gerri kodresIt’s been year since we spoke with Gerri Kodres, Chief Business Officer at Fortumo, a company which allows consumers to purchase digital goods by paying through their mobile operator wallet. The Estonian “carrier billing” company competes with the likes of Boku and Ver Se in India, in a country with limited credit card penetration, and allows merchants to monetize the burgeoning mobile Internet user base by selling subscriptions to music and video streaming, or virtual currency for use in games. In an interview with MediaNama at the Mobile World Congress in Barcelona, Kodres spoke about how the company is going to approach its India business.

MediaNama: How has the year been for you? It’s been a year since we spoke about your India plans.
Gerri Kodres:
 For Fortumo, overall the year was very good, and even better for India. Globally, we processed 300 million transactions during the last year and we had 100% year on year growth. India has grown to have the highest transactions for us. The transaction size in India is smaller than average: between $0.2 and $0.3 (around Rs 12.5 to Rs 19). In terms of revenue, India is not number one (for us), but it’s in the top 10.

The transaction size in India is smaller than average: between $0.2 and $0.3 (around Rs 12.5 to Rs 19).

MediaNama: Are you seeing a trend in the increasing value of transactions?
Gerri Kodres: We see that the trend in the value of transactions is slowly increasing, because more smartphones are in the market, but the increase will not be sudden. The purchasing power has to increase. One important point is that when some western developers come to India, we convince them to not use $1-$5 price points, but 3-4 times lower than what they’re used to charing in the western markets. Because then they’re able to optimise the revenue in India. We are bringing games from China and South East Asia to India. There are some of the global gaming brands which will activate in India, and we have convinced them to lower prices. $3 might be the price point in the US market, but a lot of people will not have $3 in their prepaid account in India.

MediaNama: How many Indian merchants do you have now?
Gerri Kodres: All together it is 30-40 well known merchants, and if you include the long tail then it is more than 100. Out of the well known merchants, it is the gaming guys, like Octro, Games2Win (which has started to use carrier billing now), and a new segment is streaming music and video. Almost every premium customer in this segmentlike Gaana, BoxTV, Star Sports, Ten Sports, Ditto TV uses our services. I cannot name them, but some very big South East Asian brands will be activated shortly. It’s two segments that have given the growth: games and streaming music and video. The growth in transactions in India has been 300-400%, but I can’t give you exact numbers.

If the carrier would be able to go up higher with a revenue share then there could be whole new segments of companies like Uber and taxi companies which rely on other methods today, and e-commerce and m-commerce companies which rely on credit cards or wallet solutions. We’re convincing carriers that these segments can use carrier billings and increase their business.

MediaNama: What challenges do merchants face with carrier billing?
Gerri Kodres: For music and video streaming, there is no major challenge. There is challenge when we want to bring western companies, because commercials are still not good enough. Overall, we are moving towards more bearable commercials. For some, regulations are a challenge: for example, for VoIP calls. One challenge is when we talk about mobile games, then it’s distribution outside of Google Play and Android. We are seeing good signs here, that this is getting better. We have partnerships with a number of ecosystems, like OEMs for pre-load, which solves the distribution issue.

MediaNama: So you’re getting involved with distribution deals of apps?
Gerri Kodres: We are not getting involved directly, but we are helping our partners, since we have our own billing deals with some OEMs like Gionee, Alcatel and ZTE. We help developers by directing them to the OEMs.

MediaNama: Has the problem with Google Play not allowing third party billing been addressed yet?
Gerri Kodres: The situation has almost always been the same. Google has not allowed third party billing for payments, other than a few segments where if you can consume the product outside of the Android application, for example if you have a music application or games. For some global game brands, carriers are directly offering to push them to their users. Carrier owned app stores have not been successful, but they do very targeted promotions for some top brands. In India as well, and within a few months, there will be some news about this as well.

During 2015, we are moving to newer segments, and some of these may be more suited for wallets. We are talking to major wallet providers in India, and we’ll run pilots and look at how strongly this business will go.

MediaNama: How’s your relationship with carriers in India? How many carriers do you have?
Gerri Kodres: We had four last year. This year we have added one more. We have Airtel,Vodafone, Idea, Aircel and we’re going live with one more. We are in a contract phase with two others. Some development in the market is that these big players that did not talk direct billing a year ago have now made it available, and we are among the first ones to integrate.

MediaNama: How are the revenue shares now?
Gerri Kodres: Revenue shares are now in the 60-70%, which is pretty reasonable. However, one thing that we’re looking for and around the world, is that we are trying to bring new customer segments. If the carrier would be able to go up higher with a revenue share then there could be whole new segments of companies like Uber and taxi companies which today rely on other methods, and e-commerce and m-commerce companies which rely on credit cards or wallet solutions. We’re convincing carriers that these segments can use carrier billings and increase their business.

MediaNama: Are you going to remain a carrier billing company or will you look at other models? Would you look at advertising solutions for apps or wallet integration?
Gerri Kodres: We want to be a transaction processor and advertising is not our core competence. We are looking to other transaction solutions which are working in emerging markets, like e-wallets. So far, e-wallets do not have good transactions in India, different from African countries, where mobile operator provided m-wallets are dominant. During 2015, we are moving to newer segments, and some of these may be more suited for wallets. We are talking to major wallet providers in India, and we’ll run pilots and look at how strongly this business will go.