Serbs pay by phone

Mobile payments firm Upaid today announced the national launch of its Mobile Payment Service (MPS) marketing campaign in Serbia. Including all three mobile operators and 10 banks in Serbia, the launch is an expansion to a service started in October 2006 with Visa International and Serbian mobile operator Mobile Telekom Serbia (mt:s).

Terry Trench, senior vice president for commercial operations, Upaid, described the service as “boring” in a conversation with Mobile Communications International magazine – it’s just a top-up application after all. But he is enthusiastic nonetheless, because he believes the service is setting a precedent. In one or two years, ‘off-operator billing’ could be used for more than just top-up. Mobile content, or utility bills (he hopes to persuade Serbian utility firms to participate) could become part of the service.

In what he reckons maybe a world first, the service is launching with every operator in the country, some 16 banks and one credit card company (another is expected to join soon). It has taken Upaid three years to persuade all of these organisations into the consortium.

But launching with just one operator and one bank is largely pointless, said Trench, because the addressable market is so small. Users have to be customers of both institutions and are unlikely to change banks, or mobile providers, to access a slightly more convenient method of topping up their prepaid account. “To get the utilities you need to have a large number of users because you need the volume. To get the volume you need all the operators and to get all the operators you need to be able to prove that you can get the majority of the banks,” he said.

While operators don’t see any incremental revenue from the service – some are even offering the top-up text messages free of charge – they could stand to reap significant savings in terms of voucher generation and distribution and commission that they pay to distributors.

“The banks are getting a revenue stream, a modest one, it has to be said, because these are very low value transactions. But the fee that the bank will charge for a transaction of this size is lower than the commission an operator pays to a merchant. So there’s the opportunity for them to put some extra margin on top of that and turn the bank into an m-commerce merchant. And that’s the future we see: Recharge, bill payment, m-commerce purchases. But you have to have the critical mass of customers,” said Trench.

The barrier to building that critical mass is registration. This is a headache for any project and persuading users to register their credit card details isn’t going to be easy. Every member of the consortium, the banks, the credit card companies, the operators and Upaid itself, is making a financial contribution to the marketing campaign. Users will receive text alerts about the new service when their balance runs out and the traditional advertising media will be hit over the coming months.

“When people look at new technologies, they tend to focus on the radical changes that new technologies can create,” said Trench. “But the radical changes are always the consequence of something pretty boring and basic, like recharge.” All of the players in the chain are hoping that users will become familiar with initiating transactions from their phone, which will lead to an easier run for subsequent m-payment service launches.