How is ‘charge to bill’ powering Africa’s booming mobile commerce market? In a second exclusive carrier billing video supported by Bango, we hear the insights of Herman Singh, chief digital officer of MTN Group…
Africans love music and gaming. Ok, everyone loves music and gaming. But Africa is, of course, the mobile-first continent, so the way that its people consume entertainment has developed a little differently from the rest of the world.
In short, the phone rules. But not necessarily the smartphone. And not necessarily apps.
“Our best selling music streaming product actually works on a browser,” says Herman Singh, chief digital officer of MTN Group. He adds that these browser-based customers are generally using feature phones to access their favourite tunes.
So what’s the best way to monetise these small browser-based transactions? Generally, it’s carrier billing.
”The challenge with any virtual product is how you collect payment,” says Singh. “So (commerce) can only grow to the extent that we can get people to pay for it. We need formal stores of value so that we can transfer funds to content creators.”
We need to give people more access to smartphones, so as the price drops and we formalise and industrialise the second hand market – and drive education – we’ll find a dramatic increase in the adoption of mobile commerce.”
“Very few people are banked – maybe five to ten per cent of the total population of Africa. But 70 per cent want to engage in mobile commerce, so how do you bridge that?”
Carrier billing is one remedy – often the only viable digital ‘currency’ in a mostly unbanked continent.
And it is especially well-suited to small ticket purchases that take place in the ‘closed’ platform of MTN’s official VAS (value added services) channels.
Singh says: “It works really well when it’s a small payment for a screensaver, a game, one music track or a subscription for access to a music service – from a few cents to a dollar.”
“(DCB) is easy because it’s one click to pay. What you want is a service that’s very fair to the customer and very low risk. Which is exactly what it is. It’s back end to back end and it doesn’t run on the open internet, so it’s very secure.”
Of course, the one-click element also serves to improve customer conversions. This is a point that is made by one of MTN’s DCB partners, Bango.
Its own research says where consumers are only presented with credit/debit card as the only payment option, conversion rates can be as low as 0.5 per cent in developing markets. It has seen conversion go as high as 82.4 per cent when DCB is offered.
While DCB gathers momentum in Africa, it is not the only digital payment option available. The continent is home to a number of flourishing mobile money wallets. In fact, MTN has launched its own wallet across many of its territories. In 1Q 2017 it confirmed that its mobile money services now have 22.2 million customers in 15 markets.
Customers can top these wallets up in a variety of ways – through bank accounts or via physical agents (with cash). The platform therefore sits alongside carrier billing and, tellingly, MTN lets DCB providers hook into it.
Singh says: “We created access to it so that the carrier billing provider, instead of hitting the airtime system, can hit the wallet system. And then we created connectivity between the wallet and the bank account so you can also use that as part of your direct carrier billing solution.”
Clearly, MTN has multiple angles covered. And this is understandable. It coverage extends across a huge continent with very diverse markets – from South Africa to Rwanda to Zambia.
However, the over arching target for MTN in all countries is the same: more smartphones and more connections. “We’ve noticed a massive increase in media consumption when there is a rise in smartphones and data bundles” says Singh.
‘Half the smartphones in Africa at the moment are not connected to the internet. We need to fix that. We need to give people more access to smartphones, so as the price drops and we formalise and industrialise the second hand market – and drive education – we’ll find a dramatic increase in the adoption of mobile commerce.”