Small payments (often called micropayments) are everywhere these days, often connected with mobility or mobile devices. Buses, fast food, cinemas, digital purchases … you name it. Several years have gone by since I first started discussing this phenomenon with companies trying to find a way to offer cost-effective micropayments to their customers.
In the earliest years of this millennium, I was working with mobile content and telecom operator payments. Nowadays it feels sad to remember that the telecom operator took 50% of the revenues and paid out in 60-180 days. In the mobile content business, you could try to live with it, but how about commodities that can be sold only once? The next step was the app stores, which took a 20-30% cut from the end-user price. It was a better deal for the content provider, but still too expensive for anybody trying to sell anything that was not digital.
There has always been the possibility of using a credit card, with much lower commissions. But cards were not really practical. To begin with, there wasn’t any mobile user interface (UI), so it was almost impossible to pay with a mobile device. Nowadays the UI issue is solved, but there are still a lot of obstacles to the use of cards. Some of the problems are country-specific and some are general. They can range from consumer resistance to entering their card number using their mobile phone, to the country-specific problem in Finland where a consumer has to use strong identification with card payments because the merchant does not want to take on the credit risk.
These were some of the issues we discussed early on in our meetings with Kotipizza (read the Pay magazine article here). They were using a generic service where several companies were selling their pizzas. The only somewhat realistic way to pay with a mobile device was to call to an IVR (interactive voice response) number, and pay a 15% premium. There was a possibility to pay by invoice, but the consumer had to pay €3 extra for each purchase. Neither method was particularly user-friendly, and both were also an economic burden.
Now, with Pizzapiikki, a consumer registers once, and can then make purchases conveniently online, in the store or on a mobile device. Choose the pizza and click to add the order to your monthly invoice. Nice and smooth. And tasty.
Even the basic flow that we have created together with Kotipizza beats the other mobile payment flows. We have some other exciting ways of using Pizzapiikki with a mobile device coming out soon. But that is another story, so you just have to wait. In the meantime, there is always pizza!
– Jouko Tossavainen
eCommerce Manager, arvato Financial Solutions Finland
Check my view on: the payment industry
Read also the full Pay magazine, out now!