Lets do an update on Mobile Payments. I should call this: Wow this is Huge. And like most of my 'definitive' treatments, lets give this an Executive Summary so you know is this worth reading (note update to article at bottom end with fresh numbers from Russia):
World has 2.5 Billion active users of mobile payments already in 2016. That is more than the total active user base of Facebook. The value of mobile payment transactions last year was worth $600 Billion dollars. Easily ten times bigger than the total combined value of all app stores, iOS, Google Play and others, put together. Just in tickets sold onto mobile alone, the world saw 11.5 Billion mobile tickets delivered last year. The bulk of those were on busses, trains and airplanes, not movies, rock concerts and lottery tickets. Mobile coupons are worth $30 Billion dollars all by that category alone. All this is discussed in today's blog article. This article sets in proper relationship the various technologies that you probably have heard of about mobile payments such as mobile internet based services like Paypal, NFC based payments like Apple Pay, Starbucks style mobile wallets, M-Pesa style SMS payments, Bitcoins, but also QR codes, USSD, MMS and WAP Billing. This article offers the most thorough treatment of mobile payments in the public domain currently, and it focuses on where the money is. 54% of all mobile payments processed last year went through..... SMS. There are tons of case examples and statistics from all around the world: Australia, China, Finland, India, Japan, Kenya, Malaysia, Norway, Philippines, Russia, South Korea, Sweden, Switzerland, Turkey, UK and USA. There are major corporations and brands discussed who do remarkable things with mobile payments today like Air Asia, Castrol, Coca Cola, Finnair, Lifebuoy, Nordstrom, Rihanna and Tally Weijl.
This blog is written by the man who delivered the keynote address to the first ever conference on mobile commerce; who wrote the world's first book on mobile money and who has written more about mobile payments than any other person in the world. He is quoted in over 500 press articles and more importantly in 170 books written by his peers. Major global players in the merger of money and mobile telecoms from banks like ABN Amro, Bank of America, HSBC and BNP Paribas, to telcos like Vodafone, China Mobile, NTT DoCoMo and Telefonica have said in public that they trust and use Tomi Ahonen to guide them on this journey. That is what to expect. This is a long article of over 10,000 words (about one full chapter in one of my bestselling hardcover books) and will take you about 15 minutes to read. It has more stats and more case examples than any other article written into the public domain about mobile payments. If you want more, you will have to buy a specialist report or book. With that, lets start. I was saying that gosh, this 'mobile payments' story is actually even bigger than I had imagined...
So you thought mobile payments was becoming 'a big thing'. That Apple Pay and Bitcoins and Paypal were important stories. That you probably had to brush up on your reading soon. I have some news for you. You are BADLY behind in your understanding. Deloitte surveyed last summer the consumers in 31 countries on all 6 inhabited continents. They found that in the ‘rich world’ Industrialized Countries like the USA, Britain, Japan, Australia etc, 20% of the consumers were already using mobile payments. That is a big number. Thats 200 million people ! (just in that part of the world). If we assume the rest of the world adds what, half to that, and we’re at 300 million active users of mobile payments - that would be nearly as big as the total population of the USA. Already using a radical new payment method! Any business, literally, any business, has to understand if this many people are using a new payment method.
And you’d be making very reasonable assumptions with those numbers. But you’d be dancing on the deck of the Titanic after it had already hit the iceberg and water was gushing in. Because that same Deloitte study was a global study. Outside of the rich world (where we all have bank accounts and many have credit cards - yes, American readers, even today many adult Europeans do not bother to get a credit card, a banking payments debit card is enough for some; only Americans have that weird addiction to plastic cards). So what did Deloitte find? In the Emerging World (what used to be called ‘Developing World’ or even worse term, ‘Third World’) where 5 out of every 6 humans alive is living - China, India, Brazil, Indonesia, Mexico, Nigeria, Egypt - in the Emerging World the usage of mobile payments is at.... 47% of all consumers !!!!!!!!
47% of the Emerging World population is 2.9 BILLION PEOPLE. Active users of mobile payments (oopsie? I guess this story is bigger than I thought). Yeah. Think again. Now to be precise, Deloitte measured ‘consumers’ so the number is not as a percentage of total population (a toddler is not a consumer but is a human). In reality its somewhat less than 2.9B but yeah. More people are ACTIVELY PAYING with mobile in the Emerging World alone, than are TOTAL USERS of Facebook on the planet! Did I get your attention? More people use mobile payments worldwide than have a credit card! Did I get your attention? Will you read this article? I have the definitive numbers, stats, case studies here for you. This is the must-read article about mobile payments and mobile money, for February 2017. All numbers totally up-to-date current.
Yeah. 2016 reality check. Nearly half of that part of the world that you are not very good in understanding - has already adopted a new payment system. And you somehow missed that. And that payment system is NOT Paypal, it is NOT Apple Pay and gosh, it is not Bitcoin. This article tells you where the money is, shares all known stats about the mobile payment industry - and illustrates with over a dozen case studies the various ways you can join in the fun, and make money with mobile.. money. (All for free.. no registration, no ads to bother you)
DON’T POLLUTE YOUR MIND WITH BULLSHIT
Most articles about mobile payments talk about Apple Pay and Bitcoins and Paypal. And as you read those articles you the reader will feel you learned something. Listen very carefully to what I write: those three cases (Apple Pay, Bitcoin, Paypal) are irrelevant. Not ‘are only somewhat relevant’. No. listen. Carefully. BItcoin, Apple Pay and Paypal. Those three cases are IRRELEVANT to the mobile payments world. If you are putting in the time studying, understanding, adopting, learning, using, copying, Bitcoin or Apple Pay or Paypal, you are WASTING YOUR TIME. I have the numbers to prove it to you in this article. Talking about those three is as relevant to the global mobile payments industry as is talking about the automobile industry today, and using only three of the weirdest examples you can think of while IGNORING Toyota, GM and Volkswagen. Or talking about the airplane industry and ignoring Boeing and Airbus. Or talking about the running shoe industry and ignoring totally Nike, Reebok and Adidas. Its LUDICROUS.
