We’re excited to be processing mobile payments in two more countries this month. Same as in most every other country, we have 100% mobile carrier coverage to maximize your payment conversion rates. Contact us if you want to turn on these markets for your account.
Other news: check out our May Newsletter for a smattering of Zong news, humor and other tidbits.
We recently conducted a consumer survey to better understand our customers’ customers. As marketers, the downside to having a frictionless end user payment experience is that we don’t always know a lot about the people making the payments. How old are you? Why did you select the “Pay by mobile” option? Do you even have a bank account? These are the kinds of questions our survey was designed to answer.
Here’s what we learned, in classic “Myth vs Fact” format:
Myth - Mobile payment users are just a bunch of 12 year olds using their parent’s cell phones to make payments.
Fact - Over 88% of mobile payment users are 18 or older. The distribution skews younger with about 60% between 18 and 30 years old.
Myth - Mobile payment users only use mobile because they don’t have bank accounts or credit cards.
Fact - 76% of mobile payment users have a bank account or credit card.
Mobile payment users have plenty of options, which begs the question, “why do you use your mobile phone to pay?”
We’re glad we asked:
34% said they used mobile because “it’s fast and easy”
22% said because “it’s fun”
20% said because “i know it will work”
14% said because “it doesn’t seem like I’m spending real money”
10% said because “i don’t have a bank account or credit card”
Folks, mobile payments are becoming mainstream.
Good stuff.
Yesterday we launched coverage in Australia across all wireless carriers. Just like in the US, Canada and Europe, we are connected with over 95% of all wireless subscribers wherever we’re live. It’s something we think is really important. After all, as a user, it’s a crumby experience to be led to believe you can make a payment only to find out your carrier isn’t supported.
We’re rolling out lots of new countries in the coming months. Check out our coverage page to learn more about where we are and where we’re going.
One final note, check out our latest edition of the Zong Newsletter. If you like it, subscribe.
This time the votes are being cast by investors. The recipient? Beijing-based Changyou.com, the game developer behind the wildly popular MMORPG Tian Long Ba Bu (”Novel of Eight Demigods”). Changyou’s (CYOU) stock price jumped 25% on it’s opening day of trading on the NASDAQ, confirming investors optimism for the company’s future prospects. In 2008, it generated over $200 million in revenue, most of which is derived from the sale of virtual goods. Still, they have a ways to go to catch up with virtual goods behemoth Tencent. These guys rang up $1 billion in revenue last year, about 70% of which is derived from the sale of virtual goods. Here’s to the rest of the world waking up to such an enormous opportunity!
Today we sent an email to some of our customers informing them we will discontinue support for the ancestor of Zong that was still maintained at http://hosted.zong.com as of April 20th. We put a lot of effort in building this platform and had many SMS based apps running on it such as simple quizzes, alerts and voting. We’ve nevertheless decided to pull the plug on this activity to dedicate all our energy, heart and soul into mobile payments.
The developer platform, which is the backbone of Zong web hosted payments services will naturally continue to be maintained, developed and supported.
It’s always tough to discontinue services, but we can’t be doing so many things well. We need focus and attention. As we’re on a mission to continue leading the mobile payments market and establish Zong as a very strong payment brand, we had to make this call. Maintaining the SMS apps was simply not in line with our ambitions and company focus anymore.
For those of you looking for similar services, you can go to the excellent Textmarks in the US.
For the others who are into mobile payments: fasten your seatbelts!
Kudos to Smallworlds for their awesome Zong integration!
One of the most talked about “pain points” associated with mobile billing are the fees levied by carriers. While it’s true that carrier fees can be laughably high, it’s important not to miss the forest for the trees. If you’re selling products with a marginal cost to produce approaching zero (e.g., software, games, virtual goods, digital content, etc.), what matters most is the conversion rate of shoppers to buyers. Yes, mobile payments are “expensive” on a direct cost basis, while credit/debit cards are relatively “cheap”. However, focus on the rate at which consumers complete a payment across different payment methods and you’ll start to see the impact on incremental revenue is driven more by payment conversion rates than by the direct cost of payment processing. And it’s not even close.
Let’s say you’re selling virtual goods as a way to monetize your wildly popular online game. Whenever a user intends to buy a virtual good, there is a chance that he won’t buy when faced with the task of actually completing a payment. For the sake of this example, we’ll define the payment conversion rate as the rate at which your customer actually completes a payment after intending to do so. More specifically, the payment conversion rate is the rate at which a user gets to the “payment completed” page after clicking the “pay now” button, generically speaking.
Now let’s take a look at mobile payment. For every 100 people who intend to buy by clicking “charge my mobile phone” about 50 will actually end up successfully completing a payment.* There are several reasons to explain such a high payment conversion rate: 1) user knows his mobile number by heart; 2) it’s a phone, not a bank account, so user isn’t worried about security; 3) there is no other personal information required - just the mobile number. So, for every 100 users who intend to pay you $5, 50 actually will. This yields $5 x 50 = $250 - $100 (direct cost for payment processing) = $150 in net revenue.
As you can see it’s not even close ($23.50 vs $150). Your net revenue is far more sensitive to your payment conversion rate than it is to your direct payment processing costs.
PS - Wondering where the “breakeven” point is for credit card conversion rate? It’s 30%. So if you’re getting a 50% payment conversion rate on mobile payment and 30% on credit card, your net revenue will be virtually the same ($137). Only difference is that with mobile payment, you’ll get 67% more paying customers than with credit card. After all, if you’re going to make the same amount of money, wouldn’t you rather have more paying customers?
*Actual aggregate payment conversion rate data shared by our customers.
In hindsight, 2008 was one of the most exciting years of my life, but more importantly of Zong and Echovox as a company. We’ve accomplished many great things this year, established Zong as a leading payment solution for Social Gaming and plugged in many new clients and partners while refining and making our payment experience better and better. I want to take this opportunity to thank all of you, who have helped us make this year so successful. First and foremost, our clients, who have built amazing monetization platforms, viral games and rapidly expanding social networks and communities. Then, each and everyone of you who welcomed us so warmly in the Silicon Valley, opened your doors and knocked on your friends’ for us. Your help and trust means a lot to us. Finally, I want to say how privileged I am to work with so many great individuals within our company, either here, in the San Francisco Bay area, in Geneva or in Paris. They’ve worked relentlessly and passionately to build an outstanding platform, product and company.
2009 is already knocking on our door, and we still have a lot to do. Tons of new clients to launch with, a very aggressive global geographic footprint expansion and many new features we need to work hard on. But the momentum, the passion, the energy and more importantly, the market, are here to help us achieve our ambitious goals.
Dear Friends, Clients, Colleagues, and Partners, may you swipe the bleak economic outlook of the year to come with your energy and creativity and triumph in all your personal and professional endeavors. 2009, here we come!
David Marcus
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