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Payments Presents a Towering Opportunity for Telcos

telco payments opportunity

Mobile phone usage is soaring and, with around a third of the world’s population and up to 65 percent of Western Europeans estimated to own smartphones in 2017, it is fairly safe to conclude that digitally-connected consumers are a strong and growing group.

Is it all good news for telcos?

The truth is, while consumers are spending more time and money on their mobile devices than on their desktops and in stores, telcos – the facilitators of this movement – are actually only billing 3 percent of consumer spend. Add to this the increasing number of new market entrants, in particular OTT (“over the top”) players, who are threatening the traditional bread and butter revenue streams of telco companies, and it is clear that MNOs and MVNOs need to consider how to carve out a profitable, sustainable path in a digitally-connected future.

According to analysis carried out by telco experts at ACI Worldwide and Red Dawn Consulting, the mobile payments market is set to double over the next five years, and telcos have a towering opportunity to increase their mobile payments revenue at least fourfold by 2022.

However, this €13 billion opportunity can only be realized by those telcos who are willing to think ‘outside the box’ – or rather ‘inside the handset’ – by examining how they can deliver against consumer demand for speed, convenience and security. And those that make their businesses a mobile-enabled hub for the digital marketplace.

The importance of keeping the customer close

Telcos should start by examining their existing relationships with customers; what role they are playing, what services they are offering, and what added value could be delivered to garner customer loyalty and increase revenues. After all, consumers are increasingly living their lives ‘on the go’ and using their mobile devices every day to shop, transact and communicate. Effectively, telcos are already placed at the center of a transformational consumer trend.

Telcos have a ‘billing relationship’ with their customers and profile data, which is a good starting point for building out and transforming their business model. By leveraging this position, telcos can facilitate more payments, and increase their share of wallet by aggregating products and making their mobile payments process more attractive than that of their competitors. Telcos also stand to own more of the value chain by partnering with players who have broader access to consumers, merchants and payment enablers. There is an opportunity to use these partnerships to shift consumers’ perception of telcos from that of ‘operator’ to ‘digital marketplace.’

Exploring the untapped telco opportunity

ACI and Red Dawn Consulting have launched a five-part insight series, which explores the mobile payments market opportunity for telcos. The series explains how expanding payment relationships, optimizing the mobile payments experience, mobile payments innovation, and effectively managing mobile payment fraud can all position telcos for success.

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