The number of people using charge to mobile to pay for things has doubled in the past two years, with more than a third of people globally making payments to their phone bills, according to this year’s Mobile Money Report from global trade body Mobile Ecosystem Forum in association with Wirecard.
And it appears that consumers all over the world have embraced the carrier billing habit. The research shows around a third of users in all the countries surveyed pay this way, with Nigeria top at 42%.
The numbers are encouraging for the ‘carrier billing’ industry, which has worked for many years to encourage this alternative payment method. Carrier billing presents a convenient alternative to credit and debit card payments. In most cases, the payment completion process is faster. It also presents under 18s and unbanked customers with a genuine payment option for digital goods. But carrier billing has its challenges. It works best when it’s available across all (or most) operators in a territory. This is not always the case.
In 2016, the market undoubtedly made great strides. Notably, Apple began to support carrier billing on its app store. It did so discreetly, and with little publicity. But the option is now available with selected carriers in Belgium, Germany, Japan, Norway, Russia, Saudi Arabia, Switzerland, Taiwan, and the United Arab Emirates. Meanwhile, there was industry consolidation among the providers of charge to bill.
In 2016, Austria’s DIMOCO acquired Italy’s Onebip, while Bango acquired USbased BilltoMobile from Korea’s Danal. These two companies, along with the VCbacked Boku, DoCoMo Digital and others, can offer content providers hundreds of global connections. And these companies’ own numbers reflect growth in the market.
The question now is how high the market can aim. Some analysts have made bold claims. A report by Ovum said mobile operators could command a $142bn mobile billing market by 2020. But it did caution this would only happen if stakeholders committed to realistic revenue shares, universal connections and consumers marketing.
The study also found that charge to mobile is part of a groundswell of use of mobile payments globally in 2016. The study shows that nearly two fifths of shoppers have used their phone to pay in a shop in one form or another.
The 18% figure reflects a big spike in ‘physical’ mobile transactions. Two years ago, just 8% had completed an in-store payment with a handset. Apple Pay is one obvious reason for this upturn. Now available in 13 countries, the service has greatly improved awareness of the mobile wallet.
But the biggest impact has come from China. The research reveals 38% of Chinese consumers have made an in-store mobile payment – nearly double the global average. This is thanks to mobile wallets such as Tencent/WeChat and Alipay. Their users frequently make QR-code based payments with these products in physical stores.
While in-store mobile payment gathers momentum, mobile shopping on apps and sites has gone fully mainstream. The study found 78% of people had made a purchase by mobile in the previous six months – that’s up four per cent on the figure for 2014.
Despite the general good health of mobile payment, banking and commerce, the old hurdles remain. Cart abandonment is still high, for example. The research reveals 58% of people have started to pay for something via mobile, only to abandon it before checkout. 31% said this was because they were asked for too much sensitive information, while 21% said the process was too long.
Christian von Hammel-Bonten, Executive Vice President Product Strategy at Wirecard, explains: “Today, consumers use smartphones to manage their entire lives: to play games, chat, check their finances, purchase products and order services. Chinese users are at the forefront of this ongoing trend. This comes at no surprise as we enable our customers from the beginning to benefit from this trend with our financial solutions. Yet the report shows also the whole ecosystem still needs to improve and that is what we are working on with MEF and its partners.”
Rimma Perelmuter, CEO at MEF adds: “The adoption of mobile money continues to advance. In developed markets, mobile payments and banking are driving a revolution in convenience. In growth markets, they are giving millions of people access to financial services for the first time.
It’s important that the industry builds on this momentum. The research shows we can still do more to improve payment flows, improve consumer trust in mobile money to allay privacy and security concerns. But overall, the news is good: mobile remains the key driver of online commerce.”
