Carrier billing (DCB) went from strength to strength worldwide in 2023, with better pay-outs in many regions, a ability to buy more things and, in Germany at least, getting its own brand name. This once forgotten payment tool is now exploding.
Increasingly recognised by consumers and merchants, DCB is poised to become a mainstream payment tool, is set to start to appear in mobile wallets and could well soon be used to buy quasi-physical and physical goods.
So what’s changed? There are a number of factors impacting its use across Europe and MENA. According to Bernd Pichler, a mobile payment specialist at DIMOCO, DCB is already very strong in certain markets as it always has been, but increasingly is being seen in new sectors. He lists iGaming, sports betting, transport, EV charging and vending machines as examples of where DCB in Europe is starting to gain ground.
Elsewhere in the world, the payment mechanism’s ubiquity – everyone has a mobile with money on it, even if they don’t have a bank account – means it has become the de facto payment tool for everything from streaming services to paying bills.
DCB in Europe
Focussing on Europe, the recent Carrier Billing Forum in Amsterdam and this October’s World Telemedia in Marbella both showed just how far carrier billing has come.
DIMOCO already runs DCB payments for bike hire and EV charging and is one of many payment providers in Europe that is looking to take DCB into esports and sports betting.
According to Gary Corbett, founder of Dynamic Mobile Billing, DCB’s success in these sectors is likely to soon spread. “You have to look at what makes DCB popular where it is used today: it is convenient, easy to use and everyone has access to it – anyone with a mobile can use it. The opportunity is in extending this message to other sectors. It already converts seven to ten-times better than credit card and so betting and esports operators already see that it is a great onboarding tool. They use it to get the consumer to put some funds in then they can convert them to another payment method down the line.”
The drawback is always the revenue share between operators and merchants – which in some territories is a high as 60% in favour of the MNO. This needs to change to make it more appealing in more advanced developed markets in Europe.
However, Europe’s MNOs seem to be getting the message. Driven by the hugely competitive nature of the European digital payments market, operators are starting to see that not only is there an opportunity with DCB, but also if it isn’t made to be competitive they could lose most of their carrier billing business to other payment tools.
The first move to eliminate this lies in making for more reasonable payouts. Amelia Newsome-Davis, head of payments and messaging at Orange France, says that carriers had, in many cases, got over the outpayments issue, with many merchants now receiving 90% and often 95% of the fee. “However,” she said, “now we have to adapt DCB for the overall modern payments ecosystem. We need to increase awareness among businesses and consumers, we need to tackle fraud and we need to brand and promote DCB to improve take up.”
What’s in a name?
What is holding it back, however, is a lack of knowledge among both consumers and merchants about carrier billing. Many simply have no idea that their phone bill or phone credit can be used to pay for things.
Newsome-Davis believes that to compete with Apple Pay, Google Pay and even PayPal, DCB needs a strong and unified brand identity worldwide.
The example Newsome-Davis gives is how carrier billing has been promoted in Germany – something Martin Shurig, head of financial and enabling services at Telefonica Germany was quick to agree with.
“There has been national collaboration in Germany among the MNOs to create an identity for DCB and a standard explanation of how it works,” he told delegates. “Zahl einfach per Handyrechnung – or ‘Make easy payments via mobile phone bill’ – has been created along with a recognisable logo to place alongside other payment logos at the point of payment. There has also been a nationwide billboard campaign and a ‘buy one get one free’ offering on selected vending machines that offer DCB to get people using it.”
This model is working well in Germany and MNOs around the world are being encouraged to do similar programmes in their own markets, with a view to one day having a universal carrier billing brand.
“This is exactly what is needed,” says Corbett. “MNOs need to help push it and this sort of thing will really help achieve that.”
DIMOCO’s Pichler agrees, seeing the branding as a key way to make it a trusted brand.
This approach is one that all operators need to adopt. For nigh-on 30 years carrier billing has been an also-ran. Now it has the chance to be a main player – it can now start to be used for all those 21st Century quasi-physical things such as parking, public transport ticketing, EV charging and car and bike short-term rental. With plans to possibly lift the €50 ceiling on payments when PSD3 comes into play, this market could explode.
While carrier billing has seen some unexpected growth across the established European market, it has become the payment tool of choice elsewhere in the world. Across Asia and in particular the Middle East and Africa, carrier billing has been embraced by SPs large and small.
Playing to it ubiquity in markets where hardly anyone has a bank account but does have a phone, streaming service, sports content providers, gaming companies and even utilities have rapidly taken up carrier billing as the means to charge their new and exploding audiences in these regions for new content.
According to Riccardo Vallaro, Business Project Manager at Sam Media: “We have seen huge opportunity for growth as they are moving forward in terms of data connectivity and users want new experiences. And this is across markets from South Africa up to Morocco. Markets such as Ethiopia for example is opening up and a lot of change here leads to a lot of opportunity. From a content perspective, VAS and DCB is still leading the way, but many local operators are opening up their networks and payments services to the likes of Netflix, so the market is moving forwards rapidly.”
Naji Bou Habib, founder & CEO of MT2, meanwhile, believes that while mass market content and VOD services, games and podcasts are doing great business, there are challenges with acquisition and advertising costs, as well as taking payments – which is why DCB rules the roost.
“Credit card payments and wallets are very low in our region due to lack of regulations and low penetration of payment providers and wallet operators. There are some moves to try using European and US players, but there are problems with these companies doing business with large numbers of users from outside of Europe. But there are some trials of this going on.”
What this means for MENA is that local telcos that offer DCB have the upper hand as DCB is the only payment tool that works for the mass market –even Google uses DCB in MENA.
“It is going to be hard to get MNOs to let go their grip,” says Habib. “And this means pay-outs remain low. But it is something we are working on through organisations such as Mobile Ecosystem Forum and others to bring about change.”