New Global Mobile Payments Survey Results Show Where Mobile Operators Place Their Bets

mobile operator advantageOn the heels of last month’s survey of mobile telecoms execs across the Asia Pacific region (and a tremendously successful #doxchat Tweetchat that had a global reach of 92,000+), Amdocs is gearing up to release a new report looking at mobile operator attitudes and activities around mobile payments. Here is an exclusive preview of the key findings.

Fighting smart

By way of background, the first report (Fighting Smart: Using Value-Added Services To Create Lasting Customer Loyalty) — based on a survey of 120 telecom executives at major mobile operators across Asia Pacific — zeroed in on the real value in Value-Added Services (VAS) including mobile marketing, mobile payments and personalized services

The survey asked tough questions centered on how mobile operators plan to meet and beat competition from Web giants, rival providers and banks/credit card companies.

And it got some surprising answers.

The survey found that the majority of respondents (62 percent) believe a VAS strategy is critical to their business. However,  the survey also revealed that revenue generation was not the top motivation for developing and delivering VAS to mobile subscribers. The end-game is about increasing customer loyalty.

Interestingly, mobile operators in Asia Pacific are not just bullish about VAS. They are well equipped to fend off middlemen in mobile payments and commerce, with 95 percent of respondents claiming to have an advanced mobile payments strategy. Connect the dots, and operators across the region are confident they will by enabling billing on behalf of third parties including app stores and providers of virtual goods.

(For more detail, check out this earlier post on MobileGroove and download the white paper here. )

Hot topics discussed

Fighting Smart was also the topic of a recent Tweetchat  — organized by Amdocs Interactive and hosted by MobileGroove — that saw strong participation from professionals, practitioners, and edgy industry watchers (for example, @Ew4n @stephen_oman and @MyIntersperse).

Belated thanks to participants across North America including @AJWright for getting up/staying up @ 9 am GMT/ 10 am CET/ 1:30 pm IST to join in! Thanks also to @MsMobileConverg (Nora Goodman), who did a great job spreading the word. You can find out more about Nora via our new, bi-weekly #FollowFriday series profiling people with impact and insights.

The Tweetchat discussion centered on three key questions:

Q1. For operators, what’s the real business driver for value-added services?

The takeaway: You’d think new revenues would be the main answer, but (as @matt6156 pointed out in his tweets) mobile operators in Asia Pacific, where most users are pre-paid and consumers have up to five SIM cards, fighting churn is top of mind. In fact, new revenues was in third place behind customer experience and stickiness. However, @Ew4n was skeptical about the interest of European mobile operators to fight churn with better customer experiences. As he put it: The sharp focus on voice/data doesn’t count as innovation. In his view, a good first step would be one number that reaches every single device I own, or GoogleVoice integration. Instead, @Ewan complained: “Most operators I see on a day-to-day basis in Europe are doing the business equivalent of head-in-the-sand.” Meantime, @yevindra and @viragthakkar directed participants’ to discuss what can drive VAS for mobile operators when third-party apps are the crowd-pleasers. Where is the money? @viragthakkar argues “they [operators] will get revenue from data plans. In fact it’s better – they don’t need to invest in apps.” Another sure bet is APIs and @BlueVia got high marks for a strategy that helps developers — and boosts their own business in the process.

Q2. Will operators succeed where banks haven’t, making mobile payments succeed?

The takeaway: The survey reports that less than half (4 percent) of operators believed they are heading for a conflict with banks. Instead they see opportunities in serving the under-banked in countries like Indonesia. As @VikasChanani pointed out: “Bringing financial services to the underbanked is one of the major drivers of mobile payment services in India,” as well as other emerging economies. The lack of a competing infrastructure (point of sales – POS systems and credit cards) also allows mobile operators in Asia to own the value chain and play a major role in commerce/transactions. @AJWright, @Ew4n and @stephan_oman debated if mobile operators might not simply set up a special short code (‘PAY <am> <phone no>) for person-to-person transactions. This approach (similar to Anam) would effectively bypass the need for a POS reader and widespread acceptance of NFC (near-field communications).

Q3. Will operator portals matter a couple of years from now?

Overall, mobile operators are confident their portals will grow in importance over the next three years. The situation in the West is very different with many participants pointing out that portals in Europe are becoming irrelevant. @TheCommCouch complained that portals are also not personalized, a shortcoming that @AJWright argued paved the way for recommendation engines (Amazon). “Carriers [are] missing the point of portals otherwise.”

You can check out the complete exchange here.

doxchat VAS tweetchat

New results preview

The Tweetchat discussion stressed the vast differences between mobile operators in APAC and the rest of the world when it comes to mobile payments and confidence in the competitive advantage VAS can deliver.

This prompted Amdocs to partner with Coleman Parks to conduct another survey around global mobile payments market trends. This time the research firm interviewed 85 telecom executives in 11 countries (U.S., Canada, Argentina, Brazil, Mexico, France, Germany, Italy, Poland, Russian Spain and the U.K.).

These new findings combine responses from the APAC survey to produce a truly global view of VAS.

Among the key findings:

The majority of operators have an active, defined strategy towards mobile payments. Asian operators have the hands-down lead with 95 percent of respondents saying they have a strategy in place (Latin American 67 percent, North America 61 percent and Europe 57 percent).

App store billing was the most popular segment on average, ranking #1 in all regions but Caribbean and Latin America Region (CALA). Bill payment was #2 on average, ranking #1 in CALA, #2 in North America (NA) and tied for #3 in the EU.  Pre-paid top-ups ranked #3, #2 in APAC and CALA, and #3 in NA and the EU.

But when asked to choose one, pre-paid top-ups ranked #1 on average, followed by bill payment, app store billing and money transfer.  Prepaid top-ups dominated APAC, app billing in the EU, bill payment in CALA, and app billing store billing and bill payment tied in NA.

Operators outside of APAC expect their share of mobile payments revenues to grow to one-third from about 25 percent today.  CALA and the EU expect 13 percent more, and NA only 4 percent.  In APAC, operators expect anywhere from 6 percent of merchandise purchases on the low-end to 15 percent of app store billing on the high.

Operators still believe they will be competitive against the banks and credit card companies. On average only 43 percent of operators believe they’re heading into conflict with banks.  NA was 35 percent on the low-end, APAC 42 percent, CALA 47 percent and EU 50 percent on the high.

Meantime, Matt does the math in a new post to highlight high-level trends across the two surveys.

My take:

Overall, the vast majority of mobile operators are convinced that mobile payments are the next big thing. While some (particularly in EU and NA) worry that traditional banks present a competitive threat, operators are also confident that the marketplace can support both parties (in peaceful co-existence). And no concern if companies and banks pair off (like Apple did when it went with credit card companies to purposely bypass the operator). Operators are prepared to cooperate in order to create mobile payments standards/services that will compete directly with initiatives from the banks and credit card companies.

Editor’s note: Watch this space for a new white paper (written and produced by MobileGroove) that provides a global view of how mobile operators see the role of VAS in their strategies around payments, advertising and personalization. To keep the conversation going we will host another #doxchat Tweetchat to discuss/debate key findings. Thanks again to everyone for joining in the last Tweetchat. Time really flew by! We have since reviewed your feedback and are looking into ways to move the discussion to a separate, dedicated chat room so we can all continue long after the hour is up.

Disclaimer: Amdocs Interactive is an MG client and supporter.

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