Direct carrier billing is rapidly replacing credit cards and other payments options. Competing with other payment methods in mature markets, direct billing has efficiently led to the up-gradation of payment platforms, approaching new business verticals.
Direct carrier billing permits operators to charge subscribers via a one-click payment method, resulting in higher conversions as compared to alternative payment options. Thus, in recent times, it has gained popularity amidst operators and customers and is anticipated to be the next big thing in the mobile payment space.
What is direct carrier billing?
Also known as direct operator billing, direct carrier billing allows any mobile customer to purchase goods and services using their handsets, with the cost of purchased goods and services being added to their mobile phone bill.
Direct carrier billing facilitates a simplified online payment experience with a reduced number of steps required to complete a transaction.
Increased Average Revenue Per User (ARPU) – Mobile payment companies charge approximately 30 to 40 per cent for processing transactions made via online mediums. This makes it difficult for digital content providers to move beyond mobile content. To avoid these costs, digital content providers have now started to establish a direct relationship with telecom operators in multiple markets around the world, in order to pass on higher revenue share to digital content providers as well as enjoy increased ARPU with increased customer usage.
Unlike premium SMSs, the direct carrier billing process does not involve a series of network messages leading to potential revenue leakage for the operator. Direct billing allows the operators to identify purchases, charging them uniquely and sum them up on the customer’s monthly mobile bill thereby decreasing the number of complaints and reducing operator costs.
Increased customer satisfaction and ARPU – Direct carrier billing provides customers with the benefits of a secure and convenient payment solution. Carrier billing allows customers to enjoy one-click billing and thus, the high payouts permit operators to enter new potential business segments and increase the usage of virtual and digital content in turn increasing the satisfaction of the individual users.
Significant end-user uptake – Owing to the increased amount of modern and digital services, the implementation of direct operator billing has resulted in its significant uptake. Due to the evolutionary approach with different system integrations being in place, leading to minimized payment process, moving over from the old mobile payment mediums to carrier billing did not take much of effort from the operators.
An average consumer who uses carrier billing, makes 1.5 payments every month. The challenge, however, is to get them carry out their first transaction using carrier billing. Marketing campaigns such as refunding the first transaction amount etc. are being used to familiarize users with paying for digital content using carrier billing.
Increased Conversions – Direct carrier billing extends less abandonment for the customer, at the point of purchase. It is a stable platform with zero per cent rate of transaction error. Unlike the other mobile payment methods, carrier billing ensures every transaction to be completed successfully. As the process altogether makes payments easier, more impulse buys take place. The implementation of direct operator billing has led to significant end-user uptake. Since the payment is convenient and does not require the input of any personal details, it has the potential to increase the transaction sizes by as much as 100 per cent.
No payment method other than direct carrier billing extends the true one-click purchase experience. Direct billing will encourage the market development and stimulate revenue growth for the mobile operators as well as digital content providers. It is anticipated that over the coming years, the telecom operator’s revenue generated from direct billing will sum up to more than double the amount they can expect from premium rate SMS.
By 2020, direct carrier payments will have expanded the revenues of the content owners and operators by as much as $5 billion to nearly $40 billion. This fact cannot be sniffed at, especially considering the other mobile payment methods available in the market.