Should your business be using Direct Carrier Billing (DCB)?

Yes! Here is why...

We analysed hundreds of articles and compiled the most comprehensive and easy to understand summary of information such as the growth of DCB within the past 5 years and it's future prospects, and then looked at why a business should care about utilising DCB?

So, what is DCB? In essence, it is a technology that enables telecommunication service providers to allow users to directly add charges to their mobile phone bill. These charges can encompass a wide variety of additional services and other purchases made using their mobile phones. 

Why are we talking about DCB? Well, we are a global provider of billing and mobile payment solutions with local operations around the world. We have been at the forefront of the mobile industry since its inception. Proud to be fully compliant with the latest industry regulations and standards and working with us gives merchants direct connections to all the major UK carriers. Not to mention the fact that we provide a complete end-to-end solution for DCB & Premium SMS charging options.

Now that the introductions are out the way let’s look at how DCB has grown in the past 5 years.

The Future

To understand future industry growth it is important to look at past performance. Research suggests that there are currently 5.15 billion unique mobile phone users in the world, according to the latest data from GSMA Intelligence. The total number of unique mobile users around the world grew by 121 million in the past 12 months.

The chart below illustrates how mobile phone subscriptions have grown in the past 10 years.

This demonstrates the astonishing speed at which the general public is arming itself with mobile phones. For perspective, there are approximately 140 million babies being born worldwide each year (2020 estimate according to the United Nations). In comparison, people are nearly buying more phones than having children. Not to mention some interesting laws involving mobile phones. For example, there is a law in Malaysia stating that divorcing your spouse via text message is completely legal. Talk about the power of SMS!

So why should your business utilise DCB now?

Well, let us use credit cards as an example. They are a great comparison because credit cards provide credit. Same as DCB. Not to mention the fact that mobile phones are a largely untapped source of credit.

If your business bases itself on the belief that credit cards are the most convenient payment method we might just have news for you! Let us look at the stats: there are currently 2.8 billion credit cards in circulation (see chart). In comparison, there are 3.3bn unique mobile phone users. Now isn't that interesting. 

Of course, it can be argued that there are many different variables when comparing the two figures. These include age, spend caps etc. These arguments bring us nicely to the age-old question; if someone has a phone and a credit card, which is more convenient for them to pay with? We think, in most cases, it will be the mobile phone and we have lots of data to back this up.

In 2017, Guillermo Escofet from Ovum estimated that the global mobile carrier billing (including PSMS) market would grow to $24.7bn by 2019. This prediction was an underestimate. The market grew to an astonishing $29.8 billion by the end of 2019. Today analysts are forecasting that the market will grow at a CAGR of 8.88% during the period 2018-2022 and now with Covid-19 and the rising demand  (you can read more about Covid-19 and payments in an article we wrote here) these figures are looking to be an underestimate too. 

Industry-leading merchants like Google, Apple, and Amazon have grasped DCB as an opportunity to offer their products and services more widely, through a friendlier, faster and secure payment method. A good rule of thumb is to follow businesses that do things best. It is common sense to learn from the greatest, right? We think so! This is why we are doing all we can here at DMB to provide the best possible DCB solutions across the UK, and in doing so giving businesses the best platform to grow and follow in the footsteps of industry-leading global companies

The last question businesses should ask themselves before setting up a DCB payments solution for their business is -

Will DCB payments keep up their momentum in the future?

To answer this question let us look at the total spend using DCB. It is predicted to reach $100 billion for the first time by 2025; rising from $37 billion in 2020 according to Juniper Research. The growth motive is the ever-increasing need for convenient payments in the coronavirus era and beyond.

The increasing shift to subscription-based monetisation models for digital services such as games, video streaming and music, says Juniper, will be key to the market realising a substantial growth rate of 172% over the next 5 years. In addition, the convenience of combining monthly subscription costs into a user’s monthly cellular subscription will be a key growth driver for carrier billing over the next few years.

Whilst carrier billing spend on physical goods is established in the Far East, Juniper Research has identified emerging opportunities for carrier billing vendors in North America. The analyst believes that high smartphone penetration and accessibility of same‑day delivery services will be key driving forces behind a growth to $600 billion of end-user spend on physical goods utilising carrier billing by 2025

Which industries need to be on the DCB train the quickest?

The short & immediate answer? Entertainment. The surge in prominence of mobile gaming, rise in demand for over-the-top (OTT) content and increase in penetration of smartphones drive the growth of the global DCB platform market. However, limitations related to the DCB ecosystem such as the spend caps hinder market growth, said the market research firm. On the other hand, a surge in usage of subscription-based digital content created new opportunities in the market.

Based on research, the applications & games segment held more than two-thirds of the total market share of the global DCB platform market in 2018 and is estimated to retain its lead position during the forecast period. This is due to a rise in collaborations by platform companies with digital content providers for optimization of their businesses, increasing payment revenues and creating large markets for applications, in-app purchases, and games.

So how can your business benefit from DCB? Simply request a call from our highly experienced team and we will help your business grow!

Another question to keep in mind within the DCB ecosystem is the Payment Services Directive (EU) 2015/2366 (PSD2).  

This law within the European Union that states:

“Settlement of all kind of payment transactions by carriers is subject to the EU’s revised Payment Services Directive PSD2.” 

This part of the European payment law, and its implementations in the member states, determines which kind of transactions carriers may conduct without needing a license as a payment service provider. 

Carriers may settle the payment of digital goods, voice-based services and charity services. To do this the payments must not exceed the threshold of € 50 for each transaction and € 300 cumulatively per customer, per month.

How will this change with Brexit? Will it be raised to help lower the spread of Covid-19 by encouraging digital payments? We will keep you updated with the latest industry news so don’t forget to register for free on our website and subscribe to future additions. Also, follow us on LinkedIn for frequent and bite-sized industry updates. If you have any questions please free to contact us directly.