Over the past few years, direct carrier billing (DCB) has witnessed significant traction. Initially, the concept was introduced to make purchasing ringtones and wallpapers more convenient. Today, it has gained a foothold in the “app economy”, where developers sell their applications in application stores and the customer is charged the same every month. Thereafter, direct carrier billing is being used for a variety of functions, ranging from purchasing air tickets to paying parking fees.
Drivers of Direct Carrier Billing
- An effective method of generating revenue
Voice and messaging is fast becoming passé, especially with the growing popularity of free communication applications like WhatsApp, Skype, Snapchat etc. While these services help operators generate data revenue, they have an adverse impact on voice and messaging services. DCB helps mobile operators somewhat recover this lost revenue.
- Enhanced convenience
DCB is a convenient and streamlined payment option. As per data released by Bango, when consumers can pay only via debit or credit cards, the conversion is as low as 0.5 per cent in developing markets. However, in case the direct carrier billing option is available, the conversion is as high as 80 per cent.
- Higher transaction values and geographical reach
Over the years, the amount of payment per transaction is increasing, which is a major growth driver. Moreover, the market itself is growing and making its debut in new countries. As of 2016, direct carrier billing is available in 120 countries globally.
Currently, the direct carrier billing market is valued at around $12-$16 billion, which is expected to grow to $24 billion by 2019. Both mobile operators and merchants will have their share of the profit in these projected amounts. In fact, Microsoft has projected the conversion rates on direct carrier billing as being three times higher than credit cards.
In fact, according to a report published by DIMOCO, conversion rates for first time transactions will be as high as 70 per cent for merchants and 80 – 88 per cent of repeat digital content purchases.
The boom in the direct carrier billing market has just started. Going forward, DCB is expected to provide more than $14 billion revenue over the next five years. There is expected to be a huge rise in usage via smartphones and tablets. The lower denomination payment potential is still being tapped. Direct carrier billing is still in a nascent stage in small ticket segments like car parking, ticketing, payment of utilities, top ups etc. The scope in this segment is huge and pretty soon, all the 120 countries mentioned earlier are estimated to explore direct carrier payment in this segment.
Direct carrier billing has tremendous potential in the coming years. The aspect of financial inclusion is being driven by G20 nations in providing convenience to around 2 billion unbanked consumers worldwide. It is a technology worth keeping note of-the potential is huge, now mobile operators need to customize their service to ensure they get their share of the pie.