Why Direct Carrier Billing

Until recently, Premium SMS has been the main way to which mobile users across the world have paid for content, like mobile games and ringtones. Although all mobile phone users could make use of this method of mobile billing it has a number of disadvantages in terms of ease of use – fluidity of the payment process and refunds.

Credit card options have become popular with stores like iTunes using this option as their preferred method and with this gaining a loyal user base, but the disadvantages to using credit card are larger than any other form of mobile billing, with the simple fact you have to pre-register (or fill out a form) on a mobile device to use credit card as a mobile billing option.

The new kid on the block, Direct Operator (or for those in North America, ‘Direct Carrier’) Billing, is here to not only have an immediate impact and offer these content stores a real alternative, but it is highly possible that this could ‘replace’, or at least have larger market share over premium and credit card options in the longer term.

For this to happen though, one important thing needs to unfold and that is the operator cut – their ‘revenue share’.

In recent years, mobile operators worldwide have historically taken a higher revenue share of the retail price for digital mobile content – they claim this is to deal with issues around bad debt, resulting from legacy mechanisms like premium SMS that partly account for this. This is slowly starting to change however, with larger brands choosing Direct Carrier Billing as their preferred billing option and with rates from 15-30% coming into play its not hard to see why.

Direct Carrier Billing Adoption

Direct Carrier Billing has become more widely adopted for in-app payments than its given credit for or maybe even thought about.

Let’s not forget here that Apple takes as much 30% from their own billing option with iTunes. Nokia with the Ovi Store uses Direct Carrier Billing as their preferred choice above credit card, as now does Mircosoft. Both having direct deals with mobile aggregators to make sure localised billing is available via their customers mobile operator.

Direct Carrier Billing Advantages

Direct Carrier billing (also known as Direct Billing) brings together the advantages of Premium SMS (being available to all mobile phone users) with the advantages of debit/credit card payment (reliable, easy audit trail, no charge backs) while also providing a low-friction purchase environment (no forms!!).

Merits of PSMS and Carrier Billing:

Premium SMS
Major Advantage
- Premium SMS Available to all mobile phone users

Major Disadvantage
- Multiple steps needed to make payments resulting in low conversion rates
- Inability to support refunds

Direct Carrier Billing
Advantages
-Available to all mobile phone users
-Supports refunds and itemisation
-Secure (if properly implemented)
-Reliable
-Enhanced conversion rates
-Greater fraud protection

Disadvantages
Operator Spending Caps

Direct Carrier billing provides several very important advantages over the competitors offerings, with low friction purchases being the most notable benefit from an application stores perspective (thereby increasing ‘in-app’ conversion rates), while also being accessible to customers who do not have credit or debit cards.

If mobile operators can continue to reduce their share on the transaction, the future of direct billing looks very bright indeed.

Related Posts:
6 reasons Direct Operator Billing will succeed

txtNation provides Direct Billing in multiple markets.

2 Comments

  1. Aaron Wakling

    Great post. I read your posts frequently regarding mobile direct carrier billing. Added you to my RSS reader!

    Reply

  2. Great article on DCB and mobile payments, working in this industry myself I’ll stay subscribed to this.

    Reply

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