Why Pay as You Go (PayG) Is Important for Telecom Operators?

The Pay-as-you-go (PayG) finance system has been around for quite some time, but its impact on device financing is relatively recent. As all businesses and most of the crucial operations even in our day-to-day lives rely heavily on technology, everyone desires to own their personal devices, especially smartphones. But with the soaring prices of the latest devices, apart from the elite few, the majority of people need to rethink their finances before taking a direct plunge into paying upfront costs of devices.

What is Pay-as-you-go?

Pay-as-you-go is a consumption-based cost model that allows the user to pay only for the services and usage that the user has consumed, contradictory to the traditional purchase model that requires the user to pay total upfront costs at once.

While a certain population of the world is ready to grab the latest smartphones on the market at any given price, there is also a population who are deprived of owning even the most basic mobile phones. The PayG finance system bridges the gap and presents opportunities to even the underserved communities to own smartphones and other devices. Similarly, youngsters that yearn to own the latest smartphones can have them without burning a hole in their pockets.

Why is the PayG finance model significant for Telcos?

Device manufacturers, resellers or device financing companies that extend the PayG model to their end-customers often bundle their hardware with telecom services and present devices such as smartphones to users with pre-installed SIM services. Let’s explore the reasons why Telcos have their interests piqued in PayG financed devices.

• Larger unexplored market
  
  While the concept of leasing devices to businesses is old, telecom carriers are obtaining a relatively new experience in the PayG model for financed devices for consumers. The consumer market has opened up a great uncharted territory for telecom service providers. This means, not only do telecom carriers have an abundant market to explore but with financed device users as their subscribers, telcos can expect lower churn rates.
  

• Higher ARPU
  
  While the benefits of financed devices for customers lie in the fact that they save their initial upfront costs, for telecom carriers the benefits of device financing lie in obtaining the Average Revenue Per User (ARPU) for the complete term of the contract. With financed devices, Telcos have an opportunity to extort additional revenue from lower ARPU subscribers and bump them to higher ARPU plans.
  

• Chance to promote latest 4G/5G plans
  
  Telcos have the biggest advantage in promoting their latest 4G or 5G network offerings as they bundle their services with financed devices. This not only presents a chance for the telecom carriers to expand their latest offerings despite higher charges but also helps promote their services indirectly. Clubbing the latest premium and expensive networks with financed devices raises the profit margins significantly for Telcos.
  
• PayG security solutions that address the pain points of Telcos
  
  Device financing companies realizing the challenges that are encountered in the financing process such as tackling EMI frauds, recovering delayed payments, device theft insecurity are increasingly partnering with device security solutions to help them secure their financed devices. The latest comprehensive solutions like NuovoPay offer security features for Telcos to secure their bundled SIM services in addition to the device security. NuovoPay’s SIM-based locking disables the functioning of the device if the user attempts to remove or swap the pre-installed SIM card. This ensures that users do not swap pre-installed SIM cards with cheaper alternatives and instills trust in Telcos partnering with device financers.

Conclusion

The spectrum of mobile networks is growing constantly, but so is the competition between telecom service providers. Device financing has popularised in the developing and underserved regions of the world owing to its pay-as-you-go finance scheme. Partnering with financed devices to offer pre-installed telecom services with hardware helps Telcos achieve a competitive edge and opens up a large market to explore.

Schedule a free live demo here – https://nuovopay.com/book-a-demo/ and get all your questions answered.

Staff writer