Monday, September 18, 2006

Great off-deck Payments article at Fierce Mobile Content

How A Payments Platform can Bridge the On/Off-Deck Divide

By Raomal Perera, CEO, Valista

With increasing demand for off-deck content today, content and service providers need to provide consumers with an easy-to-use solution for purchasing a variety of digital content and services through any mobile device. By 2007, the mobile premium content market is predicted to contribute to over 25 percent of global mobile revenue. With off-deck sales already dominating European mobile commerce, reaching between 40 to 70 percent of total revenues and with North America rapidly catching up, operators can no longer limit themselves to offering content through their own portal. A combined on-deck and off-deck strategy needs to be established.

Historically, operators were reluctant to provide access to off-deck content because of the fear that brands would suffer from poor customer service, unsanctioned transactions and fraud by third parties. While content providers prefer to stay off-deck, the ability to establish a presence within an operator's portal increases its access to subscribers--increasing sales, lessening credit risk and allowing for faster settlement. Operators also face business and technical challenges in managing the complexities of incorporating third party content and providing effective, cost-efficient transaction services outside of their existing billing systems.

Support for business processes such as payment processing, customer care, fulfillment, exception handling and settlement are vital components to bridge on and off deck business strategies.

Direct-to-Bill Charging
Premium SMS (PSMS) has been the primary method used by content providers to allow the purchase of off-deck content. However, the need for greater visibility into transactions is definitely a key factor in successfully providing off-deck content to subscribers. While PSMS as a billing method has been used in the past, it has limitations that are of concern to all parties involved in the transaction. The PSMS transaction process does not include credit checks, fraud protection or visibility into the transaction for all parties involved. Security and revenue leaks are of primary concern to both third-party content providers and operators. A Direct-to-Bill charging service provides a more robust payment mechanism when compared to PSMS. Using a Direct-to-Bill service that leverages a payments platform, merchants are able to charge consumers more accurately and to provide appropriate security, fraud protection and transparency into transactions for all parties.

Revenue Sharing
As the operator creates more highly innovative marketing offers, these programs have a direct impact on the revenue-sharing contracts that it holds with content providers. This creates the need for operators to have a system capable of ensuring revenue assurance and proper settlement for all parties involved in the transaction.

For example, if a new Spiderman movie comes out, a game, wallpaper, ringtone, and other ancillary products may be combined by a mobile operator to create a bundled offer. The discounting of products is implicit in their bundling into a single offer. Who bears the cost of this discount in the revenue-sharing relationship? If the operator offers a 20 percent discount on the bundle of a wallpaper, a ringtone and a game because it will drive purchases, it is important to highlight which suppliers are willing to sponsor a portion of that discount, or if sponsorship of the discount will fall solely on the operator's shoulders.

For a successful revenue sharing model, mobile operators and content providers need the freedom to define their contracts, without being constrained by a technology's ability to support them. A payment platform with revenue sharing technology will enable service providers and merchants to guarantee accurate and timely transaction settlements covering terms such as payments, payment schedules, discount sponsorships, liability for exceptions, refunds, non-payments, cancellation fees, and fraud. This ensures that the revenues and costs are distributed to the correct parties per the contractual arrangements.

As the premium mobile content market continues to grow, a more collaborative payment mechanism is needed, enabling content innovation and offering new opportunities for promotional programs, joint discounts, and loyalty programs. Similar to an e-commerce platform, mobile operators need to link their offerings with the generation of accounts receivable, accounts payable and settlement for multiple parties. In order to do so, operators need a comprehensive payments platform to support their on-deck and off-deck businesses. Payments platforms provide the key technology that allows operators, ISPs and aggregators to work together to successfully exploit both on-deck and off-deck markets--simultaneously. The successful and proper deployment of payments solutions helps operators, aggregators and content providers grow while still focusing on their core competencies. With the appropriate billing and payments platform, consumers will be able to access more interesting content, allowing content providers and operators to increase revenues, thereby creating a win-win-win situation for all players in the mobile content ecosystem.

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