt that the technology is just not necessary.

According to Juniper this is being met to some degree by a marked increases in the roll out of contactless POS (Point of Sale) terminals, with leading vendors VeriFone

Experts of Premium Rate Numbers in Sweden, Norway and Finland. www.viatel.se sales@viatel.se +46 8 50 60 10 00

and Ingenico both now shipping the majority of their terminals with NFC (Near Field Communications) as standard.

However, the report cautioned that stakeholders needed to step up efforts to raise consumer awareness about mobile contactless payments and to educate retailers about the contactless value proposition.

According to Juniper report author Dr Windsor Holden: “Contactless is largely being sold to retailers on the basis of faster throughput at the POS. The other critical opportunities offered by contactless -- such as consumer engagement and product upselling -- are much lower on their radar.”

Meanwhile, the report argued that the lack of a coherent business model had constrained NFC rollouts, with the cost to deploy a mobile payment card more than to issue a plastic card.

NEWS #MEDIA 96% of the world’s mobile media users are downloading apps, says global MEF research APPS ARE ALL but ubiquitous among mobile media users, with 96% having used any type of app on their device in the last six months worldwide regardless of age and gender – and it even holds true for feature phone users – finds a study of 10,000 mobile consumers in 13 countries carried out by MEF. Gaming and social media apps remain the most popular category, with 54% and 46% of mobile media users respectively having used one in the last six months. Music (41%) and photo & video (37%) apps are also well-liked by consumers. Book apps are the least popular, with just 16% having used one.

In growth markets the figures for gaming vary. Mexico consumers are avid gamers at 62% but in Kenya only 36% of users download games, preferring music (45%) and social networking (42%) applications instead.

Social networking apps usage also varies – Brazil leads the way at 62%, outperforming users in the UK and US (55%). However, of the developed markets, China does not match this trend with only 35% downloading social apps.

Lifestyle and tools apps vary from market to market with highest engagement in developed mobile markets (US, UK, China). For example, 32% of users in this block of countries have downloaded a navigation or travel app in the last six months whereas in other regions studied it was just 11-13%. When it comes to weather apps, 44% of mobile consumers in developed countries have used one; elsewhere it is between just 9-17%.

India leads the way in Education apps with 26% of users actively engaged in Mobile Education.

When you look at the data by operating system, Windows phone

owners are the most enthusiastic users of apps, across every category except books in terms of average number of apps downloaded per user. There is little to separate iPhone and Android phone owners when it comes to app use though iOS users are more likely to enjoy gaming (60%) than any other category (music and social networking are the next most popular categories with 40%).

Rimma Perelmuter, CEO of MEF, explains: “Apps are an essential part of consumers’ day-to-day life, regardless of gender, age, geography or devicetype. While games and social networks remain dominant, MEF’s App Economy report highlights growth across all categories and engagement in growth markets that will continue to drive adoption worldwide to deliver new opportunities across new verticals such as money, education, health and productivity.”

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NEWS #NETWORKS Consumers opt for mobile operators for video calling, despite OTT growth DESPITE THE GROWING adoption of OTT apps capable of providing videocalling, a multi-national study reveals that consumers think mobile operator video-calling services could be superior to those provided by OTT players. Consumers believe their mobile service provider is capable of delivering a video-calling service that better meets their needs.

A YouGov survey commissioned by OpenCloud, the telecoms software innovator, canvassed network customers across the UK, US, Germany and France. Almost a third (32%) of the adult population covered by the survey use OTT voice or video-calling services on any device with 18% using their mobile for such apps. Of those currently using video-calling apps, 38% expect their use of video-calling to increase over the next year.

All respondents, regardless of whether they use OTT video-calling services cur-

rently or not, were asked how interested they would be in video-calling services from their operator. 37% of respondents showed significant interest and, of those, 74% would be interested in an operator provided app while 89% would be interested in a ”native” experience similar to making a regular voice call (65% would be happy either way).

Interestingly, of those already using OTT voice and/or video-calling services, more than half (60%) would be interested in an operator provider service, with marginal preference for a “native” calling experience (62%) rather than an operator provided app (58%).

