The mobile payments revolution is not being televised, but it is playing out across the media and increasingly retailers. And a strange thing is happening: direct operator billing is starting to attract attention out there in the mainstream. Paul Skeldon takes a look at what’s going on
Ten years ago, give or take, premium rate billing was in a bad way. It had seen some growth after years of decline thanks to its use as a way of getting the kids to interact with the then new breed of TV shows like Pop Idol. Then it all came crashing down. One of the mainstays of the industry was even branded a “premium rat” by the Daily Mirror. Dark times. The industry faced collapse.
But these days, direct carrier billing has been reinvented. Gone are the associations with dodgy services and scams; gone is the whiff of rip off and corruption; and gone is the attitude that its not for nice people to use.
These days, everyone is looking at how to use direct carrier billing as a means of allowing rapid purchase of things on mobile, as a means of making micropayments in apps stores and apps and even for quasi-physical goods and even, one day, physical goods.
The change has come through the growing mainstream interest in mobile. 52% of traffic to retailer websites now comes from mobile devices. Mobile commerce – through games and apps – is big business. Suddenly everyone is talking about how to make mobile something that can make payments.
The enlightened realised long ago that it has been able to do that all along.
And here we are, Google Play is using direct carrier billing to allow for the purchase of apps. Bango has emerged as the de facto global leader in DOB, powering many of the world’s largest app stores, including Amazon, BlackBerry World, Facebook, Firefox Marketplace, Google Play, Windows Phone store and with more than 130 live operator connections.
Even Payforit is starting to make some progress and suddenly, media companies are also looking at how to make best use of mobile payments. Telemedia, it seems, has arrived.
“We are seeing it: not in massive volumes – yet – but there is a rapidly growing interest in carrier billing,” says Kevin Dawson, head of payments, at Oxygen8. “The legacy of PRS isn’t really an issue. People are coming to this looking for a way to bill and get a return. The main challenge has been in pay out rates. These are getting much better, but some businesses still baulk at losing 10% to the operators.’
This has long been the sticking point with PRS and carrier billing: it simply wasn’t competitive with. In the past operator took anywhere between 30 and 605 of the call charge. To some lines of business, this was acceptable, but for the mainstream it was laughable.
But this is changing. “The MNOs have done a lot of work on making it more competitive,” says Dawson. “Out-payments are around 90% and MNOs are open now to discussing deals on even better rates, if the potential volume is there.”
For many, 10% charges to use this form of m-payments still seems to be too high, but attitudes are changing. “The immediacy of the billing mechanic means that potentially an app store or an app is making a sale when they wouldn’t make a sale because the payments are easy. Even getting 90% of the fee compared to zero can be increasingly attractive. And if it takes off, then the charges start to look like just a reasonable business cost,” ponders Dawson.
One sector that is already seeing potential with this is the media. “M-payments – through direct carrier billing – are becoming more and more important as media companies create pay-walls for their content,” says Rob Weisz, CEO of Fonix. “Direct billing is a simple way for media companies to charge users for access to content and services. Consumers can be reluctant to enter personal credit card details for smaller transactions. It is also a low-friction process that helps users that are short on time and attention to pay to interact with content and services. Where we’ve launched these types of services alongside credit card in the past, we’ve seen anything up to 90% of transactions coming through the mobile payment channel.”
Mark Challinor, Vice President, International News Media Association and CEO, Media Futures (Consulting) – and formerly head of mobile at the Telegraph Group – agrees. “If someone goes into a shop and buys a bar of chocolate it feels kind of wrong to put it on your plastic card. The same could be said of picking up a daily newspaper. There are more people with mobile phones than credit cards so mobile billing could be a way to increase sales. The potential is there. But for non-app sales, or for reaching consumers without a credit card, it could be a good way of tapping into users who don’t yet pay for things with a mobile.”
But while there is growing enthusiasm for this billing mechanic among the enlightened, it could all yet be scuppered. Working against this is the payment services directive that could really scupper any moves by MNOs – or anyone else in the value chain – from realising the carrier billing dream, warns AIME chairman, Rory Maguire.
“One year on, and the PSD is still hanging over us,” he says. “The latest iteration contains wording that could exempt MNOs, but it also requires a whole accumulating total per month which is limiting so this is holding it back too.”
There is also the problem that, while Google may have dived into telemedia billing, many other blue chips need reassurances. Many also need to be made aware that it is an option. This galls to the MNOs to champion this kind of m-payment technology.
“The internal enthusiasts [at MNOs]are not being pushed up as champions of BOB,” says Maguire. “The industry isn’t being built. MNOs have to work together: there needs to be communality for the good of mankind and for the consumer. “
But MNOs hate having to work together, because legally it looks like a cartel. But it is in everyone’s interests to make this happen and make it fast. All MNO value added services are slowly being eroded by EU regulations on roaming and bundling. SMS is no longer a cash cow. And all MNO margins are being heavily eroded by smartphone technology that consumers don’t want to pay for. This all comes out of the margin. Capitalising on payments is going to suddenly become very important to them. Telemedia’s time is now.