The amount raised by text donations is less than a third of previous estimates, the phone services regulator admitted this week, after a new analysis revealed it had made an "overestimation".
The Phone-paid Services Authority said in its annual market review for the 2017/18 financial year yesterday that charity donations made by text had actually been only £37.5m in the most recent year, compared to an estimate of £124m.
The previous year's figures have been reduced to £38.6m. The PSA had previously reported that donations totalled £115m.
The PSA said the mistake had come about because it had received the wrong data from the mobile phone industry. Previously, it had estimated that the average donation was around £20, but its new research has concluded that it is actually £5.76.
“Charity donations have become an important element of the phone-paid services market. However, it appears that previous estimates of the size of charity donations paid via text may have been overestimated,” the report said.
The differences came to light after the PSA commissioned Mobilesquared, the research agency which had produced the previous reports, to carry out more in-depth research, described as “the deepest dive yet into the phone-paid services sector”. It said this had “enabled us to challenge previous revenue figures across every sector, with two standout services requiring significant adjustment”.
It said the figure for charity donations has “been significantly reduced based on complete visibility of pass-throughs provided by the mobile network operators”.
Donations make up less of the market
This also means that charity donations account for a smaller proportion of the mobile payments market than previously thought.
Having previously been thought to account to be the largest single part of the phone pay sector, it is now the sixth largest segment, with charity donations representing 7 per cent of the total market.
The PSA said that 6.5 million people made charity donation in 2017/18, making donors the largest single group of users. The next largest group of users was those accessing TV and radio, followed by 2.9 million users accessing games.
Dominance of telethon appeals
PSA projects that charity donations will grow next year by 34 per cent to £50m as “key telethon events return”.
Telethon appeals accounted for 61 per cent of text donations in 2017/18, with non-telethon donations accounting for £14.1m.
But the PSA said it expects non-telethon donations to increase. In 2016/17 non-telethon donations came to £9.6m, which was 24 per cent of the total donations.
It expects non-telethon donations to reach £17.1m and account for 34 per cent of the market.
Charity donations were one of the more trusted services, with 89 per cent saying they trusted charity donations.
At the other end of the spectrum, 35 per cent of users of “flirting chat services” felt their trust had been compromised.
The PSA said that the introduction of GDPR had impacted on donations because it was “preventing companies from on-boarding new customers as a result of concerns regarding the validity of the original opt-in”.
It said that charities were cautious about using a one-off donation as a “soft opt-in” before contacting them about regular giving.
“Charities now require a hard opt-in which means a one-off PSMS donation does not opt-in the consumer to follow-up activity,” it said.
PSA has already announced plans enable people to take part in society lotteries via text next year.
In the market review the PSA projects that society lotteries will raise £3m.