The survey yielded some surprising results that should give operators further confidence: consumers rate operators as more capable than OTT service providers to provide video-calling services on each of four criteria: Ease of use; Number of

contacts reachable; Quality of video; and use of the service on multiple devices.

When asked “who is capable of offering better services” for each criterion, consumers picked mobile operators on average 50% more frequently than OTT service providers.

In strongest support of mobile operators, and least surprising, was “number of contacts reachable” where every one vote for OTT was matched by 2.3 for the operator. This reflects the limitations imposed by many OTT providers where contacts are only among closed user groups and subscribers pay more if they wish to expand their contact base.

More surprising was consumers’ faith in operators out-performing OTT apps on “ease of use”. However, this is significant because the survey shows that 63% of consumers rate “ease of use” as a highly important attribute of video-calling services.

NEWS #TELECOMS Ringo app brings cheap international calling to smartphones RINGO, A NEW international calling app for iOS, Android and Windows Phone devices, has been launched to make international calls simple and inexpensive. It offers landline call quality at a fraction of the cost when compared to traditional long distance calling and VoIP services.

Ringo calls do not use the internet, wifi or data. Making a call using the Ringo app is identical to making a call through a wireless carrier in terms of quality, and yet costs lower than even popular calling apps, and significantly lower – up to a tenth of the cost – than traditional carrier prices . With over $95 billion spent per-year on international calling, Ringo could mean huge cost savings across the globe.

The Ringo app routes calls in a similar fashion to a regular carrier, without using the Internet, and the origination number continues to appear as the caller ID. This means calls are not affected by fluctuations in internet connectivity that often lead to audio

delays, loss of quality and dropped calls.

Additionally, Ringo will launch with an 80% discount on calling rates to United States mobile phones. Ringo will offer an unprecedented rate of $0.003 per minute to US mobile phones, which is 90% cheaper than popular calling apps.

“The US receives over 35 billion voice minutes per year, amounting to billions of dollars spent annually” said Bhavin Turakhia, CEO of Ringo. “US calls made through Ringo could potentially save over a billion dollars for consumers without compromising the call quality.”

At launch, Ringo will be available to users in the following 16 countries, who can use Ringo to make international calls to any destination worldwide at an affordable cost: Australia, Belgium, Brazil, Canada, Germany, Hong Kong, Italy, Japan, Mexico, Netherlands, Poland, Singapore, Spain, Switzerland, United Kingdom and the United States.

#PAYMENTS Italy one of most developed direct carrier billing countries, finds study ITALY IS ONE of the leading European markets for carrier billing services, with a massive mobile penetration of 133.5% and relatively low credit card use, suggests the latest market study by DIMOCO. Currently, web content up to €15 can be billed via DIMOCO one-clickpayment.

“With a credit card penetration rate of only 30.5%, we find that in Italy, mobile payment is the only way to bill digital content across the market,” says Gerald Tauchner, DIMOCO CEO, adding: “with our two available products content providers get the maximum reach to bill their consumers via all available mobileand mobile virtual network operators”.

With its mobile operator payment products, DIMOCO offers companies the possibility to bill their digital content directly via direct carrier billing; a

service that, compared with traditional billing methods such as Premium-SMS, provides a much higher degree of flexibility and, hence, has become a seriously competitive payment option in every online check-out process, appealing for consumer groups that cannot be reached with conventional payment methods such as credit cards.

DIMOCO, by providing 100% coverage through direct carrier billing, dramatically increases the sales potential of every online merchant in Italy.

According to the business customer needs’ DIMOCO offers two direct carrier billing products in Italy. One-off & subscription transactions can be billed up to an amount of €15 for web content, and subscription services up to €6.10 for mobile and web content, depending on the DIMOCO product used.

OPINION

FROM THE EDITOR

Stop whispering; start shouting about payments THE LAUNCH THIS WEEK Bill Mobile marks a red letter day in the world of telemedia: finally someone has been brave enough to line up all the hurdles to carrier billing for mainstream services, trample over them a bit and create a service that actually looks attractive to merchants. Go telemedia!

