UK Enters a New Era of Carrier Billing

Placing the transaction of goods and services on monthly wireless bills is becoming a very competitive market in the US and across the world. Direct carrier billing is not only confined to being the payment method for commodities bought online, but is also making its presence felt in offline payments.

Direct carrier billing got a big boost recently, when UK’s 3 largest telecom operators came together to strike a deal, that may allow the end users to pay for physical goods using only their phone number. The carriers in question here are O2, Vodafone and EE, and the service will be provided using the technology from Boku, which has an e-money service that allows stores to request the phone number of the customer and add the bill amount to customer’s phone bill.

For the model to succeed, it will need active participation and support of the retailers. But with three major telecom operators behind the initiative, we can hope to see the retailers getting behind it as an opportunity to offer a better customer experience and differentiate themselves, rather than just an unnecessary technical upgrade.

Boku’s e-Money service will be extended to other carriers after the initial phase. The service will allow customers to make purchases of any type of product or service. Interestingly, until now, the European Union’s (EU's) Payment Services Directive (PSD) restricted what goods (such as ringtones, music downloads and ebooks) could be bought and then billed to a mobile phone user’s bill. Such regulation was holding back the market for carriers and retailers. This recent move signifies a new era of carrier billing as potentially the mainstream payment method.

Based out of San Francisco, Boku is a well-known brand in the carrier billing space and has already worked with firms like Facebook, EA and Spotify. Many other partners selling magazines and bus tickets have already signed up to use the Boku e-Money service. This move can be seen as a part of the company’s strategy to take a bigger leap into the physical payments space. The company also aims to expand its reach among the food and beverage outlets and hopes to become the preferred company for vending machines.

The company’s ability to offer direct carrier billing services for goods and services bought at retail outlets comes from e-money license that it received in 2012 from the financial Conduct Authority, the regulatory body of the UK. The license is valid for each country in the EU and other countries in the European Economic Area.

Carrier billing has significant potential to generate revenues for the carriers as well as the third party vendors that enable the payments. The introduction of physical goods into direct carrier billing should boost the various research firms’ estimates of the carrier billing market.