STL Partners - business model innovation in the TMT sector

Strategy Reports
Telco 2.0™ Billing & Payments 2.0:
Charging and collecting for digital services

Publication: Spring 2009

Report Context

The groundbreaking Telco 2.0™ research The 2-Sided Telecoms Market Opportunity - "Sizing the new $125Bn platform services opportunity" revealed a huge new potential market opportunity through the application of two-sided business models / platform based business models to telecoms market opportunities.

However, the report also showed that realising these new potential revenues is non-trivial and requires a truly strategic approach across the industry. It's critical for Telcos to understand and apply key principles, serve real customer and market needs, be aware of possible solutions, and participate in a range of industry partnership approaches to unlock this potential. It requires a depth of approach and application against a number of market sectors and applications, and critically, the development of detailed and viable business models.

This Report studies how to enable more efficient payment methods between consumers and merchants.

Key Questions Answered

The key questions addressed by this report are:

  • "What are the main market opportunities in Billing & Payments"
  • "What products and services can realistically be billed or for via a Telco?"
  • "What do we need to do to be able to bill for them or make payments?"
  • "What are the strategies and approaches required to address these opportunities?"
  • "What examples are there of successful approaches to this issue?";
  • "What are the lessons learned already and the likely winning approaches?"
  • "What are the potential value propositions?" (one example below)

Key Issues to be addressed

  • Payee (Merchant): Identifying and authenticating the other party; checking credit worthiness; maintaining security; realising value of the payment; reducing transaction fees and other costs.
  • Payer (Consumer in retail transactions): Identifying and authenticating the other party; maintaining security; protecting precious data - credit card, bank details; automating the process - minimising password entries etc.
  • Telco: What role to play in the payments market - appropriate levels of competition and cooperation.

Key Telco Assets to leverage

  • Identity and AAA
  • Billing & payments engine for micro (and larger) transactions
  • Relationships with financial institutions

Example Potential Telco Value Proposition

  • E.g. Make (and receive) payments using your mobile account without having to reveal your name, address, bank and credit card details to anyone:
    • One password required to validate you are the owner of the mobile and the operator manages the rest
    • Consumers and merchants reveal information to Telco and not to each other
    • Paypal model which markets itself on security and simplicity

Please see also The Telco 2.0™ Billing & Payments 2.0 Research Practice.

For further information please email contact@telco2.net