Direct carrier billing company Fortumo today revealed its Emerging Markets Payment Index, according to a press release. Fortumo’s Index is intended to be used by web, game and app developers for benchmarking their revenue in markets with high smartphone growth and low credit card penetration.
The Emerging Markets Payment Index focuses on markets highlighted by GfK in its global forecast of top smartphone markets for growth by value in 2015 — India, Indonesia, South Africa, Brazil, Pakistan, Nigeria, Egypt and Vietnam, according to the announcement. These markets have a significantly lower level of access to traditional online payments methods than mature economies. India and Vietnam for example have a credit card penetration below 2 percent, and in Nigeria 99 percent of all card transactions are conducted on ATMs.
“For most developers, emerging markets are considered to have low revenue potential. This is the result of trying to apply the Western revenue model of card-based payments and large transaction sizes to low-income underbanked markets. Our goal with the index is to show developers that emerging markets can provide significant income when the business and pricing strategy is localized,” said Martin Koppel, CEO of Fortumo.
Fortumo said its analysis indicates that the majority of growth in transaction volume from carrier billing in emerging markets is coming from India, Nigeria and Vietnam. Meanwhile, Brazil, South Africa and Indonesia have the highest spending on digital content per user. Fortumo added that the average transaction size is below $1 in most markets which makes credit card-based billing infeasible for virtual and digital goods, since fixed transaction fees eat up a majority of the revenue. Most of the markets analyzed show double-digit quarterly growth rate in transaction volumes which indicates the rapid growth of alternative payment methods among unbanked users, according to the announcement.
The payment index aggregates data from various platforms (Web, mobile Web, feature phones, smartphones) and app stores. Going forward, Fortumo will provide quarterly updates to its payment index. For 2014, the index contains data on more than 300 million transactions processed by 122,000 developers using Fortumo to collect payments in 88 countries.