Direct Operator Billing – The Future of Mobile Payments?

A lot we have written already about the merits of Direct Operator Billing. Here I have put together a list of reasons we feel at txtNation, who are heavily involved in Direct Operator Payments, will succeed.

What are the 6 Reasons Direct Operator Billing will need to be successful?

txtNation has direct connections to mobile networks globally, several are starting to release direct operator billing, providing a number of benefits:

* Simplicity and ease of use – the operators will now have further relaitonships with their customers.
* Customer satisfaction – One click and transparency on bills.
* Accurate reporting and notifications to consumers e.g. paid, not billed, etc.
* High level of security.
* Low support costs to manage as ease of use.
* High conversion rates – one click, instant billing, no forms.

Consumers are still in this day and age wary about using their credit card on-line, in-app or on a mobile website. We hope Direct Operator Billing will put to rest those fears.

Author: Michael Whelan

Direct Operator Billing is getting a lot of attention of late. Why wouldn’t it with all its advantages. But is it really the next wave in Mobile Payments and is is their still space for Premium SMS and and other alternatives going forward?

Direct Operator Billing allows for customers to experience true one-click mobile billing and make digital transactions without sending a Premium SMS message to a short-code. Premium SMS requires a text message to be sent and received to bill the customer.

Co-Existing with Direct Operator Billing

I personally believe Premium SMS, WAP billing and Credit Card payments on mobile will co -exist with Direct Billing, at least for the short to medium term anyway.

Premium SMS will still have its suitability for interactive events like American Idol and X-Factor where the user is required to send a SMS message to vote. Premium SMS will also have suitability for smaller service providers that cannot get approved for Direct Billing, don’t have the traffic levels, nor have a suitable service. P-SMS will also be prevalent in markets where Direct Billing is yet to make it’s mark or even roll out. e.g. parts of South America, parts of Asia.

The reality is that mobile payments companies face the challenge of high mobile operator rates. Mobile operators charge roughly 30 to 40% to process transactions made via mobile, making it very difficult for mobile payment companies and service providers to move beyond just virtual goods and mobile content. To avoid these costs, Mobile Payments and Mobile Aggregator, txtNation has direct relationships with the mobile operators in multiple markets around the world, as a way of passing on higher revenue share to the service providers.

The current main methods for charging for mobile content and digital services include:

Premium Rate SMS
Credit Card

There are many forms of Premium SMS but the most common is the reverse billing mechanism where the user is charged for receipt of a Premium SMS message. This process involved a user sending a message to a short code to trigger the billing event. Payouts from Premium SMS result in operators taking up to 40% of the users billed amount.

Credit Card transitions on the mobile device are subject to many drawbacks including a low conversion rate due to users filling out forms at the point of purchase. The larger issue being that it does not cater to everyone – not every mobile user has access to a credit card or wishes to pay such small amounts for a one time transaction.

The new kid on the block. Direct Operator Billing seems to address head on the drawbacks of customers completing purchases on off-portal sites.

Direct Operator payments use the operator’s own billing system in much the same way as Premium SMS. Unlike Premium SMS, however, it does not involve a series of network messages that can lead to potential revenue leakage. With Direct Operator Billing, purchases can be uniquely charged and listed on the customers bill, thereby reducing complaints and reducing operator costs. This in turn allows more resources to be directed to content creation and promotion.

Direct Operator payments also has many technical and commercial advantages over other mobile billing systems.

In terms of making Direct Operator Billing more widespread and mainstream then nevertheless, it will only replace Premium Rate SMS ‘if’ it can be demonstrated to be commercially attractive for both the content owners, mobile aggregators and the mobile operators. For example, Nokia’s Ovi store is now completely integrated with Operator Billing in markets where it is available and Premium SMS where Direct Billing is yet to be launched.

The future for Direct Operator Billing

By 2020, Direct Payments will have expanded content owners’ revenues from US$5 Billion to nearly US$40 Billion. This is something that cannot be sniffed at, especially considering the other ways to pay in the mobile market. The move to this billing mechanism will for sure happen, used for certain services, but Premium SMS and Credit Card will remain until Direct Billing is i) easier for approval, ii) more mainstream – will the mobile operators push this like they have for Premium Billing as a primary billing option iii) and available in more markets.

