Virtual world payment trends 2008 - post 1

Here are 10 payment trends PG has detected so far in 2008:

1. Interactive Toys substituting as offline payment methods huge in North America and becoming big in Europe - Webkinz, Moshi Monsters etc...

2. Premium SMS - still huge in Europe but dwindling in popularity in Asia and still relatively unadopted in North America but huge potential in USA and Canada. Critical in South America with absence of other reliable payment methods

3. Credit cards still rule North America - ClubPenguin, Second Life, WOW etc... Card pocessors offer widely-varying fees and rates with little industry wide transparency in pricing and charging models with few notable exceptions (e.g.; Adyen)

4. Bank Transfers emerging in EU and offer huge high-margin low-chargeback opportunity in 2009 with SEPA

5. Subscription model powering most profitable virtual worlds. Most money losing virtual worlds like PlayRay, HABBO etc... clinging to transaction based virtual item / currency model. Hybrid model of subscription and transaction based revenue models key in North America and Europe. Transaction based model still rules Asia-pac.

6. Telco payments via IVR still essential in South America and parts of Europe

7. Prepaid opportunities still huge in Europe and now beginning to see mainstream adoption in North America as has been case in Asia for many years. Virtual world operators seemingly struggle to launch own line of branded prepaid cards. PayByCash prepaid service seems to attempt to fill this need

8. Virtual world payment network construction - few virtual world operators have dedicated payment teams. Most appear to cobble together card dominant ad hoc payment networks with in-house developers based on in-house billing-systems and processes (* email Paymentguy, who, for a small annual retainer, will guarantee your virtual world makes more money - or your money back!)

9. ISP billing emerging in North America and Europe with suppliers like PaymentOne and France telecom targeting gaming community

10. Wallets die slow painful death with companies like ClickandBuy (Firstgate) seeing steep decline in customer registration and market uptake. Paypal is unique and still rules this space morphing beyond a pure wallet service but being susceptible to fraud is still not a viable go-to payment method option for virtual world operators.

PG will add a few more trends and flush out the details with examples in later posts. This is Sunday morning post 1 of XX number of posts of a series on payment industry trends in virtual worlds.

PG