The idea of financing smartphones is fast becoming the way of things in the US. Which could be part of the reason why Red Pocket Mobile-a MVNO-is considering launching their own device financing options.
MVNO stands for Mobile Virtual Network Operator and they work a bit differently from other US carriers like Verizon, AT&T, Sprint and T-Mobile. MVNOs actually don’t have their own networks, instead, they have business relationships with other carriers. That relationship allows the MVNO to use the other carriers network, as long as they pay a fee to the carrier. This allows for the MVNO to operate without contracts, and usually as prepaid services. However, they ask that consumers bring their own device, or they offer devices through third-party retailers. Red Pocket is one of these MVNOs, and through those third-party retailers, they may soon be offering device financing options to consumers.
Red Pocket started in 2006 using AT&T’s network to offer customers their service. Then in 2013, they gained the use of Sprint and T-Mobile’s networks as well. While Red Pocket isn’t the only MVNO in the US, they are one of very few. Their biggest competitor is TracFone, while another company in the market is Ting. Still, Red Pocket could be one of the first MVNOs to offer device financing.
“We are evaluating device financing partnerships right now and will be making an announcement shortly about that,” President of Red Pocket Mobile, Josh Gordon said during an interview with Fierce Wireless. “A device financing component is important for many customers.” Gordon continued to explain that the option would allow their customers to access financed devices through their own website. Though there hasn’t been a timeline announced just yet.
Device financing has become very popular since T-Mobile started offering the option in 2013 followed closely by Sprint, AT&T and Verizon. Though the option goes by different names, on T-Mobile it’s known as Equipment Installment Plan or EIP. The device financing option is an easier pill to swallow than a contract term that locks consumers to a carrier. Device financing does almost the same thing, allowing for a small to no down payment for a device and then the full price of the device spread out across 24 months. If a consumer decides to switch carriers while the device isn’t paid off, they must pay the full remaining price of the device. The fact that it’s an easier way to get consumers using a certain carrier shows in the numbers produced by the NPD Group. Since September of 2013, the percentage of users currently using device financing options went from 7% to 31% at the end of the first quarter of 2014. That popularity isn’t only growing for the four major carriers in the US, but for MVNOs as well.
Ting, another popular MVNO in the US is also considering device financing options for it’s customers. In fact, they said they were searching options for device financing but still haven’t found the best way to do so.
Red Pocket is also searching for alternative methods for consumers to top up their accounts. In that search, they have partnered with a startup called Zipmark. The hope is that consumers will be able to use virtual checks to top up their accounts through Red Pockets website.