Index posts modest increase due to mixed results
April results: per person spending increases 3%
This month's release of the Zong Payment Index (ZPI) shows that the average monthly spend per Zong user showed modest growth of 3% from March to April. This growth is primarily due to mobile operators increasing spending limits. Typically, mobile operators impose two types of spending limits: per transaction and cumulative (e.g., per month). Changes in both types of limits this month have a shown a direct effect on spending per person.
- Austria showed a doubling of mobile payment spend per user (from an index value of 191 in March to 376 in April). This is attributed to the mobile operators in Austria increasing the maximum per transaction value from 3 euros to 10 euros. (Total mobile spend in Austria increased more than 2x, as this change attracted more new users to mobile payments, in addition to doubling the average spend per user).
- Besides Austria, several other European countries (Belgium, Switzerland, Finland, Hungary, Norway, Turkey showed >10% increase in average monthly spend per user. Similarly, several countries in North America and Latin America (Canada, Mexico, Chile and Colombia) did the same. This growth in monthly spend per user was driven by the growing adoption of mobile payments, and by the mobile operators' expansion of the spending limits, both per transaction and cumulative. It is encouraging to see these trends both in Europe, where mobile payments have been flourishing for years, and in the Americas, where they are a much more recent addition to the payment landscape.
- In contrast to these positive developments, in the US the average monthly spend per user declined -3% from March to April, and is now -16% lower than it was at its peak, in October 2011. This is directly attributable to a major US carrier implementing two new policies: 1) a much lower spending limit (going from $100 to $25 per month), and 2) requiring all mobile users to enter their billing ZIP code for each transaction, in addition to a dynamically generated one-time PIN code. We absolutely agree that the mobile operators should be cautious about user fraud and understand the need to minimize financial risk. But we think that the practices of having low monthly spending limits and billing ZIP verification don't actually serve as effective risk management measures. So we at Zong would like to make this offer to all carriers we work with: We will take on all the risk. We believe in our risk management practices 100%. So our offer is that carriers should remove the protection barriers to mobile spending, optimize the user experience, and Zong will resolve consumers' problems.
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About the Zong Payment Index
The Zong Payment Index (ZPI) tracks the spending patterns of Zong’s global user base and is broken out by its top 40 markets. The ZPI reflects three factors: (1) consumer’s willingness to use their mobile phone to buy digital goods online; (2) the consumer’s ability to use their mobile phone to make purchases as determined by mobile operator policies (e.g., spending limits, price points, etc); and (3) the cost of mobile payments as determined by mobile operators’ fees which sometimes result in consumer surcharging.
The index is anchored by metrics from January 2010 and measures average monthly spend per user in comparison to that baseline. The ZPI will be released monthly, and Zong will provide its analysis of the numbers and trends.