Direct Billing will encourage market development and stimulate revenue growth both for the mobile operators and the content owners. Thus, by 2020 the operator revenues generated from Direct-to-Bill will be more than double the amount they can expect from Premium Rate SMS.

txtNation, leading Mobile Billing provider, claim that no other payment experience allows for a true one click purchase like Direct Billing provides. Who can argue with the facts, with complete visibility, more flexible charging, higher payouts, less revenue leakage and simple customer care. All part of the reasons why txtNation are backing this revolutionary mobile payment platform.

As has so often been the case in telecom related services, the charging and payment mechanisms have become the most important point of the chain, to which the success or failure of the industry itself hangs.

The future looks set to embrace Direct Operator Billing, of which will co-existing with Premium Rate Billing which is here to stay for a long time to come.

Author: Michael Whelan, Director, txtNation

So is Direct Carrier Billing, the future of mobile payments?

For me the answer is simple, yes. The reasons for this are many and I have compilied a list at the bottom of this post. txtNation are currently reviewing Direct Operator Billing in several markets, including Ireland, UK, Denmark, Finland, Norway and Sweden. With further countries on the horizon. At this time txtNation have the other options available from PSMS, WAP Billing (PayForIt), Credit Card and IVR.

Is this going to replace Premium SMS?

No! Well that’s my opinion atlaest for the short to mid term. As with all new technolgies, Direct Operator Billing will take time to buld up i) momentum and ii) acceptance. New regulations will also have to be put into place governing how and where this can be used.

The actual technique of the billing using the ‘Operator Gateway’ is a perfect fit for some of the new applications and services built to use single ‘one click’ purchases.

Premium SMS will always have its place for more traditional type of services. That is for sure.

Right now, txtNation are gearing up for this and have already started integrations and review of the business model. Expect an API in the not to distant future!

My 5 Reasons why Direct Operator Payments will be big!

  • Increased Conversion rate with DOB!
  • Dynamic price points!
  • Less leakage! more users billed!
  • Better and more fluid user experience
  • Transparency of out payments.

Direct-to-Operator billing has many technical and commercial advantages, it will only replace Premium Rate SMS in the long term, if it can be demonstrated to be commercially attractive for all involved - the networks, clients and customers!

By 2020, Direct-to-Operator Bill payments will have expanded content service owners revenues from US$5 Billion to nearly US$40 Billion.

In summary,  is this really the  next big thing – yes!

In addition, the Direct Carrier Payment model extends the reach of networks to administrative systems outside of the traditional mobile market – this is a potentially massive opportunity for providing consumers with all in one and standardised billing option for content delivered to PCs, Pads, Internet TV’s, not just mobile phones!

Read more on our support forums:

http://clients.txtnation.com/entries/20022811-direct-operator-billing

Author: Michael Whelan

I keep hearing about the benefits of PayForIt over traditional Premium Short Code billing. Well I have decicded to take these arguments for each up against each other to see why people are tuning into the buzz surrounding PayForIt. For the sake of easy reading and clarity I have complied these arguments into a list.

Customer Pro’s!

Convenience – Consumers do not need to register during the checkout process when using PayForIt. Fast, easy and seamless.

Consistency - The pages are locked and the price, terms and company info cannot be changed meaning greater trust. With Short Codes you have to make your own display of your own call to action.

Ease of use – But is that greater than Premium SMS using Short Codes? This debate will carry on.

Trusted Logo – Well it’s early days, but this has potential!

Merchant Pro’s! The main 3.

Higher Conversion Rate - Well that’s what the debate is. Does it really convert better than Premium Rate Call or SMS? Only time will tell.

Opt-In’s are more sticky - Seamless customer payment experience meaning customers are not leaving the site.

Opens up new marketing channels - This is a biggy. The ability to up sell to other services on the back of PayForIt, shows promise.

Author: Michael Whelan

Today there are many ways to pay via the mobile. The most common Premium SMS is still at the forefront of merchants payment options.

There are however a few new kids on the block. The most recent being PayForIt, which is a prebuilt service that bills direct to the phone, via interfacing a WAP or Mobile site.

Payforit allows customers to purchase content or services on the mobile and the internet and charge it to their mobile phone. PayForIt has been mandated by all UK Mobile Networks.

Another option is Direct to Phone Billing to which operators are starting to push.

Whatever the billing and whether is uses a Short Code using SMS or PayForIt via the WAP deck, the customer is billed and gets a receipt of their transation.

What options becomes most common? Well that depends on many variables, including the market (country), the type of service, the marketing and the audience. There may not be one winner in all of this each having their own advantages for specific purposes.

Author: Michael Whelan