Soft launched at our mPayment Summit in London on 15 May, Bill Mobile offers those with non-real world goods a competitive payment tool built around Payforit that can be used for app store and in-app purchases, the purchase of digital goods on mobile and even to pay for things like car parks.

As you can see from our lead story this month, the pricing is competitive compared to the Apple App Store and even PayPal – so it should appeal to merchants.

But only if they ever get to hear about it.

The most telling thing to come out of the mPayment Summit in May was from a retailer in the audience (a man known to all who were there simply as ‘Ken”): he made the very valid point that, outside of that conference room, no-one knew anything about any of this.

This was seconded by another non-industry bod in the audience – who wants his identity protected – who went further and accused the great and the good of the carrier billing payment world – especially the operators on the panel – of “showing a stunning lack of ambition” with their payment tools.

It’s nice when I am proved right.

I have been saying this here in this publication for years. What you guys have is gold in the modern mobile centric world. Consumers will be itching for simple, one click payment mechanisms on their phones for everything from in game purchases to buying a pint to paying for their weekly shop and beyond.

There is a battle royal going on out there as to who is going to take this market and the answer, right now, is no-one. Alright there are several bank backed schemes that retailers are keen on, but you lot have the ability to help with simple one click payments that drop the charge onto the bill and its done.

But no one knows you can do this. I am hoping that the launch of Bill Mobile may change this, but so far I have seen no coverage anywhere outside the usual suspects of our niche trade press. Why isn’t the BBC and the Telegraph tech pages all over this? Why is no one really pushing this idea at the mainstream media – or at the very least the Car Park business media?

This technology deserves to be championed and pushed out far and wide. I’d use it to buy stuff – and it could yet prove to be a real money spinner. Carrier billing may be a rounding error on most operator’s balance sheets, but the potential for mobile payments is so huge they would be daft not to push this.

PPP clearly sees a future in it as its started to look at regulating the use of carrier billing in apps stores.

And Bango has started to see its potential out in Asia and the Middle East and is rapidly rolling out solutions with carriers and app stores alike across vast swathes of the world. Everyone is catching on to carrier billed m-payments – except the merchants. And this is where it falls down: if ImpulsePay, which is behind Bill Mobile, is to be believed it is offering payment terms of 9% – that’s very competitive with PayPal and certainly undercuts the idea that carrier billing outpayments are rubbish. This is something to trumpet.

But more than that, the story is that its simple for consumers to use, safe for consumers to use and that it is easy for merchants. This needs to be got out there and really pushed. And so far I have seen nothing.

So come on guys, you’ve done the hard bit of getting the pay out rates, now you need to market the hell out of this – I reckon you need a viral video. Call me :-)

Editorial Editor Paul Skeldon paulskeldon@me.com | Sales & Marketing info@telemediamagazine.com | Production Director Annika Micheli annika@telemediamagazine.com | Publisher Jarvis Todd jarvis@telemediamagazine.com To subscribe, please go to www.telemedia-news.com What we’ve been listening to Darklands – The Jesus & Mary Chain | What we’ve been amused by Hot desking – and how everyone just sits in the same place everyday | Who we’ve been following @Mrskeldon | What we’ve been reading about Bill Mobile| JUNE 2014 will bring... Bill Mobile’s viral videos

OPINION SMS

The good, the bad

AND THE UGLY

Self confessed SMS geek, Alex Kinch, CEO of Ziron, takes a wry look at some of the latest developments around SMS and assesses what they mean for the technology

I AM A self-confessed SMS geek. I have worked with SMS, building platforms and managing wholesale partnerships, since the turn of the millennium – back when margins were big, and mobile phones were the size of bricks.

A lot has changed since then, but if you’ve been following my articles, you’ll know I believe there is still a life in the old SMS yet!

