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Carrier billing in digital goods market can grow beyond £500 million by 2019, if rates are competitive warns report

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Carrier billing for digital goods is likely to be worth £500million in 2019 in the UK, according to a study for PhonepayPlus by Deloitte. But it could all go very wrong if payout rates are competitive and the user experience is improved.

With entertainment accounting for over 80% of digital products and services sold in the UK, the report predicts mobile gaming apps may offer the most significant opportunity for mobile operator billing. It also identifies potential opportunities in low-value physical and quasi-physical goods, such as ticketing, parking and transport charges.

The rapid growth in consumption of digital content, largely via mobile-based devices, could provide mobile operators with an attractive and growing new revenue stream. However, the growth of mobile operator billing as a payment option for digital content within the next five years is likely to be dependent on:
• Competitive commission rates
• More platforms offering mobile operator billing
• Investment in the user experience
• Continued consumer protection.

Joanne Prowse, Acting Chief Executive for PhonepayPlus, explains: “We commissioned this report because we wanted to understand better the trajectory of the market and, with UK consumers forecast to spend around £14 billion on digital content in 2019, to identify areas of potential growth, the scenarios for how that growth might evolve and what the enablers of and barriers to that growth might be.

“It’s part of PhonepayPlus’ role as a regulator to support innovation and market growth and the analysis in the report sets out the scale of this potential opportunity for operator billing as well as some of the challenges. The recent launch of Apple Pay in the US is just one example of the market’s scope and the speed of its development.”

Howard Davies, media and technology partner at Deloitte adds “The rapid adoption of smartphones and tablets is driving ever growing consumption of digital content and services, for which carrier billing can be a relevant payment option.”

Prowse continues: “For mobile operator billing to grow bigger in the digital content payment landscape it needs to play to its strengths and be the easiest and simplest option for the consumer. Mobile operator billing payments are secure, convenient, and offer the option to make purchases offline.”
The report also points to the need for consistent regulation to control the quality of consumer experience when purchasing digital products or services regardless of payment channel, and suggests that PhonepayPlus takes a lead in working with other regulators to develop a more coordinated approach to the digital goods and services market.

To download a copy of the report please click here

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