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Average in-app purchase value rises to $4.50: Bango

Even with newcomers to the mobile payments space such as Apple Pay, carrier billing continues to have relevance, according to Bango, driven by blockbuster games such as Clash of Clans and bigger in-application purchases.

A provider for Amazon, Google Play, Samsung, BlackBerry World and Firefox Marketplace, Bango takes 2 to 5 percent of revenue for each mobile purchase completed. Launching originally in 1999, Bango has seen the industry change from one centered on ringtones and wallpaper to one that now thrives mostly on gaming.

“The industry has changed from ringtones and wallpaper to app stores, and today there is very little need to pay for an app,” said Richard Leyland, vice president of marketing at Bango, Cambridge, England. “That need has almost gone away.

“The gaming industry does change that, though,” he said. “Clash of Clans, the most successful mobile game right now, is making huge sums of money through the idea of freemium content.”

Let’s talk numbers
Apple is the one leading tech company that has yet to tap carrier billing and team up with Bango, causing questions for why giants such as Amazon and Samsung outsource.

The answer is in the dollar signs, because Bango accrues between 2 to 5 percent of revenue from each app store purchase. Developers take home about 70 percent, while the app stores accrue approximately 5 to 15 percent and the carriers make about 10 to 15 percent.

Since the margins remain low, Mr. Leyland believes Bango’s services remain attractive for these top players.

Undoubtedly, Bango attributes several advantages to carrier billing, including the frictionless process, which claims to increase conversion rates and eliminate hassle.

Perhaps both an advantage and also a challenge, the lack of credit card-holders in developing countries help carrier billing to be a viable resource, but that fact also fences them in to those countries.

While most adult Americans have credit cards and many have iPhones, the need for carrier billing is lessened. Meanwhile, low-cost smartphones, such as Android devices, are more prevalent in developing countries, opening up a target demographic for Bango.

Competitive edge
Bango believes its two-step process of making a purchase is easier than inputting credit card information and promotes higher conversion rates. In fact, for Bango, there is an 81 percent conversion rate, it claims.

According to the carrier billing company, there are two impressive app stores to watch in the future: Samsung and Mozilla.

Samsung sought Bango’s help to decrease its reliability on Google by making its own app store and apps.

Also, Mozilla launched its first smartphones in 2012 in the developing world and has been successful in Latin America and Eastern Europe.

According to Mr. Leyland, Mozilla’s smartphones were designed to offer a choice outside of Android and Apple phones, injecting more competition in the industry, he said.

Along with the rise of competition, the mobile gaming industry is sure to drive revenue for carrier billing companies for some time.

Although Clash of Clans, for example, is free to download and play, content on the app is often purchased to get more from the game, serving entities such as Bango well.

“We have a term called digital gluttons,” Mr. Leyland said. “There is a bit of gluttony out there, and people are spending huge amounts of money through their mobile devices.” 

Final Take
Caitlyn Bohannon is an editorial assistant on Mobile Commerce Daily, New York