Over-the-top (OTT) partnerships have become a standard marketing practice for most carriers. Forty-five percent of all mobile operators now offer at least one zero-rated application to their users, and 37% have at least one OTT partnership in place, according to Allot's 2014 Mobile Trends report.
This is happening in all corners of the world ranging from the US with AT&T Inc. (NYSE: T) and sponsored data and T-Mobile US Inc. and Rhapsody to emerging markets like India where Bharti Airtel Ltd. (Mumbai: BHARTIARTL) works with WhatsApp.
By giving out some data for free, users become habituated and are willing to spend money on additional data in the future. But while carriers generate additional revenue from providing the data infrastructure powering content services, the money that is moving inside of those services is something mobile operators are missing out on.
My suggestion is for mobile operators to start providing their payment technology -- carrier billing and mobile wallets -- to these merchants as well. With emerging markets playing an increasingly important role in the digital ecosystem, most merchants are struggling to capture payments from their unbanked audience.
There are 3 billion people in the world right now who have a mobile phone but do not own a credit card -- and these are the potentially paying users merchants can't get to. A good example of this is Uber choosing to add in India and Kenya where only 2% of the population owns credit cards. For merchants like this, carriers are in a position to solve the pain of online payments.
The revenue growth from payments should not be underestimated. While only 10% of all mobile subscribers use carrier billing right now, they tend to outspend customers using only data or voice services significantly. For reference, Fortumo merchants' average revenue per paying user stands at $29 in the UK, $1.7 in India and $8.6 in Brazil. This equals or outperforms the ARPU of most carriers in these markets.
Beside the additional revenue, payments provide the added benefit of keeping customers active and loyal. The customer is most likely going to top up their account if the alternative is losing their insurance provider as Telenor Group (Nasdaq: TELN) has found in providing insurance to its subscribers in Pakistan.
As carriers are partnering with a growing amount of third-party service providers, payments are the next logical step in growing these partnerships. Right now it's the merchants that are mainly driving the implementation of carrier billing in their services. With more focus also from carriers, payments have the potential to become a significant pillar of carrier revenue beside voice and data services.
— Tim Carter, Chief Revenue Officer, Fortumo