In-App Purchase Characteristics of Top Apps

amazonAmazon has a new informative slideshare presentation ‘What the Top 50 Apps Do with IAP that the Rest of Us Don’t’ with insights into in-app purchasing. While the insights have been obtained from the Amazon app store, they are just as applicable to all stores and all OS platforms.
amazoniapHere are some of the learnings and consequent recommendations…

  • Start cheaper and increase price(s) over time to about 60% of the original price.
  • 48% of purchases happen within 1hr of previous purchase. Hence, make sure you offer an IAP within this time.
  • 37% of users who will purchase, purchase on the first day. Again, engage the customer early.
  • Offer between 1-5 price points for the best conversion. More prices points can confuse the user.
  • Apps with tutorials have a 2.5X higher conversion rate,
  • 1.14% of paying customers generate 30% of the sales. Cater for your best and longest customers by differenting your IAP offering.
  • As with non-IAP apps, retention is the only important metric. Give them a reason to come back, for example use social, leaderboards and achievements.

Mobile Payments and Banking Market Map

firstpartnerFirstPartner have a new 2015 version of their free Mobile Payments & Banking Market Map. It shows consumer segments, mobile financial services, types of payment, the payment value chain, payment processors and providers, technology and system vendors, regulators, industry association and standards bodies. There are also some useful statistics, for example, there are forecast to be 195 billion mobile and tablet transactions per year by 2019, a factor of three more than there were for 2014.

mobilepaymentsmarketmap

Mobile Payments Whitepaper

The Application Developers Alliance have a free whitepaper on Mobile Payments (pdf) with an emphasis on the issues affecting merchants.

appalliancemobilepayments

It offers a simple overview on the payments ecosystem and covers beacons, digital currencies, omnichannel, NFC and mobile wallets. It mentions issues such as security, fraud and market fragmentation.

GSMA Mobile Economy Report 2015

GSMAThe GSMA has a recent free report (PDF) into The Mobile Economy 2015. The 78 pages are a mine of information for any startup needing a global view of mobile. Here are a few insights I found interesting.

There’s often talk of how much (or little) money there is in devices or apps. However, how do these actually compare to each other and how do they compare to the money made by network operators? The following chart shows the World GDP split by mobile area. It shows the majority of the commerce is actually in network operators…

gsmagdp

 

Another is interesting chart is the one showing commercial NFC-based payment launches over time…

gsmanfcpayments

I didn’t realise there were so many launches outside of Apple Pay.

Mobile Commerce Transactions, NFC and mTicketing

juniper.gifJuniper has new research that says that Mobile Commerce Transactions will Approach 200bn By 2019. If you want to be part of this, Juniper say that NFC and mTicketing are likely to be the top growth areas.

However, if you get involved with NFC and ticketing then make sure it’s secure. As Trend Micro recently demonstrated, poorly designed/implemented systems can easily be hacked. There’s probably a great business waiting to happen (or already happened) for the right company that can white-label secure NFC/mTicketing solutions.

Apple Pay Limitations

apple.gifThere’s an interesting article on USA Today Money quoting a UBS report explaining problems with Apple Pay that will limit its dominance…
  • Onerous fees charged by Apple
  • Inferior technology
  • Little incentive for merchants to adopt Apple Pay-compatible devices

More reasons then, why Apple should open up NFC before interested parties develop alternative solutions.

Looking wider, this provides learnings for any new venture. Are the fees you expect to charge reasonable in the current (and future market), can people easily circumvent your solution using other technologies and are you expecting too much of third parties to change/update their systems in order to be part of your solution? I suppose it’s really about having an old fashioned business model which is one of the stages of my primer.

The Future of Apple Pay and NFC

apple.gifI have been analysing Apple Pay to determine if it’s likely to accelerate mobile payment in general and the use of NFC. FirstPartner have an explanation how Apple Pay Works and Penrillian explain how the market isn’t open yet.

The initial implementation is US only, supports only 1.5% of US merchants, relies on the unpopular Apple Passbook and will only work on newer devices containing NFC. Hence, in the short term it won’t be used by many people. More importantly, the implementation is currently closed in that it only allows NFC payments via Apple. It isn’t possible for third parties to use NFC to build more universal, ubiquitous payment solutions. While the essential building blocks for ‘universal’ NFC-based systems across Android/iOS will soon be in place, such systems are blocked by Apple’s strategies.

NFC isn’t just about payment. It can be used in security, authentication, stock control and a myriad of contextual triggering apps, many in the growing realm of the Internet of Things (IoT). All these possibilities of using NFC are closed on iOS for now. However, I suspect that as with apps, when initially Apple said there would be no native apps and only web apps, they will have to open things up. A universal payments system is too compelling and it’s incomprehensible that Apple will stay closed in this area for so little apparent gain. The Internet of Things needs NFC as well as Bluetooth LE (iBeacons). I believe Apple will see themselves under increasing pressure from many directions to open up the NFC APIs.

Update: Adam Cohen-Rose has pointed me to an interesting article by Clover that describes how the network-side token system was proposed/implemented by the payment networks (Mastercard, Visa). There’s no reason why this couldn’t be, and probably will be, implemented on say Android. This suggests a ‘universal’ system might be viable provided it uses a similar network-side token system.

Update: In an email to Cult of Mac, an Apple spokeswoman confirmed that NFC chip on the iPhone 6 and 6 Plus is only for use with Apple Pay. Like Touch ID on the iPhone 5s, Apple is keeping its NFC restricted from developers, at least for its first year.

Update: Mark Ranta asks Where’s the Beef? and hopes Apple Pay is just the first (baby) step.

Update: Teardown shows NFC chip is from NXP.

Update: Why Apple Pay Won’t Work.  

Mobile Path to Purchase

thinkinsights.gifIf you have a physical product to sell and you want to sell it via mobile, what should you do? Should you use conventional AdWords advertising, create a mobile accessible web store or an app? In what ways do consumers search/research products and in what ways are they completing the purchase?

 googlepathtopurchase.png

Google Think Insights has some new free research on the Mobile Path to Purchase. It shows that traditional search (48%) is the primary method of finding products but branded web sites (33%) and branded apps (26%) are also used. The key to purchasing conversion is proximity to store. Consumers tend to purchase in store (82%) or online (45%) with only 17% purchasing directly on the phone.

This isn’t good news for those currently working in the mobile payments space. One thing the report doesn’t cover is why only 17% purchase on the phone. Is it ease of use, security concerns or something else that is holding back consumers?