Imagine a car expert talking about today’s global car industry but only mentioning the example of the London Black Cab car, and then the example of the four-wheel tourist twin-seat bicycle-peddaled vehicles, and lastly the cars with driving controls for both front seats (cars made for driving instructors). If this is a story about 'let me show 3 bizarre vehicles' then thats fair. If the presentation or article or book is about 'the global automobile industry in 2017' and uses ONLY those 3 examples - it's utter bullshit. If they talk about London Black Cabs as supposedly the most used cars, but ignore Toyotas and Volkswagens, gosh, its ludicrous. In mobile payments, Apple Pay is like London’s black cab vehicle maker - is a local specialized solution for one country that isn't even their most used type of car that will not be the mass market globally. Bitcoin has nothing to do with cars. Its like counting twin-seat four-wheel bicycles as supposedly ‘automobiles’. And Paypal is a nice solution for online payments in the legacy 6th media internet world (Mobile is the 7th media). But Paypal’s solution works ACROSS both media, it can be used online and mobile (like a car with 2 controls can be used for teaching driving, and also as a regular car). Paypal are a trivial bit-player in the international MOBILE payments world. Like cars made with driver controls for both driver and instructor. They do exist. There is a genuine market for that - but its a joke, a trivial side-show of essentially forgettable relevance. If you write a story about CARS, you talk about Volkswagen, Toyota, GM. Maybe you want to add BMW or even a Ferrari. If you want to talk about ‘specialized’ cars, you can talk about Volvo Trucks or Cat caterpillars. Probably you want to talk about the EVOLUTION in cars, which would be say Tesla. But you don’t devote any meaningful time to London Black Cabs, or haha bicycles, or those weird cars where there are pedals on the passenger-seat side too.
We have the numbers. You really think Apple Pay is ‘relevant’? To mobile payments? Outside of the USA? Seriously? Seriously? Apple Pay? That only works on SOME of Apple’s iPhones and doesn’t even work on the majority of smartphones used in the USA? Apple Pay isn’t even the largest mobile wallet or NFC service provider in the world. And what is NFC in the world of mobile paymnets hahahahahahahaha.
Mobile payments, mobile money, mobile wallets, mobile banking, mobile commerce. All that will have more than half of its TOTAL global user interaction on ONE tech that has nothing to do with NFC. Nothing to do with the iOS. Something that works on every phone. In fact the ONLY digital service that reaches every economically viable person on the planet. Did you get that? A digital service that reaches every economically viable person on the planet? Not Facebook haha, Facebook only gets to less than a quarter of the planet. Not email, not the internet, not Google, not Android. The only digital technology that reaches every economically viable person - is SMS text messaging. Not every person who can be reached by SMS will be actively using it (some are illiterate) and some may well prefer OTHER messaging like say Whatsapp. Wonderful yes. But brand new numbers out December from eMarketer gives Whatsapp global count at 1 Billion active users. Contrast that with 6 Billion active users of SMS text messaging!
I am NOT talking about USAGE. I am not talking about the number of messages sent. I a talking about the REACH of a technology. An iPhone can get into 600 million pockets. Whatsapp can get into 1 Billion pockets. Facebook can invade 2 Billion pockets. But SMS sits with 6 Billion ACTIVE users and reaches every single one of the economically viable people on the planet. Duh. So the ‘envelope please’.
DEVASTATING NUMBERS ON MOBILE MONEY
So what is the primary way people use mobile payments? Its not Paypal haha, its not Bitcoin (Bitcoin isn’t even mobile money; gosh Bitcoin isn’t even electronic money, its a gambling instrument). Allied Market Research just came out with their latest count in January 2017 of the total global mobile payments market of 2016. They found the total value of all mobile payments transactions was $600 Billion dollars worldwide.
Lets pause here first. How big is that number? Its more than the GLOBAL TV INDUSTRY. Its twice the size of the worldwide INTERNET industry. Six hundred billion dollars is more than the size of the fixed landline ‘legacy’ telecoms industry on the planet worldwide! Its not just that mobile telecoms is bigger than landline telecoms today, haha (that has been true for a decade) now ONE SLICE of mobile services, mobile money, alone, is worth than the ‘parent’ that gave birth to this industry - ‘fixed telecoms’ 38 years ago (Mobile industry was not born in the USA by Motorola and Ameritech, it was born earlier, in Japan, in 1979, launched by NTT of Japan. This blog deals with facts, not peddling myths).
So mobile payments alone are worth $600 Billion dollars. Now what technology is used for those money payments? Yeah. I told you so. Duh. Not Bitcoins, not Paypal, not Apple Pay. Mobile web payments (one of which is Paypal but they are not the biggest) and NFC payments (one of which is Apple Pay but they are not the biggest) form the ‘other’ category of how mobile payment happen. Only 12% of all mobile payments in the world. happened using these ‘other ways’. That includes the famous mobile wallets also, like Starbucks which you no doubt have often read about. Thats another way to do mobile payments - yes, via an App. That is also a TRIVIALLY SMALL slice of mobile payments! Because you know what ELSE is there in ‘other’? Do you even KNOW what the letters USSD mean? Yet India, world’s second largest country by population - and also second largest market by mobile industry now ahead of the USA (behind China) just announced last year, that their national mobile payment technology will include USSD. And go to a country like say South Africa, and USSD is a staple in mobile payments. Because USSD is not ‘universally’ used in mobile payments, but it has high national successes, I won’t waste my readers time on it here, but I want you to understand context. Hidden in that ‘other’ category are all your favorites like Apple Pay NFC, Starbucks apps Apps, Paypal eCash and yes other far more used technologies like.. USSD.
(And yes, I’m not here to tease you. USSD stands for Unstructured Supplementary Service Data. It is a standard tech feature of all phones and networks and it is best known for the various ‘hashtag codes’ you do with prepaid accounts - to find out what your remaining balance is, type in #22*46 on your phone, or whatever the code might be for your network. That type of technology is USSD. It is used for service delivery, games, as a media platform, even to deliver Wikipedia content etc; and yes, used for mobile payments. If you are ever speaking in say Kenya or India at a conference and you talk about Bitcoins and Paypal and Apple Pay - but don’t know what USSD even is - you wll be exposed as a clueless Westerner who is useless to that economy. USSD powers a major slice of the mobile ecosystem).
