An Introduction to Direct Carrier Billing

When a consumer wants to purchase digital content on their mobile device, having the ability to simply add the charge to their mobile phone bill is easy and convenient—especially when they don’t have a credit card. It’s also an all-around win, as it generates revenue for their mobile carrier and the content creator. This form of payment, called direct carrier billing, is catching on and becoming one of the most popular mobile payment methods used around the world today.

A Logical Solution

Global carrier billing revenue is expected to increase to $24.7 billion in 2019, up from the $14.5 billion in 2014, according to a study from Ovum reported in a press release on MobilePaymentsToday.com. Consumers have the opportunity to purchase digital content—apps, music, mobiles, games, ebooks, and more—from the devices they use at home (e.g. consoles and smart TVs) and on the go (e.g. smartphones and tablets). In some areas people can even charge event tickets and parking meter fees to their phone bills. And since they have existing billing relationships with their mobile carriers, direct carrier billing is a logical and welcome payment option.

Plus, the payments platform makes sense for content providers, including developers of online games, social media companies, independent stores, and mobile content authors of any ilk who can tap into the billing systems of mobile carriers to facilitate sale of their digital goods. OS stores like Google Play, Blackberry World, and Windows Phone Store have already demonstrated the advantages of using the carrier billing payments option. As highlighted in MobilePaymentsToday.com’s Direct Carrier Billing Infographic, the flexible payment form has had a 300% year-over-year growth rate on Google Play.

While m-commerce is an obvious driver of the trend, so is the prevalence of mobile users who don’t use traditional payment networks like banks and credit cards and need an alternative form of payment. Considering that there are 6.8 Billion mobile phone accounts (International Telecommunications Union) and only 2.15 Billion credit card accounts (Nilson Report), it’s no wonder a carrier-facilitated mobile payment method has taken off, most notably in markets where credit card penetration is low and mobile use is high.

The Wave of the Future?

Direct carrier billing, like most other forms of mobile payments, provides a seamless customer experience. People don’t need a credit or debit card, and they don’t need a bank account. They also don’t need to enter personal details into a web form when they want to make a purchase.

More industry stakeholders, from carriers to online stores to content creators, are investigating the potential in this payment method. In their Direct Carrier Billing infographic, MobilePaymentsToday.com offers the following advice to carriers who want to move direct carrier billing to the next level:

• Leverage existing billing relationships with consumers
• Work with leading app stores
• Leverage big data
• Increase caps on available purchase price points
• Reduce revenue leakage – migrate premium SMS to direct carrier billing
• Work with regulators
• Educate end users and merchants
• Merge with the mobile wallet

The direct carrier billing form of mobile payments is likely to continue impacting the global payments marketplace. Stay tuned for more insights as the marketplace evolves.