Device financing has been a catalyst in increasing the penetration of smartphones across developed countries. Several telecom carriers have taken the plunge into device financing in recent times, also bringing into focus the previously underserved markets of smartphone financing- in the African, LATAM and APAC regions.
Traditionally, the smartphone financing model, especially the one that comes pre-bundled with a telecom service is a win-win for both the consumer as well as the telecom companies. With device financing, individual consumers as well as businesses can leverage the latest technology at their disposal, have an easy upgrade, pay lower total upfront costs and get a telecom service, with voice and data packages. For telecom carriers, smartphone financing enables tapping into a larger market space and providing a service add-on, helping to attract more and more individual consumers as well as large corporations.
Challenges of telecom companies in smartphone financing
When the smartphone financing model emerged, the telecom industry had a lucrative piece to be interested in. But as the smartphone market progressed, the challenges of the telecom industry have risen. Especially since the base prices of the modern handsets have skyrocketed, the profit margins of telecom carriers from device financing are hitting low. With the impending onset of 5G technology, the telecom operators are further in a pickle- given that the costs of 5G phones will be higher.
Also important to mention that while upgrading to the latest tech might be fascinating for the tech-loving community of consumers, the newer handsets have relatively less differentiation, fewer software upgrades and only slight hardware modifications. For example, an iPhone 11 Pro user will not necessarily feel the need to upgrade to iPhone 12 Pro.
Whether or not to dive into the financing market at lower margins is the question. The lack of an end-to-end smartphone financing management approach is the reason why most of this hesitation arises. For untapped markets, the telecom carriers have to deal with the hassle of ensuring timely payments, maintaining swift payment cycles and recovering the device in case the payments fail.
For markets with pre-existing smartphone leasing models, the challenge pertains to customer retention. With no minimum lock-in period with the SIM services offered by telecom carriers with the financed devices, the consumers are free to switch to another SIM service provider while retaining the rights to the financed device, since they pay the EMI for the same. The telecom carriers however miss out on the profit margins that are generated from the long-term association with a customer for their telecom services.
NuovoPay for Telecom Carriers
NuovoPay– a software that helps device financing companies and telecom carriers in ensuring payment remittance for the financed devices and easy device recovery with remote locking technology has an innovative take on the challenges faced by the telecom carriers.
Here’s how NuovoPay comes to the rescue of telecom companies:
- The non-intrusive client software NuovoPay is seamlessly integrated on the financed smartphone
- The telecom companies finance the smartphone + SIM service bundle
- Regular payment reminders can be sent onto the financed device and payment cycles can be tracked
- If the user removes the SIM from the financed smartphone to replace it with the service provided by some other company, NuovoPay is alerted and the phone is locked, even when the device is offline.
- The user cannot access the financed smartphone and will be able to do so only after the original SIM is inserted
- The same smartphone locking technology is used when the user does not fulfill the EMI payment.
Enabling customer retention for the financed smartphones is, thus streamlined, with NuovoPay.
NuovoPay helps telecom companies in strengthening their smartphone leasing model while ensuring customer stickiness in a highly competitive market. Going forward, this seems to be a lucrative option for telecom companies globally.
Schedule a free live demo here – https://nuovopay.com/book-a-demo/ and get all your questions answered.
