For businesses, this shift represents a big challenge, and an even bigger opportunity. Alternative payment methods can be integrated easily, and offer more convenience and better conversion rates. In many cases, the main advantage of those payment solutions is that they can also greatly expand a business’ reach. This is especially relevant within developing markets where credit card adoption is growing at a significantly slower pace than mobile adoption.
Direct Carrier Billing, also referred to as mobile operator billing, is an effective method to reach customers in these markets. This happens through a party they are already familiar with – the telecom operator. Any purchase made under this method is either added to the customer’s phone bill, or deducted from their credit balance if on a prepaid tariff.
In 2016, Direct Carrier Billing has expanded its global reach and is available to consumers in about 120 countries that represent over 90 percent of the world’s population. It is supported by multiple carriers in each country. Leading industry analyst firms approximate Direct Carrier Billing globally supports $12-to-$16 billion in sales annually. It is projected to grow to over $24 billion by 2019.
Mobile billing has seen its biggest success in the emerging markets: Sub-Saharan Africa, India, South America and Eastern Europe.
Main reasons for success
Convenience: No need to enter lengthy and sensitive payment information.
Accessibility: No sign-up requirements; covers also low-end mobile devices.
Trustworthiness: Payments are processed through the telecom operator that consumers already know and trust with their account information. Besides, direct carrier billing companies have developed high-end risk management systems that ensure an additional layer of payment security.
Direct mobile billing method is particularly effective for small-scale impulse purchases of digital content such as songs or videos. It is also suitable for food delivery and I-gaming services. Usually, many consumers abandon a purchase of that type when asked to enter credit card details as they don’t want to expose themselves to security risks or enter data manually.
Benefits for business
New customers: In 2015, there are 134 million active mobile money accounts, a number comparable to PayPal’s active users, amounting to 173 million globally. That shows the penetration level of mobile payments and people’s willingness to adopt such methods. Thus, more mobile money users mean more customers at more businesses. Moreover, higher customer traffic means more sales.
Low associated costs: Merchants’ operational costs are minimal because they require no special devices to accept payments; transaction costs are lower than debit or credit card processing fees.
Great market scope: Direct Carrier Billing, along with carrier-backed mobile money schemes, are two multi-billion dollar sectors of a rapidly emerging space. It is increasingly being recognized as carrier commerce that is currently present in 120 countries worldwide. Hence, a switch to mobile billing practically allows merchants sell anything, anywhere to any customer.
If you want to learn more on how carrier billing can benefit your business, get in touch with us here at Siru Mobile.