Psst : If you don’t like having your credit card tied to your Google Play account and live in Singapore, here’s the good news: you can now link it to your monthly phone bill (or prepaid balance) from August 15 onwards if you’re a SingTel subscriber. SingTel has announced a partnership with Google to be the first in Southeast Asia to offer carrier billing services. This means you can buy apps or in-app purchases and the amount will be charged to your mobile line instead . The company also mentioned that this will be rolled out to Optus in Australia, and companies where the company either has shares in or owns in Thailand , Philippines, India , Bangla Desh and Indonesia.
Aaah yes : welcome to the world of Direct Carrier Billing. Finally the Telcos have woken up to this latent and gigantic opportunity to capitalise on the App store phenomena. Telcos have always coveted a piece of the $770 billion mobile payments market. Direct Carrier Billing helps operators grow new revenue streams by leveraging their key asset: the billing relationship with consumers. Many consumers prefer carrier billing over credit and debit cards, as it simplifies the purchase experience and avoids the need to disclose card details to small or unknown merchants.
Content paid for via direct operator billing will come to a represent a $13 billion revenue opportunity by 2017, according to Juniper Research, compared to $2.3 billion in 2012. The research indicates that Google Play, Nokia Store, Blackberry App World and Windows Phone Store – all of which offer Direct Carrier Billing in a number of markets – accounted for approximately 48% of all app downloads in 2012. And for you NFC afficiandos : while trials have demonstrated extremely positive user responses to NFC– given the scale of the marketing/educational challenge facing MNOs and other NFC stakeholders – Direct Carrier Billing represents a greater and easier monetisation option in the short term !!
Direct Carrier Billing allows storefronts to enable payment amongst a far wider and diverse user base, both in developed and developing markets. In the latter case, bank account and credit card ownership is often extremely low; in the former, it provides a billing option to the prepaid sector and younger demographics. Furthermore, it enables few-click purchases, thereby making it a particularly attractive option for impulse purchases. Conversion rates are much higher than many other payment means, due to ease of : for example, the Google Play transactions processed on carrier billing in 2012 in the US grew by 3x in comparison with 2011. Nokia CEO stated that in cases where Nokia teamed with mobile operators to offer carrier billing, consumers were 5x more likely to complete an app store purchase than if the app store only offered credit card purchasing.
There is significant opportunity for Direct Carrier Billing to be utilised for ‘real world’ purchases in the lower value, higher volume area, both in terms of ad-hoc purchases (e.g. books, flowers) and more regular purchases (e.g. petrol). By adding ticketing applications and services to a mobile phone a customer could be less likely to replace their mobile operator with a new one; customer loyalty should increase as a result of mobile payments. With the addition of analytics of the BSS and Big Data, the operator can add far more value to mobile commerce. This is beneficial both from the perspective of the MNO – allowing it to personalise content discovery based on analysis of on-going individual consumer behaviour patterns – and for third parties such as advertisers and retailers. In several major cities in Central & Eastern Europe there are mobile ticketing schemes for trams and buses which are well established and see multiple millions of tickets sold annually. Examples include Prague, Warsaw, Bucharest, Bratislava, Zilina, Kosice and Tallinn
Telefonica Digital, along with the Telenor Group is now offering Carrier Billing to a combined customer base of 400 million. Impressive as that figure is – and i do not know how many of those customers have smartphones or tablets – the best figure is that revenues from payments have increased by 300 percent. Credit card and PayPal transactions have suffered as a result. In Latin America that figure is closer to 1,000 percent because of the low penetration of credit cards. In fact the new Firefox Marketplace, aimed at that market, is the first application to have Carrier Billing ‘baked in.’ Samsung has agreed to let customers on Telefónica’s network charge their apps and content to their phone bill or take the payment out of prepaid credit, rather than having to use a credit card.
Typically new Carrier billing platforms are Cloud based gateway / middleware coded solutions dishing out SaaS . They enable Telcos to onboard and manage the largest set of app stores, merchants and aggregators, and process transactions for any type of goods – digital, remote, or physical. In addition, they make it easy to settle against any payment method (postpaid bill, pre-paid balance, wallet, or card) and quickly capture new and emerging revenue streams. These platforms include automated workflows and business processes that maximize operational efficiencies. While the cloud-based service delivery model offers low CAPEX requirements, the revenue-share pricing model on offer ensures that OPEX is tied to service providers’ success and payments revenue.
Carrier billing provides a very real alternative to credit cards in emerging markets as issues preventing spread of credit cards (identity and reputation management, debt enforcement, informal economy) are entrenched and not getting solved anytime soon. Mobile operators have the chance to seize this opportunity and turn carrier billing into the de-facto payment method for online payments in emerging markets.
We’re going to be seeing more of these carrier billing arrangements in the future. Not only does it mean more apps and content will be sold, benefiting their developers, but it also means the Telcos themselves aren’t shut out of the value chain. This shift towards giving Telcos a slice of the Apps Store pie is a good thing – not because the proactive operators deserve it because it rewards them for the investment in expensive network assets that enable the Apps and Mobile payment economy.
Sadiq Malik ( Telco Strategist )