Making Money from Micropayments

Date: March 30, 2012
Pages: 99
Price:
US$ 3,000.00
License [?]:
Publisher: Timetric
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: M3C7FE4BC6DEN
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Making Money from Micropayments
Synopsis

This VRL report looks at the key drivers and future prospects for micropayments. This report includes:
  • Research which lays out micropayments definitions on online and mobile transactions and considers emerging business models
  • Lays out the business case for micropayments
  • Looks at how big the micropayments opportunity is
  • Assesses where payment card and service providers sit in the industry
  • Covers micropayments enablers
  • Looks at the rise of new payment services and user interfaces

Executive Summary

Micropayments are transactions with a low value, but the exact definition depends on the business case and the target group. This report considers low value payments to be transactions below €5/$6.50/£4, based on The Economist magazine’s historical averages for 2010. It defines micropayments as transactions that take place online or on a mobile, are paid in real-time or deferred and deliver a virtual good instantly.

The key driver for micropayments is the shift from face-to-face, physical payments to the monetisation of digital content, and the emergence of new business models. The micropayments opportunity lies especially deep in the internet. Products such as data, music, software or particular services can be easily and quickly downloaded – often for a fraction of the ‘physical’ price.

No emerging micropayment payment processing service to date has been able to deliver the same complete set of characteristics to truly and completely address each stage of the micropayment experience. However, the vast majority of providers of payment infrastructure, both incumbents and new entrants, share a common perception that there is the need for a universal payment platform.

Scope

Micropayments did not exist before the turn of this century. This report encapsulates the latest thinking on this fast changing subject. It includes
  • An assessment on the potential scope of the market
  • An examination of the enablers – looking at social media and mobile apps
  • M-commerce, e-commerce and m-wallets
  • Case studies in Latin America, Africa, as well as Europe

Reasons To Buy

There is a gap in the market for a micropayments mechanism that allows the sale of single items in addition to subscription-based business models
  • Use this report as part of the essential research which will help aid in the development of this mechanism
  • Examine the changing spending habits of consumers over the last 15 years
  • Gauge the opportunities for the development of micropayments processing technology
  • Predict the future shape of the market and how the payments landscape will change over the next few years
  • Discover the business case for micropayments

Key Highlights

There are a number of ‘success factors’ necessary for a successful micropayments solution. They include
  • Tailoring the business model to suit the type of product and type of consumer
  • Developing a cost-effective solution
  • Providing consumers with a secure, widely accepted and easy-to-use payment method
  • Gaining critical mass quickly
Executive Summary

1 DEFINITION OF MICROPAYMENTS

1.1 What are micropayments?
1.2 Defining micropayments
1.3 Digital vs physical
1.4 How low is micro?
1.5 What is the business case for micropayments?
1.6 How big is the micropayments opportunity?
1.7 Comment: James Ratcliff, Group Editor – Cards and Payments, VRL Financial News9

2 MICROPAYMENTS – THE STATUS QUO

2.1 Payment card and payment service providers
2.2 Emerging business models
2.3 Secure payment methods – the challenges

3 MICROPAYMENTS ENABLERS

3.1 The growth of broadband infrastructure and e-commerce
3.2 The growth of social networks, online gaming and virtual goods-related businesses
3.3 Social media and virtual currency
  3.3.1 The risks of virtual currencies
  3.3.2 In-Game Virtual Goods
  3.3.3 Mobile Apps
  3.3.4 Case Study: Facebook
  3.3.5 Case Study: ZunguZ in South Africa
3.4 The emergence of new online payments services and user interfaces
  3.4.1 e-wallets and e-money
  3.4.2 The problem with wallets
  3.4.3 TV Video on Demand
3.5 Mobile and prepaid present a major opportunity to tap into the micropayments market: Comment by James Ratcliff
3.6 VRL’s Prepaid Summit
  3.6.1 The mobile opportunity quantified
  3.6.2 Consumer relationships

4 M-COMMERCE , E-COMMERCE AND M-WALLETS

4.1 E-commerce: The Freemium model
4.2 M-wallets and m-commerce in the UK
4.3 Cards and banks and there place in the micropayments world - Comment: John France, managing director of European payments at eWise
4.4 Data from the ECB on the status of e-payments in Europe
4.5 Mobile payment patterns
  4.5.1 Industry collaboration
  4.5.2 Bank moves m-Case studies
4.6 Case study M-payments in Latin America
  4.6.1 Cash replacement
  4.6.2 Brazil
  4.6.3 América Móvil
4.7 Case study: Sweden
  4.7.1 Case Study: iZettle
4.8 Visa’s move into mobile
  4.8.1 Case study: Fundamo
4.9 Case study: Vodafone
4.10 Case Study: M-Pesa in Kenya
4.11 Case Study: Rwanda
4.12 Online gaming
  4.12.1 Revenue recognition models
  4.12.2 Case study: Zynga
  4.12.3 Case Study: Vindicia

5 CONCLUSION – THE FUTURE OF MICROPAYMENTS


LIST OF TABLES

Table 1: Virtual Income (US social gaming revenues by segment, 2010-2012)
Table 2: Virtual Currencies (Currency used in various massively multi-player online role-playing games (MMOGs)
Table 3: Overview of e-payment services
Table 4: Global Smartphone sales forecast, by OS
Table 5: Smartphone subscribers in Europe, millions
Table 6: Top 150 selected banks – Facebook “likes”
Table 7: Latin America (All MasterCard credit/debit/charge card programmes)
Table 8: MTN Subscribers, December 2009
Table 9: Zynga’s revenues

LIST OF FIGURES

Figure 1: Micropayments – Paid apps revenue forecast ($ billions)
Figure 2: Micropayments – Proportion free VS paid application
Figure 3: Secure Payment Methods
Figure 4: Digital Content Micropayment Vehicles
Figure 5: Payments Market Share Within Social Networks Will lead into other segments
Figure 6: Broadband Penetration in Western Europe
Figure 7: Virtual Currency
Figure 8: Largest demographics of consumers who have reported buying virtual goods (%)
Figure 9: Where US consumers are buying virtual goods (%)
Figure 10: Ethnic breakdown of virtual goods purchases (%)
Figure 11: Micropayments, Position in the payments landscape
Figure 12: Clear Preference? US consumers choose alternative payment options for web-related transactions over credit and debit cards
Figure 13: Value of transactions (Selected European Countries – Value of credit transfers as of 2009)
Figure 14: Comparative Growth, Increase/Decrease in the number of transactions annual percentage changes in EU by type of payment
Figure 15: Value of transactions, Selected European Countries (value of different payment instruments as of 2009)
Figure 16: Most trusted mobile payment brands – US mobile brands ranked by level of consumer trust in mobile payments
Figure 17: Scandinavia VS selected European countries, Non-cash transactions per inhabitant
Figure 18: Visa the story so far across Europe, Market Penetration
Figure 19: Fundamo’s shareholders
Figure 20: Mobile Charity Giving (% of charities signed up to JustTextGiving)

COMPANIES MENTIONED

Facebook
ZunguZ
iZettle
Vodafone
M-Pesa
Fundamo
Zynga
Vindici

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