OPW INTERVIEW - Apr 12 - Scott Pattenden is the founder and CEO of iTelebill. His company was founded in 2008 and provides dating sites with the ability to let their members charge subscription fees through their mobile phone by using SMS. They work with Social Gaming, the Adult industry and as of about a year ago, the dating industry as well. - Glenn Millar
Why should a dating site care about offering mobile billing?
There’s a large section of the global population that doesn’t have access to a credit card or payment card. Beyond that, in the U.S. alone, about 1/3 of the population doesn’t have credit available on their credit cards as a result of the recession. There’s over 3 billion cell phones globally. So this, combined with many users’ unwillingness to disclose personal and payment data to third parties, makes an alternative payment offering quite essential.
And how important is mobile billing in Europe?
The level of credit card penetration in quite a few European markets is very low, particularly compared to the US. So, mobile billing, is even more important in Europe.
What are the key distinctions with the U.S. market?
The US market is still underdeveloped with its SMS technology, but after several years of slow progress, the last 12 months have seen phenomenal growth. These gains, coupled with the increased rate of card declines caused by the “credit crunch,” means that Mobile billing in the U.S. has been a real growth sector for us.
What dating sites are using mobile billing successfully?
White Label Dating and FriendFinder Networks have added our mobile billing solution to their existing offering. The Dating Factory has built our technology into their platform from day one to maximize the revenues they can generate for prospective partners. We are fortunate to have taken on some excellent clients who are really expanding their horizons and their billing options.
What evidence have you seen that mobile billing raises conversion rates?
Our implementation on mainstream sites has seen 10-15% added to their existing revenue streams. On adult oriented or niche dating sites, that figure has topped 20%. At the end of the day increasing consumer choice is always a positive in terms of end-user conversions.
From the consumer’s perspective, how difficult is it to charge via SMS?
We designed our system to minimize user inputs. All the user needs to do is send a keyword to a short number by SMS and then click continue on screen. We handle everything else from that point on. Even subscriptions and ewallet “auto top-ups” require no further user input; much the same way a subscription card payment is handled.
Isn’t mobile billing extremely expensive? If the customer chooses mobile billing, won’t it cut into the dating site’s profits?
This is a common misconception. We recommend passing all additional costs onto the end user. This ensures that only members not currently billing by card will choose mobile billing. Since these people are not willing or able to use a credit card, these mobile billing customers are “found” money; incremental revenue from customers who would have previously left the site at the payment page.
But if you are going to pass the cost on to the consumer, why would they ever choose mobile billing over a credit card?
Personally, I am more than happy to pay by credit card, but data shows I am in the minority. A 2009 report from the Office of Fair Trading in the UK found that 1 in 3 people were still not making online transactions, with a lack of trust in security of their online data listed as the main reason. A whopping 78% of people who already make some purchases online said that the same reasons held them back from making more. In the dating market, people are also attracted to the anonymity that mobile payments offer and are more than willing to pay the premium for this service.
In the U.S. you can only charge $10 at a time through SMS. Most dating sites are more than $10 per month. Doesn’t this make SMS billing impossible in the U.S.?
We have several innovative “work arounds” in place to enable us to bill more than that, such as billing on consecutive days on “separate” monthly subscriptions to hit higher targets. The complexity and intransigence of US carriers leaves us with no other workable solution at present. However, the discussions around the new framework for 4G services should make things far simpler in the near future.
How do you prevent fraud, i.e. someone charging a subscription fee to someone else’s phone?
The user must have their phone in hand to charge to their number. Since mobile carriers consider securing the handset the end user’s responsibility, this is not an excuse for non-payment of outstanding charges. In addition, all our services are operated on HTTPS secure servers that are fully PCI compliant. We also check number ranges and usage patterns with several fraud detecting algorithms to minimize our exposure to fraudulent transactions. Finally, we have a couple of other methods as well, but I would rather keep those to ourselves!