Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineThreadbare margins in mobile payments
Direct carrier billing specialists Bango (BGO:AIM) and peer Boku (BOKU:AIM) have seen their commission from app store purchases shrink to just 1.4% each.
Direct carrier billing is where consumers can elect to charge app store purchases to their monthly phone bill rather use a credit card.
But as digital purchases continue to soar, large app store operators – Amazon, Google and Apple, for example – are demanding an increasingly large part of the profit pie.
End user spend margins have been shrinking for years. Five or six years ago Bango had hopes of long-run margins of 4% to 5%. That has proved to be overly ambitious, and the measure stood at 1.8% at interim results announced in September.
Further squeezes are believed to have come through since, a point confirmed by the 1.44% Boku reported in a trading update on 23 January.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell Youinvest.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
