The key to expanding the direct carrier billing (DCB) ecosystem and revenue base lies in bringing larger numbers of merchants onto payment platforms and making it easier for them to sell more of their goods and services to consumers.
Media and entertainment company – Global is a good example of the dilemmas which currently face merchants trying to grow their digital businesses. It owns four of the UK’s leading radio stations – Heart, Capital, Smooth and Classic FM. The company estimates that its brands and channels reach over 30 million UK adults every week.
Global has already established a stable stream of revenue through a charge to mobile via premium SMS (PSMS) and micropayments and is now considering the expansion of that strategy to include direct carrier billing (DCB). But there are caveats and issues which may delay or prevent that adoption.
Firstly, Global has to offset the potential to grow average revenue per user (ARPU) that DCB presents against the higher percentage per transaction fee compared to PSMS. Stimulating greater awareness and understanding of charge to mobile and smartphone payment methods amongst consumers already familiar with credit/debit card and electronic wallet (eWallet) transactions is also a challenge. One solution may be to demonstrate the simplicity of DCB as a payment option and the clarity with which transactions can be tracked within monthly phone bills.
Encouraging greater trust and value in the DCB ecosystem
MNOs could also help consumers better understand and trust DCB as a payment mechanism by offering additional value-added services over and above payments and transactions. That could include the processing of refunds digitally back to their original bank account or telephone bills rather than sending cheques in the post, for example.
Offering merchants better information on payment eligibility to help them decide whether a purchase should go through or not will deliver additional benefits and help to expand the carrier billing ecosystem – in other words having MNOs check whether the consumer can actually pay for the transaction, have got a bar on their phone, or if they have they gone over their spend limits. That could extend to other things like know your customer (KYC) screening, SIM swap and account payee checks – all elements that carriers know about customers which within the right legal framework to enhance payment flows.
Providing this type of additional feature and functionality within payment flows – things like eligibility checks, refunds and crediting – could go some way to justifying the costs of implementing DCB options for companies like Global and help lift charge to mobile payment methods up towards the same level as other channels like debit/credit cards and eWallets.
Collecting payments via DCB
Mobile phone subscribers tend to buy a 4G/5G bundle that includes a whole range of over the top (OTT) services and other white labelled digital goods, for example. And that has proved quite a successful route to market for merchants like EVP because those subscribers do not always have enough airtime for them to bill against but have data allowances instead.
Being able to make the most of a trusted and far-reaching telco brand is essential to merchants, even more so in partnerships which involve co-branding or white labelling the product or service offered.
Certainly, there are few industries which see the same level of trust that carriers enjoy with their subscribers, primarily due to the frequency of use and interaction that comes with consumers topping up their phone, buying data or subscribing to services like Spotify and Netflix. Given the nature of their product – usually, one-off transactions or yearly renewals – merchants like EVP do not have the same frequency of interaction with the customer, and consequently, struggle to build the same level of trust and loyalty with their customers. That makes it even more vital for them to piggyback on the telco’s brand to establish and maintain the relationship.
The speed and convenience of being able to collect payments through DCB is also a major attraction because it can reduce any friction in the customer journey that may lead to transaction abandonment. EVP has been able to sign up millions of customers by making it easy for them to understand, sign up and pay for insurance by billing them through airtime or a mobile wallet, for example.
DCB reaches consumers other payment methods do not
Some operators and merchants remain concerned that the introduction of carrier billing will lead to the cannibalisation of revenue from existing payment channels which they already offer. But that is not necessarily the case – the key is actually to provide as many choices as possible to encourage additional spending from consumer segments that would not otherwise have made purchases using other channels.
That is a pattern which has already been observed by huge global merchants such as Sony, Microsoft, Apple and Google, for example, all of which had seen revenue increase when they expanded the range of payment options offered to people shopping with their smartphones. Some people do not have credit cards or Paypal accounts, while others may struggle to input the numbers into their smartphones or remember eWallet account authentication details. Not everyone will choose carrier billing from the list of available payment options, but a significant percentage will find it the most convenient option for their particular preference and circumstances.
Educating merchants about the efficacy of DCB is something the entire industry should embrace, and just why we continue to evangelise the payment method by raising awareness and driving advocacy around DCB with forums such as the GSMA and MEF.