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Merchants selling digital content, downloads, virtual goods and services offer mobile payments to increase revenues, decrease payment processing fees, and mitigate payment processing risks.
The best fit for mobile payments is small ticket items and mobile billing is perfect for micropayments. The optimum price points for mobile payments range between 10 cents and 5 dollars, and the lower the price, the better the match for mobile billing.
Online games publishers, including casual games and MMOG, are among the leaders in offering mobile payments. The trend within the online game industry is to move away from subscription billing to a “play-for-free” model. Although play may be free, game publishers make a lot of money by selling low-cost virtual goods and services, much of which is paid for by mobile billing. For example, players can buy ammunition, dress up avatars, and participate in player communities though the purchase of virtual goods and services.
Social networking applications networks and virtual worlds are adding mobile payments in unprecedented numbers. Online games are popular within social networks and virtual worlds as are virtual gifts and other low-lost digital items.
New media companies selling music, video, and other forms of online entertainment discover mobile payments are highly effective, providing sales “lifts” of up to 20%. In some parts of the world, up to 70% of all online digital entertainment is paid for through mobile billing.
Rather than selling more expensive digital content or software downloads, some companies are opting to offer “pay-per-view” or “pay-per-minute” access to their product. Mobile billing is an excellent payment for these low-ticket transactions.
Mobile billing is beneficial for non-profits organizations that want to increase donations. Imagine the amount of money that can be quickly raised from millions of donors, each of whom donates a dollar by mobile payment in response to a particular disaster. Or think about how easy it is to make a small impulse donation by mobile billing as a response to a call to action by the charitable organization for a worthy cause.
Of course, younger buyers are highly receptive to mobile payments. Young people are big consumers of online entertainment. They grew up using cell phones and mobile payments are a natural extension of engrained behavioral patterns. In fact, young consumers expect to be offered a pay by mobile option and will often seek out merchants that offer it.
But, it is a mistake to think that mobile payments are only for younger buyers. Merchants that implement mobile billing are often shocked to discover the number of “older” users who chose to pay by mobile.
For example, women are among the biggest consumers of online virtual gifts. This is not surprising because, in general, women are more tuned in to social nuances which include giving gifts. But, it’s not just teenage girls who are buying virtual gifts by mobile billing. It is their mothers, and increasingly, their grandmothers, who are sending virtual gifts and paying by mobile.
And, it’s not just children or teenagers who play online games. It is remarkable the number of people who play online games and are decades past their teenage years.
Social networks and online dating sites are used extensively by people of all ages. It’s a solid bet that every single one of them has a mobile phone. Many of whom appreciate the ability to purchase with mobile payments without the need to disclose any personal financial information.
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