Telefónica's entry in the ‘direct carrier billing' market will
increase interest and activity in this space.
Telefónica has announced plans to use its billing relationships with
customers worldwide in order to monetise mobile content. A key part of this
strategy is 'direct carrier billing' - that is, enabling consumers to pay for
digital goods or services through a mobile phone account.
Over-the-top providers have dominated the mobile payments market
Mobile payments have been a hot topic for a while; several firms offering a
variety of products and services have entered this space in the past couple of
years. Most of these products and services involve a combination of new
technologies such as near-field communication (NFC), third-party payment
platforms from organisations such as MasterCard or VISA, and/or specific
hardware such as PayPal Here and Square). All these services are OTT and
relegate the CSP's role to that of a dumb pipe.
Direct carrier billing could be popular where credit cards are not
Direct carrier billing involves payments that the mobile operators can credit
to customers' monthly phone bills (in the case of postpaid subscribers) or
debit from their prepaid balances. Purchases are mostly limited to digital
goods and services such as mobile games, movies, music and in-app purchases
etc. Direct carrier payments are limited to low-value purchases, but the
service has the potential to take off in countries where credit card
penetration is low. These countries include most emerging markets as found in
regions such as Africa, Asia and Latin America, as well as developed countries
such as Germany where the population has been slow to adopt credit cards.
Direct carrier billing is not new; a recent press report suggested that more
than a third of European smartphone users have made purchases through direct
carrier billing at some time.
“We believe that direct to bill will become a significant part of the mobile commerce market” - Telefónica
Telefónica has framework agreements in place to offer direct carrier
billing for digital apps and content with Facebook, Google, Microsoft and
Research In Motion (RIM). This is noteworthy because each of these companies
has its own app store (Facebook is rolling out its app store internationally)
and cumulatively account for several million downloads every month. While
details about revenue split are unclear, the economics of offering a direct
carrier billing service to Telefónica's more than 300 million customers
can be compelling.
Telefónica has started to roll out the capability in Germany and plans
to have it live in 14 of its operating businesses worldwide by the end of the
year. Telefónica (through Telefónica Digital) has invested in
BOKU, which provides a service that enables consumers to use mobile phones in
order to make purchases. BOKU has made significant progress in the direct
carrier payments space and is present in more than 60 countries and has
partnerships with more than 240 CSPs. Being an investor and a partner,
Telefónica stands to benefit from BOKU's expertise and experience in
direct carrier billing as it seeks to expand revenue opportunities in this
Telefónica's venture into the mobile payments market through direct
carrier billing places it in a powerful position, enabling it to become part
of the purchase process and take advantage of new revenue streams. While such
services are still in their infancy and potentially have several hurdles to
overcome, they hold significant promise for CSPs. Analysys Mason will explore
direct carrier billing in greater depth in a report that will be published
later this year.
Telefonica announces plans to monetise mobile content through direct carrier billing published by Analysys Mason in July 18, 2012. This report price starts from US $ 999.