Direct Carrier Billing: Opportunity and Challenges
This is a huge opportunity for MNOs and app retailers looking to tap into these new markets. However, there are some significant barriers to wider adoption of DCB: large transaction fees MNOs charge app retailers, average price of JIT purchase of minutes, and the complexity of the DCB ecosystem in emerging economies. We’ll discuss each challenge in detail and how to overcome it.
MNO Transaction Fees
Comparable to credit card swipe fees, large transaction fees are charged to the merchant whenever a customer uses DCB to make a purchase. App retailers in emerging markets have access to more affordable payment processing alternatives and will continue to use them. MNOs that find ways to reduce transaction fees will attract more app retailers and will benefit from being the early birds, establishing market share that will surpass existing alternative payment options available to mobile consumers.
Carrier contracts are virtually non-existent in emerging markets. Instead, mobile users purchase JIT minutes. Flexible, discounted billing plans would allow mobile users to browse without having to keep an eye on the number of minutes they have left. Freed from watching their minutes, those browsers may become buyers.
DCB Ecosystem Complexity
Carriers, technology developers, app stores, and platform vendors are entangled in fragile relationships that are easily broken. Scalability is adversely impacted with every breakdown, slowing DCB growth. DCB goals need to be clearly defined, with all players in the DCB ecosystem aligning their goals accordingly. Widespread adoption of DCB in emerging markets depends upon this.
MNOs that find ways to reduce or discount DCB transaction fees will attract app retailers currently using more affordable alternative payment systems, providing added value for both MNOs and app retailers. Carriers that develop flexible, affordable billing plans that free mobile sers from JIT minutes will also find added value in their customer base through increased user engagement and purchases. Clearly defining DCB goals and aligning the goals of all ecosystem players will help catalyze the growth of DCB by making it easier to develop the technologies and infrastructure necessary to provide DCB services to mobile operators and app retailers.
straight to your inbox.