Integrating Payment Options Into Your App
Direct Carrier Billing (DCB) is catching fire in emerging markets. This is great news for app developers and retailers who need a simple, secure way for users to make in-app purchases with their phones. Google has made deals with several mobile network operators, making DCB an option for Google Play purchases. Mobile Networks Operators benefit, getting a piece of the purchase pie for every DCB purchase made, be it through Google play or in-app DCB purchases. In this post, we’ll cover what Direct Carrier Billing is, how it originated, and how it works. We’ll also talk about its benefits in emerging markets, for customers, app developers MNOs, and OEMs.
What Is Direct Carrier Billing?
Alternately known as Direct Mobile Billing and Direct Operator Billing, DCB allows a user to make purchases with their phone, automatically adding the purchase total to their cell phone bill. This type of purchase originated as a convenient way to purchase ringtones and wallpapers for your phone. Since then, it has evolved into a fast, secure means of making purchases of all kinds, no matter where you’re at.
DCB has come a long way since it first came out, allowing consumers to purchase digital media, make purchases inside a game or other app, and even (where it’s legal) make ‘offline’ purchases of physical goods, expanding the purchasing options available for the consumer.
How DCB works
In order to work, a mobile network operator must offer DCB as a payment option on a user’s account. DCB purchases made are usually handled by Electronic Money Institutions (EMI), which processes payment transactions made between merchants and mobile network carriers. When a user with a contract or other monthly installment plan makes a DCB purchase, the total cost is added to his bill. When a prepaid user makes a DCB purchase, the total cost is immediately deducted from funds in the user’s account.
As the rapid rise in the popularity of DCB continues, large companies and startups alike are jumping on for the ride. High conversion rates and reduced customer support costs make this payment option particularly attractive for MNOs and app developers looking to gain a strong advantage in emerging markets.
Third-party API Integration
Third-party APIs offer easy to integrate DCB for MNOs and app developers. DCB solutions are complex, requiring detailed end-to-end knowledge of financial laws, PCI compliance, security, anti-fraud measures, and other details to ensure that the API works as intended. DCB APIs enable OEMs to pre-load DCB into phones before shipping it to a mobile network operator for sale. For app developers who plan to offer in-app purchases, Google Play offers the Android In-app Billing API. Once this API is integrated, nothing further needs to be done. When a customer makes an in-app purchase, a menu of payment options will display, including one for DCB payment.
DCB Benefits for Consumers
A secure payment option
Consumers have legitimate concerns about privacy and safety of their personal information. DCB uses tokenized authentication to ensure that each transaction is secure. With DCB, the customer’s personal information isn’t transmitted; instead, the DCB payment option is tied to the user’s phone number. For users who desire it, Two-Factor Authentication (2FA) is available, adding an additional layer of protection to the DCB transaction process.
DCB offers fast, convenient purchase processing for customers right where they are. Emerging markets are expanding mobile network access into areas where smartphones are usually the first internet-connected device a user has ever owned. People living in these areas usually do not have a credit card or bank account. For them, DCB is the only way they can make purchases on their phones. MNOs expanding into areas that have no other internet access will be lucrative markets for MNOs and app developers that offer DCB as a payment option.
Build Consumer Trust
Consumers are increasingly willing to make purchases using their smartphones. Over the last few years, these powerful little devices have gained our trust. Providing DCB as a payment option builds on that trust, opening up new opportunities for operators and app developers alike.
DCB provides mobile network operators access to the mobile payments value chain where credit card purchases practically shut them out. DCB gives MNOs the opportunity to extract additional value from customers. This is especially true in emerging markets where credit card ownership is low. DCB conversion rates on first-time digital content purchases are an incredible 70 percent, compared to credit card conversion rates of 10-12 percent.
By offering DCB, mobile network operators will improve customer retention. DCB provides the customer with easy, convenient access to a payment option that is also far less prone to billing errors and fraud than premium SMS.
The big data generated by DCB can be plugged into ERP. Consumer traffic volumes and activity can be monitored to detect usage patterns. This information can then be used to help determine resource planning such as network expansion.
Configurable options in DCB allow operators to set safeguards for customer account management purposes, such as spending limits that can be set by the operator or the customer. This helps prevent the customer from running up a bill he can’t pay.
Apps that are offered with a DCB payment option will also see a dramatic increase in conversions when compared with credit card purchases. DCB integration into an app also allows for micro-payments which tend to generate more revenue than their full payment counterparts by giving customers the flexibility they need. The Android In-app Billing API from Google allows app developers to offer multiple payment options while controlling the design of the payments UI for a look and feel that is consistent with the rest of the app.
Open In-App Billing Library
The Open IAB initiative was undertaken to address the issues Android developers have had with reaching end-users such as inability to accept payments from other app stores. Furthermore, a growing number of Android phones are running custom versions of the Android OS. These custom devices do not support Google Play billing. Instead, manufacturers are pre-loading their own apps stores to generate another source of revenue.
The Open IAB project is working to address these issues by providing a unified billing library that can be used to collect payments from any app store. Currently, the Open IAB already works with the following:
- Google Play
- Amazon appstore
- Samsung Apps
While this is great news for app developers, it gets even better — Open IAB payments work in any app store for users in 80 countries.
App developers can tap into the data generated by DCB, analyzing the data to see what users are purchasing and the purchasing context. This helps developers identify what users want and what users aren’t buying. This information can then be used to step up more marketing efforts for slow selling in-app purchases, while creating more incentives for popular purchases.
It is important to note, however, that DCB APIs are not a drop-in and forget option. It is critically important to make sure the app fully supports the API and that it is fully integrated into the app. The DCB API should be fully tested to ensure it is works correctly for all transaction types in your app.
The Hottest Markets for DCB
As a payment option, DCB is gaining popularity globally, with the fastest growth in India. Latin American has the largest transaction volume for DCB purchases, but the Asia Pacific region is expected to take the leading spot by the end of this year. For MNOs, network expansion will open up more opportunities to extract value from DCB purchases, especially in areas that have populations with low credit card ownership and virtually no bank accounts. The US will continue to see relatively low use of DCB due to consumer concern over data security. This concern may actually be rooted in a fundamental misunderstanding of how DCB works. Many Americans may assume that personal data is transmitted to conduct the transaction, when in actuality, just enough information to tender the transaction is sent. The concern for data privacy may fade over time as more users try DCB and find that they really like it.
MNOs and app developers with DCB payment options will see high conversion levels, especially in areas where DCB is the only available payment option. Consumers benefit from the convenience and security offered by DCB and tend to spend more on purchases than with credit cards. App developers can use the Android In-App Billing API to offer DCB as an in-app payment option. For those developers who are looking at offering DCB for apps available in other stores, the Open IAB library makes payments possible in several app stores and 80 countries. Open IAB also works on custom Android OS installs that don’t support Google Play’s billing API. DCB will continue to be hot in emerging markets, with the Asia Pacific region taking the lead this year, creating more opportunities for MNOs and app developers looking for a great ROI.