Digital content still rules direct carrier billing

 In Blog

While direct carrier billing companies continue to move beyond digital content and into the physical world as consumers use the payment method for tangible goods, don’t expect those providers to think any differently about who brought them to the dance.

The money is still in digital content for the foreseeable future.

“I still think direct carrier billing will stay primarily with digital products for the next three to five years,” Ante Ukalovic, sales director for direct carrier billing company Infobip, told Mobile Payments Today in a recent interview.

Ukalovic can point to a number of different stats to support his argument.

Juniper Research believes that in Europe alone the value of digital content billed via direct carrier billing will reach more than 5.2 billion euros ($7.1 billion) in 2017. The company earlier this year predicted that digital content has the opportunity to deliver some $14 billion in revenues for mobile operators by 2019.

The growing number of Internet users in emerging markets likely contributes to growing revenue opportunities for mobile operators.

“There’s a race to catch the next billion Internet users from the emerging markets,” Martin Koppel, co-founder and CEO of direct carrier biller Fortumo, told Mobile Payments Today in a recent interview. “Digital commerce providers are looking for strong growth from those markets.”

Koppel believes that this, in turn, will force mobile operators and direct carrier billers to chase dollar signs in emerging markets while the physical world becomes less of a priority.

But there is some movement happening with direct carrier billing for physical goods and services. It’s not a lost cause in an expanding digital world.

Earlier this year, mobile wallet and loyalty provider LevelUp gave its users who are Sprint subscribers the ability to charge in-store purchases to their mobile phone bill thanks to a partnership with Danal. The partnership was considered the first of its kind in the U.S., a country not known for having many direct carrier billing users.

There is a certain demographic, however, that could find this payment method beneficial.

“It’s great for millennials,” Paris Leung, general manager of mobile commerce and vice president of strategy for Danal, told Mobile Payments Today in a recent interview. “They’re carrying fewer cards these days, so the thought for them is they can charge these purchases on their carrier bill.”

Leung declined to share specific transaction numbers from the LevelUp-Sprint partnership, but claimed that they are higher than original projections.

“We thought there would be very low adoption because we thought there would be very low awareness of carrier billing for physical goods,” Leung said. “The consumer comprehension of it is growing.”

San Francisco-based Boku last year took a bigger leap into the physical world when it signed agreements with the U.K.’s three major mobile network operators to let their customers charge items such as bus tickets and magazines to their phone bill.

“The areas we’re focusing on are areas where the consumer is out and about and they are looking for convenience with impulse purchases,” James Patmore, managing director of EMEA for Boku, told Mobile Payments Today in an interview at the time. “Our mind is quite open to where we’re going to go [in the physical world], but we’re focused on making this a success in some initial launch areas.”

Fortumo and Infobip each have piloted programs in Asia that bring together direct carrier billing and physical goods and services.

Infobip’s Ukalovic doesn’t anticipate his company expanding such pilots anytime soon.

“For us, it’s great when other companies experiment, but we as a company are still focused on providing the right technology [for direct carrier billing] and supporting our partners,” he said. “We think the money is in digital content.”

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