India is home to an estimated 1.21 billion people. There are about 867 Mn phone connections in circulation. Some of the major telecom operators include Airtel, Vodafone, Idea and Tata Docomo. Mobile Payment companies such as Buttercoin and Swiff have shown interest to enter India and capitalize on the revenue generated through mPayments. One such company which has recently set up operations in India is Fortumo. The company offers 3 types of services, web payments solutions, mobile payment solutions and native in-application purchase SDK.
On September 17, 2013 Fortumo officially announced its availability to do business in India. Fortumo has tie ups with all the major telecom providers and has access to over 530 Mn users in India. Speaking about the launch, Gerri Kodres, SVP Business Development and Carrier Relations at Fortumo stated "India has historically been a tough market to crack for mobile payment providers due to outdated premium SMS technologies being widely used, making payment integration for mobile game and app developers complicated. Rather than relying on old technologies which were meant for selling ringtones and wallpapers, Fortumo connects to operators directly through direct carrier billing. In this scenario, users do not need to send any messages. This makes payments faster, in turn increasing conversion and revenue for developers."
One of the blog posts on Fortumo’s website highlighted the reason behind their interest in launching their service in India. According to the post, in H1 2012 80% of 221 Mn phones shipped to India were feature phones and only 15 Mn were smartphones. Fortumo claims that one of their services allows them to streamline the payment flow initiated through a feature phone and integrate it with their cross-platform mobile payments.
Fortumo was launched in 2007, aiming to be the most developer friendly mobile payments provider. Mobi Solutions a specialist in SMS based service provider owned major stake in Fortumo when the service was launched. Back in February, 2013 Fortumo raised $10 Mn from Intel Capital and Greycroft Partners to foray into emerging markets, according to Techcrunch. Globally, Fortumo has presence in over 180 countries and has tie ups with over 300 carriers and 92,000 developers. Some of the popular app or game developers who use Fortumo’s direct carrier billing service include Pop Cap Games, Rovio (Angry Birds app maker), EA, Gameloft, Badoo, etc. According to Fortumo, the worldwide gross transaction volumes for mobile payments for digital goods are estimated to reach $268 Bn by 2015.
LTP View: Fortumo’s tie up with some of India’s large telecom providers to enable carrier billing for games etc. is a good move. India is a feature phone led market and their presence in rural and semi-urban areas is still significant. It will be interesting to see as to how Fortumo would be able to make revenue by targeting the feature phone users. Generally in India, app sales through a feature phone are limited but if there can be a better, easier way it could be interesting to a certain set of customers. The silver lining is that the smartphone sales in India are on the rise and this may help developers and Fortumo through app based sales. If Fortumo is successful with its operations in India, this may lure other mobile payment firms (carrier billing model) to start looking at India as a potential market.