So if not Paypal or Apple Pay on NFC or some app (or this newfound weird letter combiation, USSD) What is bigger? In at number two... you readers will be floored because NOBODY else tells you this - is... WAP Billing. Yes. In year 2016, out of all $600 Billion dollars worth of mobile money transactions, the second most used tech was not NFC or internet payments or any other ideas that the West Coast clueless tech press likes to sing songs about. It is WAP Billing. And how much of it was WAP Billing? 33% !!!!! $198 Billion dollars worth of mobile payments worldwide - through WAP Billing. Payments that were collected through the telecoms operator billing systems (including prepaid of course) and most of those who use WAP Billing do not own a credit card!! They have no way of getting onto an iTunes account or to buy from the iOS App Store. But in most countries the operators offer their version of what Apple and Google do with their app stores - by letting local content owners bill via mobile - charge via mobile, send money via mobile - which then shows up on the phone bill (or is deducted from your mobile account). This can be VERY advanced, such as issuing you a ‘disposable credit card number’ on an exact payment account as a kind of prepaid voucher Mastercard. Enter those 16 digits and this expiration date, and then your payment will be accepted at the hotel. But you were CHARGED via your MOBILE account (prepaid account) and this type of payment is done either via Premium SMS or via WAP Billing.
Almost any mobile based subscription service that does not involve approval purchase message every time it is used - is done with WAP Billing. I know you are stunned because your tech writers were telling you about Bitcoins and you were at Starbucks and used their app and you love your Apple Pay on your iHandcuff sorry Apple Watch. Tomi Ahonen talks about WAP Billing why? Because one THIRD of all mobile payments are run through it !!!! Has nothing to do with Paypal style internet payments. WAP Billing enables single-click buying on mobile commerce sites. It is HUGE. How huge? WAP Billing powers an industry twice the size of global radio. WAP Billing powers an industry three times the size of the global videogaming industry. WAP Billing collects four times more money than ALL APP STORE REVENUES, combined! WAP Billing powers an industry six times bigger than the music industry. That is why while nobody else does - I keep harping on and on about this. $198 Billion reasons why. Duh. Come out of Silicon Valley’s silly bubble and taste the real world. Visit Nigeria visit Brazil visit Russia visit Indonesia visit Egypt visit Chile visit Malaysia visit the Ukraine. WAP Billing. Who knew? (My readers knew). But hey? Thats number two. Whats at number 1?
Haha its Premium SMS of course. That is how mobile money was BORN. Apple did not invent mobile money with Apple Pay haha (the first NFC mobile wallet was born in Japan invented by NTT DoCoMo a decade prior - and my readers knew; I was URGING Apple to deploy NFC and give us mobile payments back when many iSheep were insisting nobody will ever pay with their mobile wallet, imagine what a ‘risk’ it would be if you lost it hahahahahahahaha). How do I know its the first? Because I got to see NTT DoCoMo’s Felica and its NFC mobile wallet Osaifu Keitai - before it was launched commercially, in a private demo, as they wanted ‘the famous author’ to know if this technology and perhaps include it in a future book. NTT DoCoMo is of course also a reference customer of mine, so I have quite often been shown their coolest stuff before it is launched. I was literally the first person to write about Osaifu Keitai in the English language, I loved it that much. Now we see Apple Pay - is total iClone of NTT DoCoMo mobile wallet - down to Siri the digital assistant even.
So Premium SMS? How much of total global mobile payments went via SMS last year? $324 Billion dollars worth ie 54%, said Allied Market Research in January 2017. That is as fresh and as total numbers as you can get. That is explaining who is Toyota or Volkswagen in ‘mobile payments’ and who is ‘the London Black Cab car company’ haha. Did I tell you this? Did I repeatedly say ‘SMS, SMS, SMS’ on this blog, in my books, on Twitter, and in my presentations? Do I not include SMS payment discussion in EVERY mobile payment and mobile money and mobile banking and mobile commerce item I have ever done? But did your other tech writers even MENTION the largest platform in the world used for mobile payments, or were they talking about weird bicycles for tourists that two can peddle and hoping you might not notice that a BICYCLE is not an AUTOMOBILE. It does not ‘auto’-move at all, unless a human POWERS it...
So you say, ‘Tomi we know all about M-Pesa’. Haha, and if that is your response, boy did you need to read this article. M-Pesa is a glorious RECENT example of mobile payments, developed by my dear friend Susie Lonie who won an award for her work too. Susie spoke already at the world’s first conference on mobile commerce haha (where we first met, I did the keynote) which was half a decade before M-Pesa.
So yeah, good that you know what M-Pesa is. I was here writing about M-Pesa from literally its birth and have celebrated it year-by-year (and I have USED M-Pesa myself personally, have you?). But M-Pesa is a late bloomer. Mobile wallets via SMS existed years before M-Pesa. SMS based mobile wallets like M-Pesa were first deployed in the Philippines by the local telcos Smart and Globe. They are MILES ahead of Kenya, over there in the Philippines which has become the first country to do the interconnect of their mobile payments so you could send money from one mobile wallet on one network - to a friend on a rival network. In an American context, you could for example top up a Sprint customer by paying with an AT&T account. That kind of integration happens in the LEADING countries who have done it the longest. (Incidentally, I had USED Smart Money personally, in the Philippines, before M-Pesa was even born).
But the Philippines did not invent mobile PAYMENTS. That happened in Finland. Not by Nokia not by Sonera or Elisa or Angry Birds/Rovio haha. Mobile payments were first invented by .. Coca Cola. They deployed two vending machines as an experiment in Helsinki, one at the airport, to see if payments by Premium SMS might be a viable alternate payment method to paying by cash or credit card. Boy did it ever? Coca Cola reported a few years ago that adding SMS payments boosts the total collections per vending machine by 12%. Same machine. Same drinks. Same location. But 12% more sales if you add SMS to your payments. Because how many times have you been thirsty but then found you did not have the coins in your pocket haha. Apparently that happens 1 in 8 cases and its a global fact, because Coca Cola says this is true in all the regions. Same percent. Add SMS payments, get 12% more money out of the same vending machine. THIS is the magic of mobile. This is why I say Mobile is the ‘Magical Money-Making Machine’. Because nothing else changed in that Coca Cola vending machine, not its location, not its size, not its sounds, not its drinks selection, not its prices. They ONLY added SMS to payment options - and sell 12% more drinks!!!!
