Mobile operators turn to direct top-up to counter declining prepaid ARPU
Date: Fri, 06/26/2009 - 13:16 Source: Vesta Corporation PR Department
Vesta Corporation, a global pioneer and leader in electronic payment solutions, announced results of an independent research study, indicating how an effective prepaid top-up strategy can deliver significant value to the prepaid mobile market. The study, based on operator interviews, shows that the implementation of a direct operator top-up strategy can bring double digit revenue gains and reduced costs. Given the size of the prepaid market in Western Europe, this can equate to hundreds of millions of Euros annually. Direct operator top-up channels include all operator-managed top-up channels that rely on electronic transactions outside a retail environment, such as the operator’s website, IVR and handset applications.
The research indicates the significant advantages that direct operator prepaid top-up has over other existing top-up methods, including improved performance metrics, lower costs and improved CRM capabilities. In addition, direct handset top-up has the ability to remove the fragmentation and complexity impacting the take up of m-payment services and drive new revenue streams for operators.
The research has been conducted by independent telecom consultancy Northstream and is based on the feedback of leading wireless operators across Western Europe. The results have been published in a whitepaper ‘Time to Top-Up the Prepaid User Experience: How an effective top-up strategy can improve operator performance metrics and accelerate mobile payments’.
Chris Parsons, CMO of Vesta commented; “When prepaid direct top-up is executed properly it not only offers an opportunity to increase the ARPU of prepaid but also provides the foundation for operators to seamlessly offer a wide range of profitable mobile payment services from the same platform. Aside from prepaid debit reload, other services such as peer-to-peer transfer, international remittance and mobile commerce become far more readily accessible”.
According to the whitepaper, with overall growth in the prepaid market slowing, operators are looking at ways to reduce costs while increasing prepaid customer loyalty and revenues. Non-cash (credit/ debit card/ bank) payment penetration has grown significantly in Europe, and a staggering 91% of operators interviewed intend to drive top-up transactions from costly commission-based retail infrastructures to “virtual” non-cash top-up (NCTU) channels.
Aligned with this view, not only are operators exploring alternatives to retail top-up but 100% of those interviewed want to shift their non-cash payment mechanisms from a bank centric model to a direct operator model. Given this finding, it is somewhat surprising that less than 20% of the NCTU offerings analyzed in the research included handset-based top-up applications, even though top-up frequency using handset applications can be up to 80% higher than other channels. This increased frequency also results in an ARPU increase of 23%.
The main imperatives stated for adopting a direct top-up approach were avoiding zero credit service interruptions, increasing top-up frequency and improving customer experience with anytime, anywhere top-up availability via handsets, the web and IVR. However, the research also indicated the ability of direct top-up to enhance CRM capabilities, enabling operators to identify high value customers and cross-sell while customizing and optimizing user experience. Indeed, over 90% of operators interviewed highlighted the need to strengthen the way that top-up integrates with their online services and other operator-controlled channels.
Chris Parsons continues: “By adopting a direct top-up approach, operators will improve their prepaid performance indicators by reducing costs, improving prepaid customer loyalty and increasing revenues. Operators are struggling to build-out direct top-up channels given the reduction in their IT budgets but those that address these challenges early will reap significant benefits in the prepaid market and create a strong platform from which to launch further mobile financial services.”