by Paolo Rizzardini, vp for mobile payments with Infobip
Ever since the beginning of the mobile payments industry, the Asia-Pacific region has held enormous potential for content providers. The mobile app market in the East is more vibrant than anywhere else in the world and is showing no signs of slowing down any time soon. In fact, this positive trend is continuing at an exponential rate, particularly for Android devices. There are multiple reasons for this. First of all, it is common practice for consumers in Asia to access and purchase multimedia content through their mobile phone.
This is a habit that started with textual content and premium SMS purchases, but has now evolved to cover richer media and payments made by direct mobile billing as well.
This change comes as no surprise. Although preferred payment methods vary from country to country, APAC overall is a region where credit card penetration remains low.
According to recent World Bank statistics, credit card penetration varies from one per cent in Vietnam and Indonesia up to 12 per cent in Malaysia (excluding more developed countries like Singapore where it is at 37 per cent).
And the fact that APAC is largely unbanked favours the adoption of alternative payment methods, particularly mobile-based alternatives.
Another important driver is rapidly-growing smartphone penetration in the region, which is among the highest in the world.
According to research by IDC over one billion smartphones were shipped last year, with Latin America and APAC the primary driving force behind this incredible growth.
IDC’s research also predicted that the Asia-Pacific region alone will be responsible for 1 billion units shipped per year by 2017.
However, to better understand the impact of this on the mobile content business, it is important to consider another important factor – the average price of a smartphone.
Globally, during 2013, the average price of a smartphone was $337. This figure is slowly declining as hardware becomes more affordable, and by 2017 it will be $265.
In APAC, however, the average purchase price is already lower than the global average, forecasted to be $215 by the end of 2017.
The driving force behind this change will be the impact of so-called second tier smartphone brands (Huawei, Lenovo and LG being the most popular), and a lower purchase price in APAC holds two key benefits.
On one hand, it significantly limits Apple’s growth due to its much higher hardware prices, and on the other, helps drive Android penetration as it is the OS of choice for many OEMs operating in the region.
From the perspective of content providers, the high penetration of Android devices increases not only the potential user base, but also the number of channels through which mobile content can be published.
In the case of a mobile app, for example, in addition to the staple Google Play store, there are also a growing number of independent or mobile operator-specific stores that can be targeted.
Although individually these options provide a lower penetration rate than the Play store, they are often much more targeted and accessible.
In many cases, marketing content can be done in conjunction with the owner of the store (which is most likely the mobile operator).
It is also important to underline that different publishing channels provide different payment options.
This is particularly true in South East Asia, where including mobile-based payments has become mandatory because of lagging credit card penetration.
To satisfy this real-life market demand, operators are developing a range of payment options for consumers.
These include two main solutions in addition to the legacy, but still widely popular, premium rate SMS – mobile wallets (Philippines, Indonesia, Vietnam, Malaysia stand out in this sense), and direct mobile billing (also known as carrier billing).
When it comes to direct mobile billing (DMB) service availability is continuously growing, reaching 100 per cent of subscribers in South Korea, Japan, Taiwan, Singapore, Australia and Hong Kong.
Due to widespread smartphone availability in APAC, DMB will soon also reach all subscribers in Thailand, Malaysia, Philippines, Indonesia and Vietnam as well.
Another increase, and an even bigger one at that, is in terms of the wide number of services that are now offering DMB as a payment option, both from local (Asian) and foreign companies.
Statistics show that in countries where DMB is available, conversion rates rise by up to 85 per cent.
It is an especially encouraging model in East Asia where credit card penetration is still low, primarily due to a lack of availability in the region.
As a result, when it comes to monetisation, it is important that developers, content providers and online merchants also have the option of providing direct mobile billing (DMB) as this payment technology is seeing significant growth.
Ultimately, the Asian mobile industry is one of the fastest growing in the world and mobile-based businesses are capitalising on this trend thanks to the availability of new payment technologies made available to a huge percentage of the population that are eager to adopt them.
With adequate knowledge of the consumer market, a content provider with access to all of these possibilities can turn APAC into its own gold mine.
Paolo Rizzardini is currently vp for mobile payments with Infobip. A graduate of the prestigious University of Padua, Paolo holds a degree in computer science engineering and has vast experience in international business. He’s currently managing a team of 80 in the Infobip’s office in Belgrade. Paolo’s specialties include business analysis, planning and development in the telecommunications field, operation management, mobile products definition and project management.