I was literally the world’s first person to talk about how you can pay by SMS in Finland. I made my first mobile payment when the only country that was even possible was Finland and only two machines were enabled to take the money (when did you make your first mobile payment?) And I was so honored to have Coca Cola’s Chief Marketing Officer Stephen C Jones write the Foreword to my fourth book (the signature book to this blog) Communities Dominate Brands. That is why I KNOW this part of mobile industry better than anyone else. Its because I saw its birth and its evolution. I know when something is not mobile payments (Bitcoins) or is a sideshow freak (Apple Pay, Paypal) and I can draw attention to the big matters when they arise (like NTT DoCoMo introducing Osaifu Keitai or Safaricom/Vodafone introducing M-Pesa). And I can point out the relevance of the trivial non-players like Apple Pay and Paypal. Now one last bit from Allied Market Research in January 2017 about mobile payments? Where is this market? Most of the money is spent in... Asia (duh). Where is your T-Dawg based? In Hong Kong. I’m not there in Silicon Valley’s silly bubble drinking iCoolaid, I live in the real world where it is happening, and I not only read about it, I see it and use it and experience it. I would be a little bit leery of taking advice about automobile development from a ‘car expert’ who lived in a country that didn’t have cars and everybody used bicycles haha... Silicon Valley is an exciting place but if you want to know what is happening in mobile money - then go where the money is! Show me the money! That means.. Asia. Come here to see it and how it is actually used!
Ernst & Young counted in November of 2016 that China had 410million active users of mobile payments already. For contest, the USA’s total population is 340 million and some of them might actually not own an iPhone, or use Paypal, or drink Starbucks haha. Which is the Black Cab car company and which is Toyota or Volkswagen? So 410 MILLION active users of mobile payments ALREADY TODAY, and that is not Apple Pay or Paypal or Starbucks (or Bitcoin). Gosh, perhaps we NEED to read Tomi Ahonen’s blog article today...
MOBILE MONEY STARTS WITH.. COUPONS
I promised you case examples so lets do case examples. Not of Bitcoins. Case examples of SMS MOBILE MONEY. Haha. This is the reality. So for context, lets see how corporate-branded money started. The first way ever, that the print industry and the advertising part of it, figured out to literally ‘print money without a banking licence’, was the humble newspaper coupon (20 cents off for shampoo, expires March 31, 2017). The type that our old aunt still clips every Sunday from the newspaper and has a jar full that she always offers us, hey, I think I have a coupon for that (which turns out to have expired two years ago). Well, like anything mobile does it turbocharges it. Coupons today? electronic coupons are the big growth area, digital coupons. And the biggest part of that is .. mobile. And of mobile coupons, yeah. You guessed it. SMS of course. Juniper reported on the numbers last year. Mobile coupons are now worth $30B globally. What is the majority of all mobile coupon delivery method? It is not Facebook. It is not Whatsapp. It is not email. It is not Snapchat or Instagram. Its not Amazon or Paypal. This is not just the ‘largest’ among several. It is the MONSTER among lilliputs. Three out of every four mobile coupons in 2016 was delivered via one technology and that is... SMS!
If you follow my blog or read my books, you knew all about this. But did your tech writer with his or her recent article about ‘mobile payments’ even MENTION mobile coupons? Here’s one case of a mobile coupon. Finnair. Finnair invented mobile check-in 15 years ago. They have since evolved their system and originally it was only done on SMS, now it covers every conceivable tech and offers everything you could hope for in a mobile travel branded solution from an airline of course, from ticket sales to loyalty points. But what about a mobile coupon offer? As more than half of all of Finnair’s passengers have enrolled into their mobile service, and Finnair knows what you’re flying before you fly, they will do an instant, one-time upgrade offer, only on a first-come, first-served basis, only when there happens to be excess capacity - and starting with premium loyalty customers of course.
So, its the flight from Dusseldorf to Helsinki. Flight has closed, ticket sales counter is closed, only these 78 passengers will fly in this Airbus A320 to Helsinki today. There are 3 seats left in Business Class that are not sold. Because the plane is not full, Finnair has no reason to upgrade anyone into those Business Class seats. BUT.. It can SELL an upgrade.
Ticket sales counter is closed. The passengers are minutes from boarding the plane. They have gone through the security check already. How can we possibly ‘sell’ anything to these passengers? Its automatic, of course. We send them an offer. A coupon. We do it the only way that reaches every pocket of every economically viable consumer on the planet - including each of those 78 Finnair passengers in Dusseldorf airport. Remember this is not SPAM, we are not pushing at these customers anything they did not PREVIOUSLY agree to receive. They are our LOYALTY program members. And we had already previously asked them, are they interested in travel-related promotions and special offers. Only those who said yes, are included. We do not spam. So here it goes.
30 minutes before boarding commences, the 3 Platinum-level Finnair Plus loyalty program members feel their phones buzz. They receive the message ‘we have a few seats left in business class today on your flight from Dusseldorft to Helsinki. we noticed this time you are flying in economy class. Would you like to upgrade yourself to Business, because you are a Platinum level frequent flier, we will make you a one-time offer of 100 Euros for the upgrade that normally costs 500 Euros.’
It includes a ‘Click-to-buy’ link. One of the 3 takes the offer, and the system sends the new boarding pass to him, onto the phone, with his precious seat 2D in the front of the plane. 15 minutes later, the Gold Level frequent fliers receive a similar offer, but now at 200 Euro cost to upgrade. One takes the offer. Next the boarding starts, and as some Silver level Frequent Fliers take advantage of the fact that they are allowed to board early, even when travelling in econmy class, he suddenly notices his phone getting a message, and its the upgrade-offer (but now for 300 Euros). And out of the two dozen Silver level Frequent Fliers, the first to take this last seat, gets it and another was too slow and gets the message apologizing that he was not fast enough...
The same 78 passengers will fly on this Airbus A320 from Dusseldofr to Helsinki today, no matter what happened. They have paid their tickets, their luggage is stored, there is no way to try to sell them anything else. But an automated system can now extract MORE PROFIT from this group of passengers by moving a few from economy class to Business Class. And the consumers do it themselves, and they PAY FOR THE PRIVILEGE.
This is PURE PROFIT for the airline. So do the passengers love this? 23% of all Finnair frequent fliers who have been offered a paid upgrade - have already used that facility at least once !!!!!!
This is the power of mobile. This is the power of mobile PAYMENTS. This is the power of SMS text messaging!!! This is a COUPON.
