Tola CEO, Shane Leahy, looks at the opportunities mobile carrier billing grants to operators in markets such as Africa, while also ticking all the same boxes in Europe
The GSMA’s latest ‘Mobile Economy’ report highlights that at the end of 2016, 65 per cent of the world’s population had a mobile subscription, with this total set to reach five billion by mid-2017. By 2020, it is anticipated that almost 860 million new subscribers will be added, taking the global penetration rate to 73 per cent. The near ubiquity of these devices is continuing to change the way we communicate, connect and consume goods and services. Over 2 billion mobile phone or tablet users are expected to make some form of mobile commerce transaction by the end of 2017.
From a financial services perspective, the mobile phone plays a particularly important role in developing countries, such as those in Africa. 66 per cent of the continent’s inhabitants do not have access to a formal bank account. However, despite limited access to traditional banking infrastructure, over one billion of these people have access to a mobile, which has played a key role in financial inclusion. M-Pesa is the leading mobile money service, allowing customers to securely send, receive and store money via a basic mobile phone, and in some markets, using a smartphone app.
This new ability to create financial interactions with an unbanked population brings great opportunity for businesses operating outside Africa to extend their customer base. This opportunity is particularly relevant for online gaming, gambling and sports betting operators. Nigeria, South Africa and Kenya especially are experiencing a massive outbreak of online betting. The estimates are that by the year 2018, the online betting market in these three countries will reach US$37bn.
The market potential is there for all to see, though when thinking about entry into and growth in this area, many operators still have concerns around fraud protection and ease of implementation.
Upping the ante
Clearly, payment providers have a major role to play in enabling the secure transition into this market. First and foremost, merchants and businesses must be ready to offer a payment mechanism that does not hinge on the end user having a bank account, ruling out a reliance on credit or debit card payments. The mobile phone is the key – integration between businesses and mobile wallet subscribers allows the seamless transfer of funds, allowing gaming and gambling operators to simplify mobile payments in line with technology uptake and consumer expectation.
Using the mobile phone in this way simplifies user identification to reduce the risk of fraud, while simultaneously taking away the hassle that comes with the need to input long card numbers, expiry dates, billing address details or password security.
The added value is the real-time payment verification process. Security is provided at check-out with a one-time 4-digit pin received in an SMS to the customer’s mobile device. To authenticate a credit card payment, the consumer must enter their PAN, Expiry date, CCV2, and Billing Address. The payment is subject to the 3D secure process. This involves three entries selected from a predetermined password. By contrast, the simple four digit PIN code is only sent to the handset of the mobile phone in question. If that isn’t you, or you don’t return the PIN within the hour, the transaction is not completed.
Closer to home
Of course, we’re looking at a very different market in the UK, with a well-established banking and card infrastructure and high level of financial inclusion. That said, demand for mobile payment technology is growing rapidly, with businesses also recognising the importance of delivering quick and seamless payment capabilities to improve mobile commerce and enhance the overall experience. In a recent survey of UK consumers, we found that almost half (45 per cent) of people say it would be easier to place and pay for online bets if they could pay directly from their mobile, with nearly a third (32 per cent) saying that this would likely lead them to place online bets more frequently.
As gambling and gaming businesses begin to develop their mobile propositions, consumers will naturally begin to find favourites. The winners in this loyalty game will be those that can offer the best end-to-end experience. In March 2016 alone, there were over 7,500 different physical betting shops in the UK – add to that the online presence of each of these brands, and the added growth of online-only providers, competition is stiff.
This rivalry heaps on the pressure to reactivate existing users and continue to engage new customers. The successful operators, and those that will succeed in increasing revenue streams, will be those that provide a high quality, innovative offering from beginning to end, giving the customer exactly what they want. In this race, the payment mechanism can no longer be a ‘back office’ afterthought. The debate continues around whether gambling success is down to luck, or skill. Roman philosopher Seneca said that “luck is what happens when preparation meets opportunity.” Gambling operators would be wise to follow this ethos, using technology to ensure they can capitalise on market potential.