Advice to Operators #5 - P2P Credits

Anyone who's ever used a prepay phone (which probably excludes most people who work for an operator, funnily enough) knows what a real pain it is when you run out of credits. Just as your battery runs out in the middle of a critical call, your credits fail you just when you really need a mobile.

I know it makes sense to have back up credits. But all that normally happens is you buy two cards and then buy two more then the second one has run out.

Many kids and teens have prepay phones, as we know. Not only are they always running out of credits, but they don't necessarily have the cash to immediately buy new ones or have a backup supply either.

OK, I know that the perennial excuse of "Sorry, Mum, I was out of credits" is often used instead of saying that the kid forgot to make an important call. But it's still an issue.

Now, what happens when someone is out of credits? Stating the bleeding obvious, they have to stop using their phone until they get topped up. This means there's a potential revenue loss, as calls that would have been made and and messages that would have been sent, never happen.

Sure, some of these will merely be delayed, but a good proportion (maybe 70%? - this is a wild guess) have been lost forever.

When this is applied across the board, the resulting loss could be pretty significant. As an example, here's some rounded up, ballpark stats. In the UK, there's 50 million mobiles, of which say, 60% are prepay. Let's say that ARPU is in the region of £130 ($236) for prepay customers. Let's say then that the average prepay customer runs out of credits once a month and that 70% of those calls/messages are lost for ever.

I reckon that indicates a potential loss to the industry of around £90 million - which, even for the huge telecoms industry, is no small change. And clearly, the figures could be higher than that.

So, what's the advice then? Well simply allow P2P transfers of credits. When Teddy Teen has run out of credits, his good old Mum can send him new ones. Or he can borrow some off his mate and return them when he has got some of his own.

This wouldn't just have the effect of increasing revenue. It would also be great for customer service and if implemented by one network, might allow them to steal a march on the others for a while.

Once a P2P system was up and running, it would be both proof of concept and a great platform to launch a mobile payments system, with real cash.

I was reminded of this today, when re-looking at G-Cash in the Phillipines. This is hardly a low key project and is very successful, to boot. So why the reluctance in other markets to take on this great idea?

Another operator mystery. If I've missed something, be sure to leave a comment and put me right.

Comments

[Simon Cavill]

Hello,
I read your article with interest as we are a UK based mobile payments company and have just created a joint venture with Voca (ex Bacs, they process all Direct Debits in the country) to faciltate secure mobile top-up and P2P payments against a single direct debit held against your bank account. This provides a low risk, low cost payment system activated through your mobile phone. Contact us for mre information

Simon Cavill
CTO Mi-Pay Ltd

www.mi-pay.com

[Digital Evangelist]

I have been looking at Mobile Payments for the last three months. The problem at present is with regulation of e-cash with stored value systems the question is when does you phone become a bank account?

The European's are not going to launch a family & friends system any time soon. The customer service systems are not good enough and SIMPAY would have to be adopted by all the operators in a country.

However from what I see the development of a single standard mobile commerce platform is important for the development of content and data services.

[Dean]

I just had a quick look at the Globe-cash FAQ, and it doesn't look that simple & intuitive. The only bit that I like is the "G-CASH PAYMENTS VIA TEXT". I would probably replace the merchant-to-customer sms with a WAP Push message, taking the customer to a page that lists all items purchased,the total amount due and a "Confirm" button. Hey that would mean that Telcos could replace VISA and MasterCard (at least for small value transactions) and could charge processing fees.

--Dean

[Clara]

Nearly all my friends and I are on prepay mobiles here in New Zealand, and both our two major operators have some good solutions for when you run out of credit:

Vodafone has offered their 'IOU' solution for a while now, you send them a free text when your credit falls below 20c and they put $2 on your account immediately, which will be deducted the next time you top up. Or if you've got it set up, you can directly top up your phone from your bank account via your mobile with Vodafone Hotlink.

On Telecom, you can make a sort of mobile version of an old-fashioned collect call by calling *SHOUT and the receiver of the call will be billed for the call, good for teenagers ringing their parents at home... You can also do the top-up with your bank account via your mobile with mTopup.

Some ATMs also lets you topup your prepay account directly. =) So the m-payment scene is looking pretty good in New Zealand at the moment!

[Clara]

Nearly all my friends and I are on prepay mobiles here in New Zealand, and both our two major operators have some good solutions for when you run out of credit:

Vodafone has offered their 'IOU' solution for a while now, you send them a free text when your credit falls below 20c and they put $2 on your account immediately, which will be deducted the next time you top up. Or if you've got it set up, you can directly top up your phone from your bank account via your mobile with Vodafone Hotlink - and if you topup your friends, you get a bonus out of it as well! (I feel like an ad for them, but it is a rather cool idea, perfectly aimed at the target market)

On Telecom, you can make a sort of mobile version of an old-fashioned collect call by calling *SHOUT and the receiver of the call will be billed for the call, good for teenagers ringing their parents at home... You can also do the top-up with your bank account via your mobile with mTopup.

Some ATMs also lets you topup your prepay account directly. =) So the m-payment scene is looking pretty good in New Zealand at the moment!