Mobile Carrier Billing
DIRECT CARRIER BILLING also known as direct operator billing first came into use as a payment method for digital goods and value added services such as ringtones offered by mobile operators. Today it has outgrown its origins to become the most popular mobile payment mechanism. Convenience and by-passing the need to share credit or debit card information, which many perceive to be insecure, have been the main drivers of this technology, particularly in Asia and Africa. Hyped up alternatives such as near field communication (NFC) and cloud based mobile wallets more suited for developed countries with high smart phone and credit card penetration, are yet to make a mark in these markets.
Carrier billing works by allowing subscribers to add the cost of purchase to their monthly usage bill. Pre-paid customers are required to top up their accounts with sufficient credit prior to purchase. Transactions can be triggered by choosing the add to mobile bill option for in-app and in-store purchases or by simply entering an SMS or USSD short code. This is a true alternative to other online payment methods and does not require users to put up credit or debit card information or pre-register for an online payment solution such as PayPal. Carrier billing offers a seamless user experience, particularly for small ticket purchases or subscription based services where complex authentication procedures are unnecessary. It also is within the reach of people without access to basic financial services and young people without bank accounts or credit cards.
Mobile carriers have the added advantage of being able to leverage existing billing relationships with customers. There are 6.8 billion mobile subscribers around the world today, immediately reachable through carrier billing. In contrast, newer technologies such as NFC and mobile wallets are hindered by the lack of supporting infrastructure and critical mass adoption. However, regulatory issues and the high-carrier fees charged by operators for facilitating billing poses significant challenges.
Carrier billing is nothing new to Sri Lankans. E-Channeling, the popular mobile solution for channeling physicians, relies on carrier billing as the method of payment. In the last few years it has become the ubiquitous method for channeling a doctor. The common use cases for carrier billing in other countries are for smaller ticket purchases such as train or bus tickets, feeding parking meters etc. A doctor’s appointment costing more than thousand rupees or so is in contrast a relatively expensive purchase.
The quick uptake enjoyed by EChanneling has demonstrated that Sri Lankan consumers generally wary of sharing credit card and banking information, have trusted this method of payment. Perception of security maybe enhanced by the fact that all SIMs issued locally are tied to a national identity card (NIC). Limits set on the maximum value of purchases provide some protection against fraud. Phone bills can be paid and pre-paid accounts topped up at many road side kiosks and supermarkets, creating a significant convenience factor. Local mobile operators and regulators have also combined to create an eco-system championing mobile payment services and platforms encouraging businesses to monetize their offerings through carrier billing. The awards won by Dialog at the World Mobile Congress 2015 are an indicator of this trail blazing eco-system.
The Holy Grail in terms of realizing the full potential revenues for carrier billing, is to become a convenient payment method for physical goods and services. While this level of adoption may take some time, for some sectors such finance offers more immediate use cases. Micro-finance schemes leveraging mobile operator’s ability to reach the unbanked as well as collect daily or weekly micro-payments conveniently, at low cost may give birth to a new brand of financial services. A one-rupee a day insurance scheme currently being trialed, that adds a rupee to the subscriber’s mobile bill in exchange for providing cover is one such innovative example. Data about each individual subscriber’s bill settlement record (for post-paid customers), top-up habits (for pre-paid customers) going back several years, current physical location and mobile usage patterns are readily available to mobile carriers. Analyzing this treasure trove of data could be used among other things to generate a more accurate credit score.
Telcos partnering with other sectors of the economy such as banking and retail sectors is essential to realizing the full potential of carrier billing. If the telcos remain hungry and pragmatic many more firsts seem on the cards for the Sri Lankan mobile eco-system.