Attendees at the World Telemedia Event in Marbella last October came away with some useful insights and analysis of the rapid expansion of the telecoms value-added services (VAS) and mobile payments market in the Middle East & North Africa (MENA) region.
Consequently, telecom carriers in the region have begun investing heavily in VAS and international service providers from the UK and Europe are stepping up to meet the rising demand from both consumers and businesses.
MENA Market Challenges
The MENA market has some notable challenges, particularly with payment tools. Traditional payment methods such as credit cards and bank transfers can be inconvenient or inaccessible for many consumers, especially for small, recurring payments common in VAS and Telemedia services. This limitation restricts consumer access to the full range of available services and was a key theme of the Alternative Payment Mechanisms panel debate chaired by Commcorde’s Senior Strategic Communications Consultant, Andrew Darling, in Marbella.
Evaluating Alternative Payment Solutions
Telecom carriers are adopting mobile money and direct carrier billing as alternative payment solutions. Mobile money allows payments via mobile phones without bank accounts, while direct carrier billing charges purchases to mobile phone bills. Telco revenue from these transactions is expected to grow from $9.3bn in 2024 to nearly $15bn by 2029, a 59% increase.
This growth is driven by greater consumer awareness and the need for new revenue streams, according to a study by Juniper Research.
Carrier billing provides an alternative payment method for mobile subscribers, but by facilitating transactions, this technology can also increase market share for the purchase of digital goods in markets where traditional banking infrastructure is weak or non-existent, for instance in parts of Africa.
Future Payments in MENA VAS Market
The integration of multiple alternative payment solutions is essential for continued growth in the MENA VAS market. Telecom operators in the region can broaden their customer base and increase revenue by simplifying the payment process. Additionally, establishing a robust payment ecosystem will enhance the overall digital economy in the region.
As World Telemedia prepares for its next event in Dubai in May, it will be interesting to observe how the market continues to evolve and what insights the broader industry can gain from these new developments.
Regulatory Issues
As the MENA market takes off, service providers need to ensure that compliance issues are kept under control. This is where organisations like MCP Insight are working hard to make the industry a safer space to grow brands both in the UK and in international regions such as MENA. Historically, the UK was one of the first markets to introduce DCB and mobile VAS and consequently has remained a bellwether as to how regulatory regimes approach growing new markets. Hence, businesses that have their origins there have thrived in new markets and continue to apply their experience and expertise successfully.
The Shift from PSA to Ofcom: What Happened in the UK Market and Why?
The PSA served as the UK’s independent regulator for phone-paid services for many years and played a critical role in ensuring transparency and consumer protection in an industry known for its complexities. However, as digital, and mobile ecosystems have evolved, so too have the challenges associated with regulating phone-paid services. And with the emergence of app stores, subscription-based models, and innovative digital content, the traditional boundaries of premium rate services have blurred.
Recognizing these challenges, the UK government decided it was time to consolidate the regulatory framework under Ofcom, the national communications regulator. The transition which will be completed by February 1st, 2025, is a double-edged sword for businesses in the mobile VAS sector. While it offers opportunities for growth and increased consumer trust, it also presents new challenges.
Opportunities:
- Increased Consumer Confidence With Ofcom’s reputation for rigorous oversight, consumers may feel more confident using premium rate services, leading to higher engagement and adoption rates.
- Streamlined Processes By consolidating regulation under one entity, businesses can expect fewer overlapping requirements and a clearer regulatory pathway. This simplification could reduce compliance costs over time.
- Support for Innovation Ofcom’s broader telecoms perspective positions it to support innovation in the VAS space, particularly as technologies like 5G, AI, and IoT create new opportunities for mobile services.
Challenges:
- Stricter Compliance Standards The increased scrutiny and higher compliance bar under Ofcom may create hurdles for smaller businesses or startups entering the market. Adapting to the new rules will require investments in legal and operational resources.
- Potential for Increased Penalties Ofcom’s enforcement powers include significant fines for non-compliance, which could be a deterrent for some businesses.
- Navigating the Transition Period During the handover phase, businesses may face uncertainty about specific regulatory requirements. Clear communication from Ofcom will be essential to minimize disruptions.
Preparing for the Future
Businesses in the VAS sector should act now to stay ahead of the curve by assessing current practices against Ofcom’s requirements and make necessary adjustments. This includes ensuring clear advertising, explicit customer consent, and robust billing processes. They should also proactively educate customers about their rights and how services operate because transparency is key to building trust in the new regulatory environment.
By staying informed about Ofcom’s guidelines and participating in industry consultations, active engagement can help businesses anticipate and adapt to regulatory changes. Finally, enhancing fraud prevention measures and strengthening internal systems to detect and prevent fraudulent activities will not only ensure compliance but also protect service providers’ reputations.
If you would like to discuss how Commcorde can help build, maintain and protect your reputation in the mobile Value-Added Services industry, get in touch with one of our specialist consultants today: [email protected]
