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COMMERCIAL CONSIDERATIONS
Q. Many m-payment projects have failed because there was essentially no business case driving them. What makes the types of applications MoPay is offering so different?
A. The applications MoPay is designing with our customers are based on real business cases and enable cost-effective processing of mobile payments.
Firstly, the shared infrastructure of a managed service eliminates the need for capital investment to operate a payment service and requires minimum human resources to manage.
Secondly, the scope of the financial advantages for participants varies from application to application. For prepaid mobile top-up, the cost savings of replacing expensive voucher-based schemes with more cost-effective and convenient methods such as SMS-based top-up is dramatic. For financial services organizations, m-payments represent a new payment channel and a way to ensure that more transactions are processed by banks leading to additional revenues and profits. For some applications involving the transfer of funds from one account to another via SMS, the speed and efficiency of electronic money transfer can shorten cash collection times, thereby improving cash flow (eliminating cheques/cash payments).
Operators can use MoPay-enabled services to enable low-value payments for goods and services which they sell directly to mobile users. They can also make better use of their SMS channels by bundling SMS packages for banks, merchants and other participants who are offering m-payment services to their customers.
Q. For prepaid top-up, how does MoPay reduce operators’ recharge costs?
A. The majority of mobile users still rely on costly voucher-based top-up schemes to recharge their prepaid accounts which can cost operators up to 25 percent of top-up revenue. Electronic top-up from a user’s card or bank account is the cheapest way to recharge a prepaid account. There are no distributor or retailer margins to pay, and no printing or PIN management costs. Migrating users over from traditional schemes to new SMS-based schemes through good marketing and incentives can reduce costs dramatically and result in increased profits for mobile operators.
Because users have a top-up mechanism literally at their fingertips, recharge becomes more readily available and in many cases, can actually encourage users to consume more airtime, thus increasing ARPU. SMS-based top-up is also readily available whilst roaming.
Q. How much does it cost for the user?
A. Pricing of services to users is at the discretion of individual service providers. For certain applications such as prepaid mobile top-up, SMS are generally offered free of charge so that even users with zero credit can recharge their accounts. For other applications where an SMS might, for example, replace a check and eliminate the need to send a letter to pay accounts, users can pay for the cost of the SMS.
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