By John BaRoss, Founder & President, FINCCLUDE Incorporated
In recent years, pioneering Carriers and their partners have
continued to successfully advance how CB helps merchants and consumers by demonstrating again CB’s effectiveness as a billing option – now for ‘soft-physical’ goods like ticketing (i.e.: commuting/transportation via taxi, ferry, train, ferry, (etc.); sporting events and more). The benchmarks for incremental revenues, larger addressable markets, higher conversion rates, as well as stickier customers and goodwill windfalls again were achieved.
A majority of FinTech Payment Industry coverage focuses on marquee companies (Apple, Google, Samsung, etc.) as they strive to advance Mobile Payments/proximity payments. While specifics are proprietary, one important indication of marketplace feedback comes from Vodafone which has the flagship Carrier operated mobile money service: M-Pesa. In contrast to the attention garnered by proximity payments, a significant majority of M-Pesa transactions are remote as opposed to proximity, reinforcing the notion that CB’s focus dovetails with consumer/marketplace needs.
During a late May 2016 webinar by Ovum, CB was stated to have achieved $16.6B in 2015, projected to climb to $25.3B by 2020. Clearly $16.6B is huge, yet viewed through the lens of Carriers which had aggregate revenues of $1.02T in 2015, CB was less than 2% of the Carrier industry’s 2015 total. That said, there is growing appreciation in increasing numbers of Carrier C-suites that M-Commerce revenue is projected to be $1.3T by 2020, overtaking aggregate global carrier revenues in just a few years. The incremental revenue opportunities from M-Commerce via Carrier billing assets can be huge.
As CB understanding, acceptance and appreciation grows, regulators to carriers globally are now making moves to adjust regulations and modify carrier economic models to help unleash the optimal potential of CB for online merchants selling physical goods. Speaking with industry leaders involved in emerging CB-physical goods initiatives, two (parallel) value proposition thrusts were evident:
1) Harnesses the array of CB benefits (merchants realizing incremental revenue, reaching larger addressable markets, superior conversion rates, etc.). There is also an increased focus on CB helping advance financial inclusion – a differentiated strength of CB as its purpose since the beginning was to reach the unbanked.
2) A new twist for those familiar with carrier economic models because it involves margin advantages. Carriers have established a reputation for charging a premium for DCB. Merchants decide whether the incremental business via CB was worth CB’s premium (lower margin to merchant). As a variety of environmental factors have evolved over time, a trend is emerging with carriers becoming more competitive with their margins, and in some markets the CB margin is providing a better margin compared to certain alternative payment options.
More about FINCCLUDE: www.fincclude.org).