THE GOOD I have been really excited by a raft of exciting SMS applications that have been announced in the last month. Some of the highlights include Acer ‘Liquid Leap’ smartwatch, which has in-built SMS notification technology. On similar lines, LG also announced its SMS-activated smart appliances, which means, yes, your fridge could soon be texting you when it’s running low on milk!

It was also interesting to see Twitter announce that it is enabling password reset through SMS. For those that didn’t see this announcement it’s pretty easy to understand - essentially a lost or forgotten password can now be reset through two methods, SMS or email. Those who opt for SMS will first have to associate their mobile numbers with their Twitter account. Once the number has been activated users will then be able to disable any text notifications that they don’t want to receive.

With this mass A2P SMS deployment (it was recently estimated that there will 400 million global Twitter users by 2018) the news that A2P SMS revenues are set to overtake P2P SMS shouldn’t be a shock - Juniper networks estimated that A2P messaging is set to be worth nearly $60 billion by 2018, up from $55 billion in 2013.

THE BAD The biggest update from the last month is certainly bad, but it’s also pretty salacious. It is, of course, the news that the ICO raided a SIM farm, responsible for sending out approximately 350,000

spam messages to mobile phones. The raid happened after consumers reported their spam messages to 7726 (the GSMA spam reporting service, it’s the numbers you get when you spell out SPAM – clever, no?) This new facility was introduced last year with EE, Vodafone, Telefonica O2 and Three.

A spokesperson from the ICO said that the firm responsible was in line for a “sizeable fine.”The news also comes hot of the heels of a bust that took place with a Yorkshire direct marketing firm and a Devon PPI claims company, which were told they faced fines totaling £140,000 for breaching electronic marketing rules.

The most interesting thing to take from this news is that the ICO is improving the way it gathers intelligence and, as such, is more frequently finding and penalising those responsible. The fact that these SIM farms exist won’t come as a surprise to many of you, but it’s welcome news that they are slowly being stopped. Marketing SMS can be incredibly effective when it’s targeted and relevant – spam SMS damages the whole industry.

THE UGLY Well ugly may be a little harsh, but even the most self-assured telecom CEO wouldn’t have been blamed for watching Apple unveiling its iOS 8’s new messaging features from behind the sofa, with a strong drink in hand. Since Apple launched its iMessage platform in 2011, it’s fair to say that carriers P2P SMS revenues have fallen. However, the victims this time round were clearly the rival messaging apps – for example, the new self-destruct feature for audio and video messages seemed to be a direct attack against Snapchat.

In this monthly column I aim to share the most interesting updates on SMS – but if you can’t wait to the next issue please do follow me at @ alexkinch, albeit I warn you now I talk about tea, a lot, like a ridiculous amount. I am quite obsessed.

ANALYSIS APP STORE BILLING

App, app

AND AWAY FOR DOB

News that PPP is to regulate the use of PRS for apps stores – and is piloting this no less with GooglePlay – shows how direct operator billing (DOB) has finally hit the mainstream in the UK. Has telemedia billing’s time finally come, asks Paul Skeldon?

THE NEWS THAT PhonepayPlus is to run a 12 month pilot scheme to facilitate effective regulation of app store purchases that are charged to consumers’ phone bills. marks a turning point in carrier billing. it has arrived if it needs to be regulated.

The scheme will see Google’s Play Store as the first participant in the pilot, which exempts developers in participating app stores from the requirement to register with PhonepayPlus before operating PRS. App stores that meet a number of criteria, including providing an escalation path for consumer complaints and operating a registration scheme for their app developers, can apply to join the scheme and provide carrier billing to their customers. More information is available on the PhonepayPlus website.

Over the past year, Google and a number of other major app stores have been rolling out phone billing to their users. This means that consumers on participating phone networks have the option of paying for digital content like apps, games, music and videos on their phone bills rather than using credit, debit or pre-paid gift cards. Juniper Research has estimated that the worldwide market for carrier billing of this kind could rise to over $13 billion by 2017.

In what amounts to a new digital deal for consumers, people who buy digital content on their phone bill will receive additional protections under the PhonepayPlus Code of Practice alongside app stores’ existing processes.

