It took 128 years to bring landline phones to one billion people. Then, in 20 years, six billion people bought mobile phones—including those in regions previously cut off from any means of communication. That doesn’t just keep them in touch. It creates a new financial landscape.
“Mobile phones have become the sole payment channel for many consumers in developing countries,” says Andreas Papadimitriou, an investment officer at the European Investment Bank, who worked on a EUR 25 million loan to Upstream, a leading m-commerce platform that provides digital services to emerging markets.
Upstream products range from infotainment and micro-insurance, to gaming and video portals, app stores, cloud storage and mobile security solutions, language-learning and mobile marketing promotions. With 10 regional offices and operations in over 45 emerging markets, Upstream works with 60 mobile operators, having access to 1.2 billion consumers, and more than 10 billion consumer interactions per year.
EIB involvement provided a long term financing partner to Upstream, thus enabling the company to further invest in R&D. Such a facility was a unique offering given that retail banks were unwilling to fund it in the long term and private investors are still reluctant to support companies in developing countries.
“A one size fits all solution cannot work”
For the past ten years, Upstream’s focus has been overcoming the two main challenges digital consumers encounter in developing countries: scarcity of locally relevant services and inability to pay for people who don’t have bank accounts.
In regards to the first challenge, Upstream ensures that the digital services it provides are relevant in terms of content, affordability and accessibility. What does that mean in detail?
- Content. Upstream sources from international and local service providers the most relevant services, adapting them to take local languages and cultures into account. Beyond the local feel of the service, Upstream understands what type of services are currently missing in emerging markets, thereby accordingly creating offerings to meet these needs.
- Affordability. Upstream operates in markets where incomes are on average 87% lower than those in developed markets. “We price services in line with local conditions and offer them through subscriptions with regular micro-payments,” says Guy Krief, Upstream’s chief executive.
- Accessibility: Upstream provides its offerings in 0G to 4G formats, thereby reaching all consumers regardless of their device or their internet access. The content can be consumed via SMS, mobile internet or apps.
When billing becomes a science
Catering for content, affordability and accessibility, the company’s experience over the past 10 years shows that the most sustainable business model to monetise consumers in emerging markets is through subscription micro-payments. Consumers frequently pay amounts as small as a few cents to acquire unlimited access to digital services.
That’s important when consumers often only have the equivalent of USD 1 or USD 2 on their airtime balance at any given point.
“Billing in emerging markets requires the appropriate technology and know-how,” says Krief. “It requires a balance between identifying the optimal pricing and then knowing exactly where and when to carry out successful charges.
Upstream employs professionals from over 30 nationalities, across 20 markets. The average age is 31.
Digital services that improve people’s lives
The three billion consumers who industry experts believe are waiting to join in on the web will be in Africa and Asia for the most part. They will need a device to get online, infrastructure to deliver online content to them, and every other mechanism that currently exists for the web.
“They may not use it the same way,” says Krief “but they will use the web for a lot of the same things we use it for. They will also get new services that are more tailored to them, their culture and specific needs.”
A significant part of Upstream projects are in education, health, lifestyle and financial services.
In Nigeria, for instance, Upstream’s daily health tips service is a great success, at a weekly subscription of 50 NGN (14 US cents). “Mobile devices are becoming an access point for offerings that complement or enhance services provided by NGOs and government organisations, like schools, hospitals and banks, in more rural areas,” Krief adds.
The same goes for education, where Upstream designed and developed a Mobile Language Learning service that is a fun and affordable way of learning a new language via SMS or mobile website. It has enrolled 11 million subscribers across 15 countries, including 10 countries in Africa and three in South East Asia, making it one of the leading on-line language schools across the globe.
“Subscription rates are particularly strong in regions where proficiency in English is lowest, such as Egypt and Vietnam,” says Krief. The service was nominated for the 2016 Global Mobile Awards in the category “Best Mobile Innovation for Emerging Markets”.