END OF HUMANS IN RETAIL? AIRLINES
So if Finnair started that revolution where is it headed now? Come to Asia and see. Air Asia, our largest low-cost airline has shown what is next for money. They have ended human check-in. At their largest hub in massive Kuala Lumpur airport KLIA-2 terminal there is no more human service for check-in. They discontinued human check-in. There are check-in kiosks. You can do check-in online. But most of the check-in is done... on MOBILE. Duh. How is the mobile boarding pass sent to you? Not by email. Not by app. Not by NFC. And not by SMS. It is sent to you via... MMS. Yes. The boarding pass is sent via MMS to your phone. And most consumers are blissfully unaware that this technology even exists on their phones, they just think its a pretty picture on that ‘text message’ that they received. They think it is an SMS-with-a-picture. It carries of course the QR code to offer the travellers unique boarding pass so that the ticket cannot be duplicated in some way. But back to mobile payments. THE END OF HUMANS at the cash register? It is coming. You saw it at KLIA, Air Asia is the first airline to have ended the human interface on Check-In and you have to have a mobile to get on the plane (or use a kiosk or go to an internet cafe, use the web version, and have that boarding pass then printed out if you want).
Mobile will kill cash. Mobile is already doing that in small ways, in many areas. I’ve reported on things like parking in Estonia (SMS) and bus tickets in Sweden (SMS) where you can’t do cash anymore but you can do mobile. Now .. an airline. Now it doesn’t seem that bizarre anymore, to be reminded that several countries are in a race to eliminate cash in our lifetimes - replaced - not by Bitcoins, not b Apple Pay, not by Paypal - but replaced by mobile money. As I wrote on this blog years ago Turkey was the first country to throw its hat into that ring.
But lets still stay on the mobile coupon just a little bit longer and have a sip of wine. Again, that logical evolution. From SMS to MMS. If you are doing a coupon, then do it properly and that means MMS. In Australia Cracka Wines will let you send a bottle of wine to a friend, delivered as a coupon to their phone. Via MMS. Friend picks up the wine at the store, at the check-in they just scan the code from the coupon and the wine is paid. Eesy-peasy. THIS is how it SHOULD be done. Any gift coupon or offer - gosh, that HAS to be mobile (and increasingly that moves from having been done on SMS to now doing it properly on MMS). Its not just coupons that power mobile money. Immediately next after coupons, come the tickets. Juniper reports that in year 2016 worldwide a total of 11.5 Billion mobile tickets were delivered. Most were not movies or concerts or lottery tickets (even though those too exist on mobile). Juniper reports that the three largest groups of mobile tickets consumed today are for bus, train and airplane.
MORE THAN HAVE TOOTHBRUSH
Those who have followed me for a long time remember the toothbrush story. Cisco last year gave an update on global numbers. The planet has 7.4 Billion human beings who have 7.9 Billion mobile phone accounts active currently (107% global penetration rate across all humans alive, not just ‘household penetration’ or ‘adult’ penetration). This is no surprise to us, I was the first to report on these numbers. But that toothbrush number? Cisco mentioned that only 3.5 Billion humans (only 47%) live in a household with running water... That makes you pause, doesn’t it? Yes 4.4 Billion humans (53%) do not have running water at home (and I am not saying ‘water safe to drink’ haha, some areas do have running water which is not safe to drink and I am not talking about only the desolate areas of Republican-run states in the USA like in the town of Flint in Michigan) But seriously. More than half of the planet’s population does not have running water at home. Think about cooking, about cleaning, about the toilet, etc. And then toothbrushes too. Haha, we are far past the point of ‘more mobile phones than toothbrushes’. But lets show what mobile can do for our hygiene, in a positive way, via mobile (and today’s topic, mobile commerce haha).
Then lets wash our hands. Lifebuoy is a soap brand. They did their ‘Wash Hands before Meal’ polite reminder to help sell soap. Its not to remind adults to wash hands, its to remind adults to TELL THEIR KIDS to wash THEIR hands (before meal time). And then it gets really really REALLY clever. So first, there is a target audience with a need. The Muslim holy month of Ramadan includes a daily fast (no eating). Then there is the eating period which is marked by something called Iftar. And then the weird bit - Iftar apparently starts at a different time every single day (don’t look at me, I didn’t invent this religion haha). No seriously, there is a ‘calendar’ that tells every day at what precise time Iftar commences (and you may start to eat after fasting all day and you are by now very hungry).
So Lifebuoy knows first off, that may kids forget to wash their hands before the meal. And that dirty hands spread all sorts of diseases and parents are worried. So good timing. And Iftar is different every day. So they did an OPT-IN ad campaign, to offer free short video reminding of exact Iftar time every day, sent 5 minutes before Iftar starts. And it of course included a video to remember to wash hands before you eat. What was delivery mechanism you ask? YouTube? No. MMS. Yes, MMS can do short videos. And remember this is India, most people do not have smartphones. And much of the nation is not on high-speed networks. MMS is a nice short video platform for that need. And did this work? Lifebuoy increased market share 15% !!!!!!
They did not even include a link to SELL the soap. It was just ‘hand-washing reminder’. But with Lifebuoy branding - and helping with the exact timing issue of Iftar. BRILLIANT and did great help in boosting Lifebuoy brand preference among the Muslim segment in India.
ELECTRICITY AND CONNECTIVITY
Sorry, I got side-tracked with the old toothbrush story out of that Cisco update in numbers. There was a new number last year that Cisco gave us (or at least new to me). The number of people living in households without .. electricity. So 7.4 Billion people alive, 7.9 Billion mobile accounts are live, 3.5 Billion have running water, how many have electricity at home? 5.3 Billion (72%). And that means 2.1 Billion human beings live in homes with no electricity (28%). Gosh that does make one appreciate how lucky we are, those ‘rich’ enough to be reading this blog (or writing it). More than one in four humans still lives in so great poverty and so little convenience, they do not have a light bulb in their home to turn on the light at night - because their home itself is not connected to the electrical grid.
