Direct Carrier Billing: The Overlooked Mobile Payment
By Christine Kern, contributing writer
Should more retailers be using direct carrier billing?
Direct carrier billing, also known as direct operator billing in some parts of the world, can be viewed in the mobile payments market is the neglected voice in the mobile payments marketplace.
Direct carrier billing (DCB) is a mobile payment method that is an alternative to using a credit or debit card. Research from Analysys Mason shows that the DCB market is growing modestly but still accounts for a relatively small amount of consumer spend. Industry players such as merchants, vendors, and operators should have a clear view on which countries or regions represent the strongest potential markets for DCB. Research predicts that direct carrier billing will provide telecoms worldwide with more than $12 billion in revenue in 2022.
DCB is an attractive method of payment in many cases because it can be targeted towards any user with an active mobile subscription. An attractive market for DCB would have much higher mobile penetration than bank account penetration, or one where consumers have security concerns regarding sharing personal data online.
And while direct carrier billing remains in the realm of digital content such as games, music and movies, it is starting to have some real-world applications such as parking and event tickets.
App stores are just one example of how technology has changed this corner of the payments market.
"[Direct operator billing] has become the app store's friend, and they are realizing that and rolling it out," Richard Leyland, vice president of marketing communications for direct operator billing provider Bango, told Mobile Payments in an interview.
App stores for Blackberry, Firefox, Google, Microsoft and Mozilla all support direct carrier billing. Surprisingly, Apple does not support DCB, even though the iPhone provider is increasing its presence in emerging markets where consumers shy away from traditional payment cards and fall into the underbanked or unbanked population.
Recently, direct operator billing has transcended digital content and is encroaching on the physical world in a few ways.
Boku provides direct operator billing for parking in several countries, including the United States. Boku also powers direct operator billing for the Sony Entertainment Network, which drives the digital storefront for the PlayStation family of gaming consoles. And that's where the physical and digital lines really begin to blur, at least in the case of one particular game.
Skylanders is a popular video game that interacts with physical pieces consumers can purchase in the PlayStation Store.
"You have the physical figure that sits on top of the gaming console, and the kid can click in the game, buy it, and it's coming by UPS," Will Hahn, principal analyst for communication service provider strategies at Gartner, told Mobile Payments Today. "So now we've crossed over. It's a physical good, but in a way kind of virtual because the only real application of this physical thing is in this game."
Bango, Boku and others know the money for direct carrier billing still lies in digital content. Consumers no longer rush to stores to buy the latest song or album by their favorite artists, since they can download it digitally from their devices. Gamers can rent and stream the latest flicks from their PlayStation 4 in minutes. Even some comic books are digital-only productions.
Technology has changed direct carrier billing to where it is a game-winning basket for consumers.
"I think we need to be realistic about what is the sweet spot for carrier billing, and I don't think physical goods are a very natural fit necessarily," Leyland said. "The sweet spot for operator billing is for micropayments, the impulse buys."