Jo Prowse, Acting Chief Executive of PhonepayPlus, said: “App stores and developers have particular circumstances that differ from others who operate premium rate services. This pilot scheme’s intention is to address app stores’ differences whilst ensuring consistency for the market, the right protections for consumers and that the outcomes of our Code of Practice are met.

We welcome Google’s involvement in the pilot.

“Consumers who pay for app store content on their phone bill will now benefit from additional protections under PhonepayPlus’ Code of Practice, alongside app stores’ own policies. In an environment where payments are frictionless and small impulse purchases may add up to considerable sums, these protections amount to a new digital deal for consumers.”

The move comes as Direct Operator Billing (DOB) for apps stores becomes more prevalent. The launch of BillMobile this week positioned it clearly for this in the UK. However, overseas it is already the only game in town for apps. Bango is increasing its infiltration of the developing ‘new smartphone markets’ of Africa, LatAm and the Middle East, with rolls outs of direct operator billing (DOB) for apps stores across these regions. Since the beginning of 2014, Bango has launched additional DOB for app store partners with Saudi Telecom and Mobily in Saudi Arabia, Mobinil in Egypt, Telkom in South Africa, Telefónica in Mexico and Telenor in Hungary.

Bango provides operator billing for Google Play, Windows

Phone Store, Facebook, Firefox Marketplace and BlackBerry World, and an agreement with Amazon has also been announced. These digital content giants are rolling out high performance DOB with increasing pace, enabling more customers to pay for games, music, apps and other content.

With more than 120 live operator connections in place, reaching more than one billion consumers, Bango has emerged as the de facto leader in DOB for app stores.

Direct Operator Billing has become a vital enabler for content monetization. With powerful advantages over SMS and cardbased payment methods, including a huge reach and the ability to offer frictionless one-click payment, DOB may be the only mobile payment method with revenues that outstrip the hype.

Revenues from DOB were over $2B in 2012 and are forecast to reach $13b by 2017 (Juniper Research). Much of this growth is expected to derive from developing world countries, where smartphone ownership has recently outstripped the ability to pay for content, and DOB is an ideal solution.

“These markets represent the new digital economies, built on their runaway growth in smartphone usage”, said Richard Leyland, VP Marketing Communications at Bango. “While there has been limited payment for digital goods through Premium SMS in the past, for most operators in these markets, Bango’s app store partnerships are the first time true Direct Operator Billing has become available. The result is that consumers get the higher user experience standard established by leading app stores, which includes the quality and depth of content, content discovery, getting the content onto the device and, of course, the purchasing experience”.

ANALYSIS

M-PAYMENTS

Ringing the changes

WITH CONVENIENCE

All the talk about mobile payments is set to come to fruition over the next few months as Paym, Zapp and others all start to get going in the real world. And with Apple probably doing something too in September with iPhone 6 there’s now everything to play for. But Paul Skeldon believes that it won’t be a technology that wins, but convenience and engagement through payments THE RECENT LAUNCH OF of Paym heralded the beginnings of the mobile payments revolution. While there are many consumers who claim that they don’t trust it or need it, many are buying things through mbile. The latest figures across Europe, from payment provider Adyen, suggests that mobile web payments accounted for 20.1% of all payment transactions on international payment provider Adyen’s network worldwide in March – more than 66% higher than March 2013. Of that 20.1%, smartphones accounted for 10.9% of all payment transactions while tablets generated 9.3% of total transactions.

“Now that the majority of merchants worldwide are engaging with consumers via the mobile web, the paradigm has shifted from, ‘Will people actually buy goods and services with their mobile devices?’ to ‘Fact: mobile commerce is a vital sales channel for both merchants and consumers – and therefore deserves increased focus,” said Roelant Prins, Chief Commercial Officer at Adyen, which processed more than $2.2 billion in mobile payments in 2013.

But is this really mobile payments: isn’t this just doing e-commerce on a mobile device? To many companies – not least payment gateway providers for e-commerce – this isn’t m-payments.