Now wait a moment, there, Mr Expert-Consultant Mobile Guru-man? You said mobile penetration rate was 107% but a quarter of humans live in homes with no electricity? That math does not square up! Ah, good point my dear reader. We have seen this phenomenon too, and met it in the mobile industry long before the other tech like personal computers, TV sets, radios or even electric light bulb industry bumped into this class of consumer. The answer is partly public opportunities to recharge, and very importantly also: the battery life. So increasingly various public places offer not just free WiFi but also free charging stations for mobile phones. I thought the airport in Nairobi Kenya was pretty clever with this a few years ago, where they made it a marketing opportunity, and had Samsung do the sponsoring of the free electrical charging stations. Then we do get the extent of human ingeniuity about it, from various recharging solutions from solar energy to diesel electricity generators to long-lasting battery power stations (with USB power connectors) to even the bicycle-pedalled phone recharging etc. I had a lovely portable spare battery pocket power USB gadget that was solar-powered. Like a spare battery in your pocket, but leave it at the hotel window for the day, when you come in to the room after the conference and your phone battery is nearly dead, and you need urgently a recharge but have to rush out with your colleages to those drinks, you pick up the fully-charged recharger, plug in the phone, put both in your pocket and by the time you next need your phone, its nicely recharged again. And all by solar power. And if you writer was not such a clutz, that battery recharger would not still be sitting at some hotel window in some forgotten country, still collecting solar power and wondering why is it no longer loved...
But yes, electrical power? Schools in Africa let students recharge phones while they sit in class - parents in areas where there is no electricity typically send their phones in with the kid, to get a full charge every few days (note, these are obviously the type of basic Nokia phones that have batteries that go on for many days). In Pakistan there is a wonderful story across the often-fought border, where some send phones from the village across the border, on the India side, where they don’t have electricity in that village, to the town on the Pakistan side, where there is electricity. And the phones are charged there and then sent back to India for those villagers. Because the mobile phone handset itself is so easily portable, and has a rechargable battery, that makes it possible to expand the reach of mobile far beyond the reach of electricity. But think about YOUR clients and customers. Can you serve them by for example providing free electrical charging right now? How much will that ‘hurt’ your total electrical bill? And how much greater utility will that give to your customers? Because all consumers use their mobile phones all the time and everywhere. Especially when they are shopping.
RETAIL AND MOBILE
A survey of 9,000 consumers in the USA by Connexity last year, found that 63% will use their phone INSIDE your store, to compare your prices to those they find elsewhere! And what about your OWN online store? 58% of consumers will compare YOUR in-store price, against you OWN online store price - while they are in your store. Gosh, why would you EVER have a different price online? Thats is BEGGING for your consumers to turn against you and hate you. Learn about mobile! Learn how to USE mobile. How you make more SATISFIED customers with mobile and how you drive foot-fall to your stores, with mobile, and how you bring SPECIAL value to your BEST customers with mobile - and your mobile sells ON YOUR BEHALF.
Martin Lindstrom offers a great example in his new book Small Data. In Switzerland the clothing store chain Tally Weijl noticed that teen girls would regularly use their phones to share clothing opinions while in the store. So for example when deciding what to buy, they’d snap pictures of the various outfits and post onto their Facebook page and ask friends for opinions, etc. And without attempting to become Switzerland’s answer to Facebook and try a massive retailing social media website launch, Tally Weijl figured a far easier, simpler, cheaper way to connect with those girls. They installed WiFi at their dressing room area, so girls could easily - and more importantly, without mobile network charges - connect and do this sharing of the pictures. We see that kind of development all the time, Hong Kong was one of the early countries for example where all local retail banks (as distinct from haha, private banks for the super-rich and commercial banks which Hong Kong is littered with) started to offer free WiFi in their lobbies. If you have to stand in line to see a bank clerk for some banking transaction, and that takes 15 minutes in the busy period of lunchtime say, then its a huge convenience if at the same time at least you can go surfing online - via WiFi and free. On your smartphone of course. The Hong Kong subway offers various spots of free WiFi too for the commuters as they wait for the subway train. Do we care about mobile when we’re hungry? UK survey by xAd last year found 51% of British consumers go to their phones before deciding which restaurant to go to.
EUROPEANS FAR AHEAD OF USA
And don’t look at that laggard USA for any gosh ‘leadership’ in mobile PAYMENTS. In October, Visa reported on their survey of European use of mobile payments in 19 countries last year and found that already 54% of Europeans are using mobile payments. If the global average is 20% for Industrialized World and Europe is at 54% then the North Americans and Australians are quite far behind, to make the math work out. But where do you go to learn about mobile payments in Europe? You’d think Britain (banking leader) or Finland (mobile payment launch country) and yes Visa said they are also high on the list but the two LEADERS in Europe may surprise you. They are Turkey and Romania. Ah, yes. Who talks about THOSE countries to you? Oh, my readers knew. Turkey, haha, I was again, literally the first person to write about Turkey’s ambitions to end cash, replaced by mobile money. I speak in Istanbul on a regular basis meeting with all sides of the mobile industry (and was just in Romania last Spring).
BUT 220 MILLION ONLINE STILL ON FEATUREPHONES
Yet we have to understand the global market. Opera released their latest count of their browser active users last year at 350 million users. And in the context of roughly 2 Billion mobile web users globally, that may seem like a relatively trivial number. The point some took out of their announcement is that 130 million people with smartphones use the Opera browser. What most pundits and analysts missed was the obvious corollary. It means 220 million people in year 2016 were active users of the mobile internet who DO NOT HAVE A SMARTPHONE. Yes you may well think every consumer has an iPhone or at least a Galaxy and a big touch-screen device on 4G and watches your ‘cool’ YouTube interstitial advertising. But about one in ten internet users who use the mobile phone to access the internet does so from a DUMBPHONE. What is known as a ‘featurephone’. And they often do not have even 3G connectivity. They often do not have touch screens. Their network coverage on 2G standard low-speed high-cost and often patch networks can be atrocious. Yet its their only way to connect to the internet and they are using it (happily). Did you test your online services on how they seem on a basic 2G dumbphone with a 2.6 inch screen that is operated on a KEYPAD and does not have touch-screen? All smart companies do this, they make sure all their websites are not only ‘mobile first’ optimized for mobile, but that they will work on very slow networks and very small screens even without touch-screen input. Yes, in Africa, India etc, that means even still supporting WAP the very rudimentary and rough ‘mobile internet’ in its first iteration that we rich nations have moved beyond a decade ago.
