Product Spotlight
Mobile TopUp: The Gateway to Mobile Payments and Remittance
by Diarmuid Mallon, Senior Product Marketing Manager, mCommerce
The mobile world can be divided in two groups, those who pay for their mobile service via a bill after usage (post-paid) and those who pay up front (prepaid).
Depending on where you are in the world, the importance of prepaid mobile is either very well known, or perhaps a big surprise. Nearly 70% of the world?s mobile subscriptions are prepaid; however, the uptake varies greatly. For example, in Africa 97% of subscriptions are prepaid, while in the US and Canada, prepaid makes up a mere 13% of subscriptions.
Why is prepaid so important?
A short history of (Air)Time
Although the very first attempts at launching a prepaid mobile service can be traced back to 1993, it was not until the late 90?s that we would recognize mobile prepaid as being first introduced.
TMN in Portugal and Eircell in Éire both launched PAYG (Pay As You Go) services; aimed at increasing their market shares. Up until then, mobile subscriptions required bank accounts, credit checks and other hurdles which limited access to mobile telephony. TMN and Eircell were keen on extending mobile services to those without bank accounts, lower credit ratings and of course to those under 18 that needed an alternative to postpaid subscriptions. Thus, PAYG services were created.
The ability to get a low cost handset with little or no credit check and the ability to pay as you go turned out to be hugely attractive. Both operators had great success with the services and were soon mimicked by other operators. Within a few years, prepaid was becoming the dominant method of mobile subscription, and even saw the GSM standards extended to enable the use of prepaid devices when roaming.
Subscribers purchased airtime initially through operator stores, but eventually through point-of-sale terminals at news stands and grocery stores. Given the profile of the target customer, it came as no surprise that the majority of topups were purchased in cash.
Operators built a highly efficient network for taking cash in for subscribers and converting it to a stored value, airtime.
Prepaid: The Enabler
What does prepaid have to do with payments and remittance? Mobile topup is a great enabler for mobile payment and remittance services, particularly for services that need to start with cash in, rather than being linked to a bank account or a credit card.
For many mobile subscribers, access to a bank account or a credit card is either difficult, even impossible and therefore cash-based services become the option. By making use of an operator?s existing mobile topup ecosystem, it is possible to create new services based mobile topup.
The simplest mobile topup service is airtime transfer. For example, rather than loading the mobile topup onto your own phone, you can ?gift? it to another phone. For a parent, it could be adding airtime credit to their child?s mobile phone, or for a migrant worker, it can be used to topup a spouse?s phone so they can keep in contact.
In emerging economies this model can be extended beyond the operators store network by enabling street vendors to sell airtime. Using nothing more than an ordinary mobile phone, they can resell airtime without the need for point-of-sale terminal.
Topup does not have to be limited to enabling phone calls. Instead of traditionally using mobile topup to load an airtime credit onto a phone, the credit can be converted into a stored value in a mobile wallet. This value in return can be used to pay for goods and services or even as a mechanism for saving money.
Beyond Theory
When writing about mobile services and particularly mobile payments it is very easy to forget about the practicalities for user experience and acceptance. One of the many benefits of a solution based on mobile topup is that in the target markets, the mechanism is well understood and trusted, and is the primary charging mechanism for the majority of subscribers.
Today, our mobile remittance and mobile commerce solutions are in ?live? service for customers such as Vodafone Egypt, Lari Exchange, Phone1, ICSL Nigeria and RedFacil Chile in markets like Africa and Latin America. All of these services make use of the mobile topup mechanism as part of the solution.
The Sybase 365 mCommerce solution covers the entire value proposition for emerging markets where mPayments and mCommerce can create low cost, basic telecommunications and banking services for the predominantly unbanked. In emerging markets, mPayments and mCommerce solve basic payment and banking needs of a cash society while addressing a major service gap.
All data: Wireless Intelligence, based on connections data for Q3 2008.