A mobile commerce revolution: carrier billing

(mefminute.com)
The mobile commerce evolution is inseparable from the development of the digital content, starting from the late 1990s. Back in the days, mobile operators were at the center of the value chain, but consumer market was profoundly changed with the rise of ‘smart’ devices. Smartphones and tablets increased both quantity and quality of digital content, but at the same time they allowed the OTT players – Google and Apple – to bypass the operators and arrive directly to the end users.

With the initial rise of the App stores the operator sites saw a major decline in content sales. For several years they had the reputation of “old-fashioned” technology that was slow to innovate in the digital content field. Today the carrier billing has a fresh start, connecting both operators and developers, allowing seamless monetization in emerging and developed markets worldwide.

Find out more in Neombile’s Infographic

OTT players issues vs. carrier billing opportunities

One of the main issues that OTT players had to face was the complex billing mechanism that required bank or credit card data, and included numerous problems, regardless of the market type.

In emerging markets with high mobile penetration there is also a low percentage of credit card owners; on the other hand, in developed markets users often don’t feel comfortable or safe sharing their financial data online. With carrier billing it becomes a seamless and safe process, since the operator already has all the necessary data. It also provided the long awaited answer for the mobile app developers: how to monetize apps & content.

Let’s take a closer look at some of the main carrier billing assets.

The advantages of carrier billing

Carrier billing allows consumers to acquire digital content with phone-based purchases, by simply adding the cost of a purchase directly to the phone bill, almost identical as buying on-demand television by adding it to the cable bill.

It is primarily used for different types of digital goods, for example apps, music, or in-app purchases, and today carrier billing powers $3 billion in mobile transactions, or 12% of the global market for mobile digital content, estimated to reach $13 billion or the 22 % by 2017 (Business Insider).

The major challenges are related to lowering the operator fees that range from 25 % to 40 % of the total cost of acquired goods. With lower rates, both merchants and users will be more encouraged to purchase via their device, leading to bigger volumes of carrier billing sales. The South Korean digital economy is a really good example: carrier billing is widely used for e-commerce transactions on mobile. Google also announced a major shift toward the wireless carriers billing, focusing on advanced markets with thriving app stores, including Japan, U.S. and U.K.

The state of carrier billing today was nicely summed up by Juniper’s Research Director, Dr. Windsor Holden: “The beauty of the direct carrier billing process lies in its simplicity and ubiquity: if enabled, it can be utilized by anyone with a mobile phone, allowing content providers to monetize digital content through the hundreds of millions of consumers who lack credit or debit cards, or who simply don’t want to register a card. Where carrier billing has been deployed, not only do conversion rates rise sharply, but there is a marked increase in average transaction values.”

The future of mobile payments will certainly be carrier billing. Furthermore, carrier billing will soon become the preferred payment choice for the OTT players as they are finally realizing its potential.