MAGICAL MEASUREMENT MACHINE
I have been teaching in my workshops and seminars for ages, that Mobile is the Magical Measurement Machine. And we are seeing ever more smart uses of this ability. So consider Castrol motor oil. They developed a special oil to work with ‘Tuk-Tuk’s that run all day in hot climates, to keep those engines running better. They are 3-wheel motorcycles that are omnipresent in most Asian cities. Now how do you MARKET to the segment of ‘commercial’ drivers who do ‘truck delivery’ services using a Tuk-Tuk? A nasty job involving all day of sitting in the polluted air of megacities, in the noise and exposed to the elements, and rushing from one job to the next. Like taxi providers but even less glamorous. Castrol noticed in India that they cluster at night, park in the same areas (where Tuk Tuk parking is free, obviously) and near their homes (so far from the expensive city center locations).
But not everybody parking there is a Tuk-Tuk truck driver. Then they monitored the traffic of all phones that spent their nights within walking distance of these big Tuk-Tuk parking lots. Now they had the initial target group. Next, they weeded out non-drivers. Simple test: do you SMS during the day. Anyone who did a lot of texting, is not driving a Tuk-Tuk and those were eliminated (yeah some do it, but this is rough segmentation work, follow me on the logic, don’t get caught in the argument on the one exception). Out of remaining mobile phone numbers who sleep in walking distance of that parking lot, they did a week-long monitoring of their movement. If mobile phone did not move from that zone - its not a Tuk-Tuk. Eliminated all the housewives and others who lived in walking distance who otherwise were not SMS users. Next look at movement pattern, if the person moved on the same pattern every day - went to work in the morning, came back in the evening, clearly used a bus, sat at an office all day. Thats not a Tuk-Tuk driver. A ‘van delivery’ type of driver is like a taxi-driver by pattern - all day driving, and in random patterns. Very quickly they had the sub-sample of all who were within walking distance of that parking lot - and who also drove all day.
Now they launched their ad campaign as a voice ad - voice ad that a driver can listen to without having to look at the screen (And with language issues - India gosh, how many hundred languages do they have) and literacy issues - not everybody can read - they made an ad offering airtime for the ad to be forwarded. But the ad only talked about benefits to Tuk-Tuk drivers who drive all day. These ads were placed in the parking lots where they knew the Tuk-Tuk drivers go to park. And because they had measured the total target audience, nobody could cheat the system by referring the ad to their mother, and get more airtime. Only those ads that reached Tuk-Tuk drivers would yield the airtime beneifts to those who shared.
But the kicker - of COURSE a sample of all Tuk-Tuk drives in a city, will know ALL OTHERs who work in that field. So very soon Castrol had achieved viral spreading of their voice ads to essentially 100% target market penetration... They reached 1.8 Million Tuk-Tuk drivers in India and Castrol sales.. up by 30% !!!!!!!!!!
This is the power of mobile commerce. This is the magic of mobile. This is HOW you do it. This is why we do mobile. This is why mobile money is inevitable. Mobile is the magic that merges advertising with .. MONEY.
CLICK TO BUY
And the ultimate merger becomes possible with Click-to-Buy. The merger of money and marketing will happen through mobile. Mobile is the magical money-making machine. So why wouldn’t every single advertiser go into using mobile? And mobile is the magical measurement machine, so anyone doing a coupon or offer will love the power of mobile, doing it. So lets see an example. In the USA, a digital music store ‘The Edit’ will have a typical type of music catalog like any music store from Amazon to iTunes (maybe a bit more smart, The Edit also does its music store via messaging including various messaging platforms including.. haha.. yeah, of course MMS !!!!) So you see the album cover art, the name of your favorite rock band, the songs on the album, the ratings by fans, etc etc. And what sits there on the bottom of the mobile page or MMS message? A ‘click-to-buy’ link! Buy instantly. Every single mobile advertising campaign should do ‘click-to-buy’. I wrote about click-to-buy literally in my books 15 years ago! But increasingly we see these now. Excellent. And imagine the power of ‘To buy it, reply YES’.
UPDATE - NUMBERS FROM RUSSIA
This update paragraph added 19 Feb 2017. Our dear friend Dave Birch (David GW Birch the famed author of digital money books) was on Twitter about at the same time as I was writing this blog article. He Tweeted fresh numbers out of the three large mobile payment providers in Russia. His Tweet said that Yandex has 30 million mobile users on SMS based system; SberBank has 28.9 million users on SMS; and Alfa-Bank has 2.5 million on.. USSD. So that is the 'facts' part of this added paragraph. Now the 'analysis' part by me (not from Dave's Twitter feed haha, don't blame this on Dave). This is not everybody out of Russia's mobile payments opportunity. But it gives us some scale of the magnitude. We cannot add those numbers together to get a Russian total, because obviously some people have accounts in multiple systems but this does give us a range. Russian total mobile payments number is definitely more than 30 million, and on these 3 systems, is somewhere between 30 million and 61.4 million. A fair guesstimate would be that something like 45 million Russians use mobile payments on these three systems. And its mostly SMS with USSD also being used. Because this data came in right as I was posting the blog, I wanted to add this update to the blog for my readers and to thank Dave for sharing that info from Russia.
The power of SMS is not subsiding. Do not mistake the enormous growth of FREE person-to-person messaging on Whatsapp, for any kind of decline in the BUSINESS use of SMS as the planet’s only way to get into every pocket. Look at the Country Music Festival last year in the USA. They offered the massive live concert audience a chance to send requests to the DJ, for the music to be played between the live band performances. The audience could vote. Two ways to vote, via Twitter or SMS. And was there any interest in asking an audience at a rock concert of what should we play next? Gosh yes. 25% of the audience voted. Wow. Imagine that. Imagine a car race or football game or whatever audience event you arrange. Why NOT ask the audience to participate? And if you do, make sure you offer them the chance to do it with SMS. Don’t make them download your app. Thats silly. Let them use SMS. They will. And they will love you for it.
While we’re on music, lets look at the superdiva Rihanna and what she did. They offered a puzzle, via an app and series of videogame-music-video things. It was a game. If you managed to get through all 8 parts of the game, you received Rihanna’s brand new album totally for free - downloaded directly to your phone. 1 Million won the album (13 million played the game). But along the way, you heard 8 of her songs. For those who didn’t win the game - almost all are Rihanna fans - they heard part of the music - and I am certain a good bunch of those went and bought the album. And all were engaged with their favorite artist far more deeply than any other album launch ever before. This is the power of mobile. We can do magical things. We can do radical new things never done before. And every time we can include the ‘click to buy’ links.
