Putting the NOW into Payments

A Smith

Examples of mobile pricing innovation are proliferating like mushrooms in a damp forest. Traditional bundles of data, voice and text are being deconstructed to be re-combined as highly personalized and configurable plans tuned to digital consumers’ lifestyles. Social media, music, HD video, roaming packs – purchased for an hour, a day, a month, or a year. Choice rules and the opportunities to drive new revenue and excite customers with compelling, relevant and valuable propositions have never been greater.

These innovations will also drive profound and beneficial change in the technological and economic landscape for the Digital Service Providers (DSPs) serving these consumers. If pricing innovation is the butterfly’s wings, then the hurricane is what is about to blow through the world of telco payments and billing.

The story starts, as it should, with the customer. The digital natives hungry for these pricing innovations march to a real-time beat which also drives their purchasing behavior: “Show me what I need now, make sure it’s relevant, provision it now, and I’ll PAY NOW.”

I don’t use CAPs lightly but PAY NOW is that important! To understand why requires a short retrospective of telco retail billing and payments, a world of deep-rooted traditions little changed in half a century.

The telco payment map comprises two countries – Postpaidia and Prepaidia. Islands with incompatible infrastructure; different size railway gauge, one runs AC electricity, the other DC – you get the idea. Diplomatic relations are awfully strained and numerous Convergence Treaties have seen limited success, won over very long timescales and at substantial cost to balance sheet and careers. Each island boasts multiple layers of defence designed to break the spirit and budget of the most fervent Convergist.

But for the digital consumer, PAY NOW is increasingly the destination of choice; easy to understand, easy to implement and immediate. It works for groceries, it works for apps, so why not digital communication services? The successful DSP will position PAY NOW center-stage in their charging strategy. They will leave the complex, expensive and non-strategic functions of payment processing and debt collection to other organizations designed to do that sort of thing.

Despite the conceptual simplicity of PAY NOW, its introduction can bring huge benefits for a DSP’s infra-structure complexity and cost. No more ‘big billing,’ subservient to the dictatorship of the monthly bill cycle; financial management and bad debt costs will tumble; no postpaid – no invoicing costs, no prepaid – no top-up systems. Offers will no longer be tied to a bill cycle, and can be made as a one-off, one month recurring, 12 month recurring deal – whatever the customer needs. The heart of the PAY NOW service provider will be an efficient and unified real-time charging and policy core, integrated with a payment gateway and supported by rich self-care capabilities.

In addition to cost reduction and simplification benefits, many of the constraints enforced by legacy billing and payment systems and processes will ease into retirement. The drag on innovation and time to market – created by demanding reverse compatibility with features such as re-rating, pro-rating and bill cycle changes – vastly outweighs their contribution to customer experience. They don’t create value. Lose them. Focus on what does.

It’s not for every segment or market, but PAY NOW does have a natural affinity with retail digital communication services. It offers the potential to profoundly alter digital service provider economics through hugely reduced operational costs and a much simpler and more effective platform for innovation and value creation.

After pretty much half a century of the same, tired pricing, it’s about time.

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