Money Transfer could be the Next SMS
Far from dead, Jote Bassi argues SMS is thriving as operators add new services to increase revenues and give customers fast, easy, secure new applications.
29th July, 2008
Anam TelecomsEurope
The popularity of SMS amongst users has never been in doubt and usage is expected to continue to grow over the next few years. However, for many operators what is in doubt is the revenue they can generate. SMS is part of the battleground for new customers with increasing numbers of text messages bundled into monthly subscription packages. Consequently end-users think of texting as part of their bundle and a ‘free’ service. While this may well have helped drive up usage, it has done little to increase SMS revenues.
Although operators are giving away text messages, they are also trying to entice customers to sign up for new, premium data services including web browsing, uploading photos or video to specialist websites, accessing favourite social networking site from mobiles, micro-blogging, or a variety of others. These new services are targeted at early adopters who are happy to explore such services and uptake is further encour-aged by offering ‘unlimited’ data bundles to tariffs. However, both of these aspects rule out a large number of subscribers from accessing, using and, most importantly, paying for them.
There have been some notable successes with new mobile 2.0 applications but they have not had a negative impact on the number of text messages sent and received. Whilst certain users may add the new serv-ices to their portfolio of communication tools, they do not do so at the expense of the humble SMS.
The big question for operators then is how to generate additional revenues from SMS? There is a large untapped market for oper-ators to increase revenues by adding new services to their portfolio using SMS.
Mobile banking services are being rolled out particularly in developing countries where many banks offer balance checks and other transactions via SMS targeting those without bank accounts or local branches. People can buy ‘credits’ and use their mobile to spend them: G-cash in the Philippines and in Kenya M-Pesa were recently launched. These services have taken off with the growth in mobile penetration and most carry phones and help in the growth and development of local communities in developing economies.
New Revenue Stream
The international remittance market is currently a multi-million dollar industry into which operators could tap. Using SMS, people can send and receive money safely and securely across international borders. The simplicity of the service is one of the key aspects to adoption: users type a payment text message into their mobile device, access their address book to select the recipient’s regular mobile number, then send an SMS. The system is easy to use, intuitive and convenient: there is no need to remember any phone numbers and it is like sending any normal text message. The simplicity of the service does not mean it is without value.
Mobile operators can exploit the money transfer market in Western Europe where people have bank accounts, regularly move money around, understand and are comfortable with internet banking and remote access. This service offers people a quick and easy alternative to current systems, using a familiar and comfortable device and application. Users do not have to log into PCs or use cheques to transfer money.
Since the perceived value for the end-user is high, money transfer steps outside of regular bundles and can be offered as a paid-for service. Person-to-person money transfer via SMS can increase an operator’s profits and, by introducing a commission rate for each transaction, operators can generate additional income: a telco with 3.5 million subscribers could realise a profit of $6.7 million over three years.
To introduce a new mobile service effectively operators must look at three things: how people use phones; their behaviour in the real world and combining those in new profitable services. Only if all three elements are in place will the service be relevant and beneficial to both end-users and operators.
SMS usage remains extremely high with most people using it regularly. For many, especially the less technically savvy, mobile phones are for making calls and sending text messages with other applications often deemed unnecessary, too complicated or too expensive (especially for pre-paid customers).
Increasing revenue from a popular, existing service is as important for operators as introducing new applications that may or may not prove popular with subscribers. Most operators talk about looking for ‘the next SMS’: transferring money via SMS is here now.
Jote Bassi,
VP of Global Sales & Marketing,
Anam. www.anam.com
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For additional information, please contact:
Patrick Smith
Sonus PR
+44 (0)20 7851 4890
