May 21, 2014
Why can't you still pay using just your phone and your existing phone account. Forget about the retail stores, I mean why can't we pay for digital goods in a simple way. For many years now Apple has shown how micro-payments can be done effortlessly for download of songs and videos on the phones. But what if I need to buy a pen on an Ecommerce site? What if I need to buy a Turkish cloth on a foreign online store? What if I don't have a credit card, can I still download the apps on my iPhone?
The answer to most of these questions was always there. Right next to us - our phone and our account with the carrier. I was happy to see that the users on the soon to be released Firefox phones will be able to pay for their apps via their phone bills. Same is true with Google Play store now. Its not silicon-valley-kind-of-cool but its cool. Carrier billing players like Boku, Bango, Fortumo, and others are targeting convenience for the consumer. Facebook, Google, Amazon and others are getting into arrangements and deals with these carrier billing players for this reason. And that is why it was in our - One of the biggest moments in payments industry that defined 2013.
Carrier billing is gaining across markets (both developed and developing) in providing the most convenient method of making mobile payments. The following chart shows how carrier billing has picked up pace in past few years and is expected to grow further in coming years.
(Source: Juniper Research 2013)
Carrier billing is secure in nature as it typically uses a two-factor authentication method. The user enters his mobile number and receives a one-time password via text message to complete credentials. This eliminates fraud as the buyer must have the device in-hand to complete the purchase. The cost of the purchase directly gets added to the operator bill.
Carrier billing method speeds up the checkout process. The transactions are quick because the carrier already has the user's data and the stored billing information means less typing and less room for error — especially on mobile devices and within apps. This makes it highly beneficial over other methods. On second-screens (mobile phones, tablets and Internet-enabled TVs), simplifying checkout is critical. With 50% of Android apps using in-app billing, leveraging carrier billing makes sense for many developers and sellers of digital products.
Different examples show how tech firms, developers, app stores and mobile carriers are eager to contribute to the growth of carrier billing:
But carrier billing has some hurdles ahead, in particular the high prices currently charged by mobile operators for providing carrier billing services that is keeping many app developers away. With a few good business models, carrier billing can see more applications and popularity, even extending to physical goods in-store (mobile wallets have not been able to solve)
If consumers catch up, merchants offering carrier billing-based mobile payments will generate incremental revenue. Perhaps new consumers shall also be attracted, especially those, that were previously unable or unlikely to pay via other payment options, such as credit and debit cards.