Really cool integration of Zong in a virtual world
February 10th, 2009
Kudos to Smallworlds for their awesome Zong integration!
Archive
Posts Tagged ‘Mobile payment’
The importance of payment conversion rates
January 22nd, 2009
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 specific example to illustrate how payment conversion rates impact revenue. Let’s suppose you offer two different ways for your customers to pay you, with a credit card or with cell phone. For every 100 users who intend to buy by clicking the “pay by credit card” button, only 5 successfully complete a payment.* Again, there are lots of reasons why this payment conversion rate can be 5%: 1) user doesn’t want to share sensitive financial data; 2) user doesn’t have card handy; 3) user gets “cold feet” halfway through typing his billing address, etc. For every 100 users who intend to pay you $5, only 5 actually will. This yields $5 x 5 = $25 - $1.50 (direct costs for payment processing) = $23.50 in net revenue.
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.
Announcing Zong hosted mobile payments
September 8th, 2008
Today at Techcrunch50 we will unveil what kept our relentless team of coding ninjas from sleeping in the past months: our brand new hosted payment solution for Web apps.
Zong is now the first and only mobile payment system enabling Facebook application developers and Web Publishers to seamlessly bill 95% of the US and European wireless subscribers on their phone bill.
This new solution converts web visitors into active buyers up to 10 times better than any other payment mechanism such as credit cards. It is already live on leading Facebook virtual currency solutions providers and we have a strong pipeline of deployments that will be completed in the coming weeks.
Implementation in an existing web application takes no more than 2 days including testing.
This hosted payment solution has been developed on top of Zong’s existing platform and API, with the same tools that are available to any developer setting up a free account.
Customers cannot provision themselves for this service yet. But we can setup new accounts on our backend. If you’re interested in implementing it for your service, please contact Tamer: tamer(at)zong(dot)com. We will provision an additional 10 to 20 partners before opening up self-service configuration on Zong.com, so please provide us with as much detail you can about your app, traffic and unique users in order for us to get back to you quickly.
For live demos of the solution and live services using Zong, please visit our “booth” at Techcrunch50 in the exhibitors area located in the demo pit room.
Zong at Techcrunch 50!
September 3rd, 2008
Come and meet us September 8-10 at the Techcrunch 50 event in San Francisco!
As exhibitors, we will be showcasing our new Zong based hosted mobile payment solution that enables any Web publisher or Facebook application developer to add frictionless mobile payments to their app in less than a day.
We will also have a lot of exciting news to announce and few good surprises for the TC50 audience!
If you want to setup meetings and book demos in advance, please contact your trusted mobile monetization guru, Tamer: tamer[at]zong[dot]com.
Zong on the Shoemoney Radio Show
June 6th, 2008
Charging for content on the web, yeah really…
May 14th, 2008
Everyone on the web feels content should be free, but let’s face it’s not. Someone’s got to pay for it sooner or later. The consumer always pays, either by clicking on a sponsored link or banner and buying some other company’s products or by willfully deciding to pay because the service or the content is of value to him.
The more time I spend talking to “Web 2.0″ companies, the more I realize how tough it is for them to monetize their sometimes huge user-base. Some early Facebook application developers faced the reality of extra-low CTRs and had a bitter pill to swallow when ad networks went from inventory acquisition (a time where any publisher names its dream CPM level and gets it), to ongoing operation, where they need to make money. Some app developers saw their monthly revenues plummet from $50,000+ to $5,000 while doubling their traffic! Well guess what… If no one buys a product or service or anything that’s ad-driven, then advertisers stop buying ad-space. The web is not TV or billboards or even magazines where advertising agencies can cuddle the ego of high-powered P&G marketing execs with cutting edge branding campaigns. The web is about measuring every single interaction, cost and ultimately ROI. Branding dollars, where ROI doesn’t matter, are not going to the web and they won’t anytime soon. My point, and advice to any new or seasoned entrepreneur is that you need to figure out a business model! Don’t build a business thinking that you’ll find an easy way to monetize your user base if it’s big enough and that this will be easy by simply adding advertising, it won’t!
I’m not pretending or even assuming that anything is monetizable with a bona fide transaction. I’m saying good quality content, time-sensitive services and specific features of a given web service can be monetized and if the price point is below $10, mobile is the best way to do it. Let’s imagine you’re house-hunting on Craigslist, and let’s assume these guys decide they want to make money, which is another story. Would you pay $2 a week to instantaneously receive on your cellphone new listings matching your search criteria, with immediate access to pictures and contact details of the seller? I bet a good 50% of the people looking for a house in a competitive area would pay for that.
So is Loren/1938 Media going to become rich by selling a few posts at 99¢ a pop? Probably not. But he will get some transactions and it’s a good experimentation to measure take-up. Would any of you type in your credit card details to watch any of these videos? No you wouldn’t.
Precisions on the video below: although we’re working on covering the globe and 3 billion mobile subscribers sometime in 2009, we now cover a little over 500 million mobile subscribers across the US and Europe. Our target is to reach 1 billion+ by the end of the year.