This is just paying online with a different OS. True mobile payments is about using the phone as a conduit between the consumers bank account or a card and the merchant. And this is where the real plays are happening right now.

And there is everything to play for. The Centre for Economic and Business Research (Cebr) estimates that 20 million adults will use their mobiles to pay for goods and services by the end of the decade, with the value of purchases tripling from current levels to £14.2 billion in 2018.

Yet the Cebr research doesn’t really suggest how this is going to come about.The early money has always been on NFC – where the phone essentially acts like a contactless card. While this was written off early on, it is perhaps now starting to gain some credence.

Monthly spending on contactless cards has exceeded £100 million for the first time in April 2014, according to data from The UK Cards Association. Couple this with the news that 78 million NFC enabled SIM cards were shipped in 2013 globally and it might mean that consumers are nearly ready to make the NFC m-payments leap.

The SIMAlliance suggests that shipments of NFC SIMs rose by 159% to 78 million, with the biggest orders coming from Japan/Korea (37 million shipments). North America hit 24 million shipments.

But the number of SIMs still lags the number of NFC-enabled phones. Analyst IHS says NFC was in 275 million units in 2013, up 128% from 120 million in 2012.

WorldPay sees this as clear evidence that retailers have to now

take NFC payments seriously: starting with cards, but ultimately leading to mobile NFC payments. Worldpay UK’s chief marketing officer James Frost explains: “The UK Cards Association [data] simply reconfirms the surge we’ve already seen in consumer confidence – which has seen average sale size grow 27% in just two years. If you’re a business regularly taking payments of £20 or less, contactless is a must. You can serve customers quicker, cut down queues and never miss a sale during peak times. That’s why we helped over 70 large retailers move to contactless last year.”

However, there is much work to be done on the retailer side. Berg Insights has estimated that 53% of the world’s POS terminals will be NFC ready by 2017. There is still a long way to go.

While the NFC message might be starting to filter through, there is a growing groundswell that points to consumers wanting simple and faster ways to pay, and that this is really where the benefits of mobile payments lies.

A study into smartphone users’ attitudes towards mobile payments by integrated mobile solutions provider Oxygen8, has revealed – rather unsurprisingly – that simplicity is the driving factor to unlocking widespread adoption. Despite having the capability to do so, a third (33%) of 18-44 year olds in the UK admit to never having made a payment using their phone. However, over half (56%) would be more encouraged to do so if it was as simple as paying with a single click.

The need for a more straightforward payment method is consistent throughout the research findings, with 56% of smartphone users surveyed admitting that multiple steps put them off making mobile payments. 55% also stated they would be more likely to make further payments using their smartphone if a simpler method was universally available.

“We live in an age where secure hassle free payments, such as contactless and 1-click online payments, are a given,” says Maria Grant, Head of Product Development at Oxygen8 Group. “These findings show that consumers expect similar simplicity when it comes to mobile payments. Businesses, like ours, are able to provide this to merchants. But it’s clear that the industry needs to work to create more awareness with consumers that simple, secure and swift smartphone payment options already exist.”

The importance of consumers having access to the right mobile payment mechanism is amplified further by a third (33%) of those surveyed confessing they would like the option to directly click through from a SMS marketing message advertising a product or service to pay for the goods. However, 73% have abandoned shopping baskets for reasons including fiddly navigation, security concerns, off-putting pop-up adverts or a clunky checkout process.

ANALYSIS M-PAYMENTS

Businesses will need to address these concerns if they want to capitalise on the consumer appetite for direct payments from SMS marketing.

And this is the real nub of what mobile payments has to offer: it has to offer speed and ease of use, but it also has to be part of the loyalty-engagement play by the retailer, encouraging repeat business and cutting cart abandonment. And it is here that retailers should be looking when assessing what technology they should be investing in to make m-payments a reality.

“To exploit the opportunity to engage with consumers via the smartphone businesses need to make sure the whole process is simple and seamless, from a targeted SMS through to payment,” concludes Grant. “If they can achieve this then it will create a direct way for them to build brand loyalty and increase sales.”

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