Credit card payments are just a stopgap for apps



The Middle East's mobile-apps business is growing slowly, but surely.

As The National reported earlier this month, more than half of smartphone users in the Mena region intend to buy an app in the next 12 months; 24 per cent claim they will spend more than US$50 in total.

That certainly points to a viable business model for budding developers keen to make the Arab world's 'Angry Birds'.

Yet some have over-egged the potential of mobile applications. One industry player reportedly said that apps now account for 5 per cent of total marketing budgets in the Gulf region, a claim that was widely derided on Twitter (notably by @eamonncarey, @youseftuqan and @alex_malouf).

There is one factor holding back the development of the apps business in the region: How consumers actually pay for a download.

While many apps can be downloaded for free, some are priced at a few dollars (and, in a few cases, much more).

Given that this is a vital income stream for apps developers, it is essential that consumers are given easy options to pay for downloads.

According to David Ashford, the general manager of AppsArabia, an applications investment fund based in Abu Dhabi, payment methods are a key factor in the growth of the industry.

"That's the one thing holding back this region, the consumer-payment mechanism," Mr Ashford told The National recently.

Mr Ashford's preferred choice is direct billing by mobile carriers, which allows consumers to buy apps and charge them directly to their mobile-phone account.

"I think this is the floodgate. When carrier integration is live across as many of the telcos as possible, and as many of the regions as possible, the consumer is suddenly able to pay for things," Mr Ashford said recently.

Nokia, the Finnish handset manufacturer, has already launched a direct billing service in the UAE, while BlackBerry says it is in negotiation with "all carriers" in the Middle East region over similar initiatives.

The benefits of this system are clear: Consumers are already accustomed to paying their mobile provider for service, and so a few extra dollars for apps downloads will not be seen as too much of an imposition.

This method also sidesteps the problem of asking consumers to enter their credit card details each time they want to download an app.

So it is surprising that handset makers are still pursuing other payment methods. For example, the electronics manufacturer Samsung said last week that it had launched a credit-card payments system for UAE customers of its mobile application store.

While different payment options such as this are welcome, more handset makers need to forge ties with mobile networks to enable carrier billing. Credit-card payments are just a stopgap for the apps business.


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