TAXES AND SMS
Submit your tax return in 5 seconds? So now many countries will already let you file your taxes via mobile (that was invented in Norway). We have a cool development from just across the mountain chain in Scandinavia. Sweden not only lets you send in your tax return by mobile, they will send you the summary of their official government tax office automated count of your taxes, that they will accept as your full and final tax return if you want. That pre-filled tax form comes in the form of an SMS text message. Here is the truly amazing part. You can file your total annual tax return legal requirement - by replying ‘yes’ and you are done. The appropriate final documents will arrive in your home snailmail at a later date (need no further action like signatures and sending documents). If you are a devious Bond Villain with tax-dodges in every Trump-friendly nation, then perhaps this is not for you. But if you are a regular Swedish salary-earning worker, or a student or housewife or retired, you have no exceptional tax filing needs. A simple calculation of ‘this is what I earned’ and based on the tax table and various deductions ‘this is what I was supposed to pay in taxes’ and you see how much taxes were already deducted from your income, and there you go. Its a couple of hours of paperwork for most taxpayers if they have their documents in reasonably good order. But the government already has all this info. So to stop the normal taxpayers from doing hours or pointless accounting, the tax office precalculates the tax rate (many countries do this already) and now the coolest part - that proposal arrives via SMS and you can accept it by responding ‘yes’ this is what I agree is my tax return. And assuming you don’t have to make any new payments for taxes due, haha, at that point, you are done for the year. Filing your taxes in 5 seconds, tack so mycket Sverige! That is brilliant. Jattebra, heja Sverige.
EXCLUSIVE PERSONAL PREVIEW OFFER
Ok, most will not want to end on a note of celebrating the taxman. So lets go for something at the other extreme. The personal consierge sales rep. Nordstrom is a premium retail chain in the USA. They send exclusive personalized recommendations to their loyalty program members. This way loyal customers are first see the new colors, new fashions, new designs first, before they go to the shelves, and haha, yes ‘click to buy’. The offers are sent as ‘picture text’ messages. (ie its MMS but Nordstrom doesn’t want to confuse its clients). The customer can simply respond by SMS and the store has your size already, they will keep one for you to come pick up from the store, or they’ll send it to your home. They have your payment preference stored so they’ll charge you by whatever is your preference to pya. This is the POWER of how to sell by messaging. And the power of mobile payments. And how much MMS can accelerate sales compared to SMS. We learned in December that Nordstrom now makes 20% of all of its sales through its online stores and 67% that is via mobile messaging; all other digital sales combined, online and mobile, apps and web, when all added together, form one third of the online store sales. Duh. What did I say?
So where is this going next? I think we should keep an eye on the country that launched mobile - Japan - and the company that invented mobile payments - Coca Cola and perhaps what Coca Cola Japan is doing. Oh, yeah. That makes sense. So Coke Play. This takes the loyalty program like Finnair Plus, adds the gamification we saw with Rihanna, and the integration with other payment platforms like in the Philippines and voila! A Coca Cola currency. This idea was first deployed by Coca Cola in South Korea. You earn Coke Play points when you buy Coke products. You also earn Coke Play points by watching their ads. Any one ad can only deliver one set of points, but for example if its a poster-size ad on a bus stop, if you see ANOTHER bus stop with that same Coke Play ad, you can go THERE to get another top-up to your Coke Play points. (see the Gamification part? - explore the various Coke ads across all media - be rewarded for that).Then the redemption. Buy Coke products, duh. Drinks. But also other branded stuff like T-shirts and hats. Ok that is to be expected. Until... you do the integration bit, and suddenly Coke Play points can be used... to buy OTHER things from OTHER providers! Like to pay for airtime on your phone (telecoms services) or buying songs to download onto you phone, or to watch a movie on the phone. .WOWZIE !!!! This is the FUTURE. Coke has in fact launched a branded currency. It is a currency because it works beyond Coca Cola's own domain of its own products. They are LITERALLY printing money !!! Make money by making mobile money !!! Thats whats happenin' in Japan, dudes and dudettes. Yeah. Gotsta luv Mobile. Oh, Coke Play? You can also earn points by dancing (they have a dance contest too, best dance routines as voted by viewers, earn Coke Play points.. yeah. This is EXACTLY the way mobile should be - Fun, Personal, Playground). Are you learning anything today? Was this blog worth your while? Tell all your friends to stop reading about Bitcoins and come here to study what REAL mobile money looks like!
TWO AND A HALF BEES
How big is mobile payments today? Back to Deloitte’s global survey from last summer. If we take the population-adjusted average of what they found (20% in rich world, 47% in Emerging world) we get an estimate of 42% of all consumers on the planet are already today using mobile payments. What is the proportion of kids too young not to be counted as consumers, to remove, I am not enough of a sociologist to know the exact number but in round terms, that gives us 2.5 Billion active unique human beings already today using mobile payments worldwide. Larger than Facebook. Active users. Most of them use SMS, the second most used mobile payment method is WAP Billing. I showed you how to you can get into the mobile money game, and make money with mobile. If you want to read an actual book about Mobile Money that does NOT waste your time on Bitcoins haha, or Apple Pay but has 50 CASE STUDIES of the success of mobile payments, then go get my Pearls Vol 3: Mobile Money. At 10 Euros, its about the value going in understanding this, the most dynamic part of the global economy this year, 2017. Why would you read anyobody else’s book first? I was there to literally see the start, and I was the first to report on the origins and the evolution of mobile payments. I will not mislead you with nonsense stories like Paypal. Almost every case study in the ebook is valid today for you to deploy, copy, take advantage of. See more about Tomi Ahonen Pearls Vol 3: Mobile Money here.
And then one more plug. As Mobile Pay is growing, it has now reached the size it no longer can be kept as one slice of a chapter in my Almanac series. In the brand new 2017 Almanac, Mobile Money will have its own chapter and series of tables & charts and analysis. That ebook is not yet out, it will be in some days, but as always, just before the new Almanac comes out, I make a special deal with the current edition. See the 3-for-1 bundle and 4-for-2 bundle offers here. For literally the planet’s best stats and numbers on the Mobile Payments slice of the mobile industry, now in February 2017, you need the brand new TomiAhonen Almanac 2017. Be the first to get it (out in a few days). See more here.