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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.
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