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By Hannah Back • March 5, 2019

Direct Carrier Billing...  How big?!

Do you charge customers for your product/service?
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If your business has ever considered mobile payments for your service, you've probably come across the term Direct Carrier Billing  (DCB) as an effective way to make it easier for your customers to pay.   Put simply, this is where any purchase made under this method is either added to the customer’s phone bill, or deducted from their credit balance if on a prepaid tariff.
 
Currently in the UK, DCB is worth £253million, but is set to grow to £580million by 2020, driven by services such as ebooks, health services, gym payments and magazine subscriptions - which alone will account for 27% of the UK DCB market by 2020 (1).
 
DCB certainly is growing in popularity and has the potential to capture the unbanked population.  But despite the financial worth of DCB, how big is it really on the agenda for merchants?  In reality, is it changing the payments landscape?
 
For BUSINESSES, DCB may represent a challenge, but it also brings with it, huge opportunities.
 

Increase in Customers: In 2015, there were 134 million active mobile money accounts (2).  Mobile money users means more customers , and more businesses. DCB can massively expand a business' reach.

Low associated costs:  This is an attractive option for companies as there is no requirement to have a special device for receiving payments, so costs are minimal.  What's more, when you consider the full cost of other payment options like handling cash, or the total cost of credit/debit transactions; then the proposition of an automated and secure mobile payment makes alot of sense  - a win-win!

Great market scope: DCB can pave the way for merchants to sell anything, anywhere to customers, via mobile's rapidly emerging space.  DCB is already established in 120 countries world wide (supported by telecoms providers, or carriers in each county) - that's over 90% of the world's population.  DCB has seen its biggest success in the emerging markets of South Africa, India, South America and Eastern Europe.

Why do CONSUMERS also love DCB?

Convenience:  For buyers, there's no need to enter long and sensitive payment information. This suits our instant gratification consumer culture.  DCB is ideal for small-scale perhaps impulsive micro-payment purchases of digital content or a service  (e.g. a song or video, or food delivery or game).  Consumers can often abandon a purchase if they're asked to enter credit card details.

Accessibility:  We live in a digital age where over 95% of adults now own a mobile phone.  When DCB requires no sign up, and can be achieved on low-end handsets, it's no wonder consumers love the accessibility of 'adding it to their phone bill'. 

Trust:  Because DCB payments are handled through the telecom operator (or carrier),  consumers already know and trust the carrier with their account information. 

Why the slow-burn with DCB? Why hasn't it exploded yet?

So, if DCB is seemingly a winner for both merchants and consumers, what is holding it back?    

DCB is not completely plain sailing.  At last Autumn's World Telemedia Conference (2018), which we attended and presented at, Nick Lane from Mobile Squared (Mobile Insight Analysts) talked the industry through the figures, and explained the slow-burn nature of DCB and some of the obstacles which are stunting its explosion...

Revenue-Share Issues: "The biggest bugbear with DCB is that revenue shares between merchants and services providers and MNOs are still not favourable. Currently, operators are typically keeping a higher than expected percentages of revenues, which is too high. Credit card and other payment tools are typically around 3-5%. “Getting it to 5% would be acceptable,” making it more attractive to more merchants".  It's work in progress!

Time Lag:There is also the issue of time to market. “It can take anything from several weeks to a number of months from initial discussions to actually getting a DCB service up and running across a network – that compares poorly to PayPal, which can usually be set up in a matter of minutes. Hours at most. This does put merchants off and, while DCB isn’t there to compete per se with other payment tools, many aren’t bothering to add it to the mix simply because it takes too long".

Lack of Awareness: "There is also the issue that the market simply isn’t educated about DCB. Many consumers and merchants both are unaware of the benefits of DCB and this lack of perceived interest feeds into operator reluctance to improve revenue shares and speed up onboarding. However, as it does slowly start to offer ease-of-use gains to some consumers, it will start to see more use". 

Dynamic Mobile Billing can facilitate a Direct Carrier Billing service for merchants.  Want to know more, and join the revolution?  Text 'Sales" to 63333, or email sales@dmb-uk.com and  we will discuss your requirements, and talk you through the process.

 

(1). https://www.telemediaonline.co.uk/carrier-billing-jam-tomorrow/   (2) https://blog.sirumobile.com .