Ante Ukalovic, the CEO of Centili
The global explosion of mobile payments has sparked countless conversations about how this technology will improve the lives of consumers, as well as creating visions of a ‘cashless society’ in the near future. Although it is likely that mobile payments will never fully replace physical currency, m-payments are certainly causing major disruption across the globe and are transforming the way consumers pay for goods and services.Yet there’s no single uniform approach to introducing mobile payment technology. When we look closely at how mobile payments are impacting consumers, it becomes apparent that it is actually an umbrella term for an incredibly diverse range of technologies, each meeting aunique set of needsina particular market.
The radical differences in the use of this technology reflect the different approaches to payments around the world, with each adoption of m-payments specific to the market in which it was created. M-Pesa, Vodafone’s pioneering mobile money service, remains the go-to example of a locally developed solution that addresses the needs of a market where a majority of the population had limited or no access to financial services. Its success and subsequent expansion from Kenya to other African markets, and later worldwide, has shown that there is a growing appetite for alternative payment methods.
Developed vs emerging markets
The way M-Pesa has exploded across Africa but not hit the UK and US highlights the dramatic difference between m-payments in developed and emerging markets. Approaches to mobile money like M-Pesaare not the leading m-payment technologies in countries with developed banking infrastructure as there is simply no need for it.To look at this from the other side,Apple Pay,while gaining momentum in developed markets, doesn’t work in in emerging markets where credit cards and smartphones are not the norm.
The dramatic rise in smartphone numbers across the globe is doing much to close this gap, but the ever-present issue created by the availability of banking services, or lack thereof, remains in emerging markets. However, smartphone growth is fuelling another mobile payments technology that addresses the need for a convenient digital and virtual goods payment – Direct Carrier Billing.
Direct Carrier Billing charges the purchase amount directly to a mobile subscriber’s bill, eliminating the need for a bank account or credit card. Not only this, but it simplifies the entire process through a one-click payment flow, making it incredibly simple and convenient for users – especially when it comes to in-app purchases.
A dream for developers
Mobile apps and digital content has truly taken off, however the lack of uniformity in payment methods around the world has left many app developers struggling to monetise their work. The challenges they are facing are two-fold; how to make purchasing on mobile easy enough so that people will buy their app and in-app content, and how to enable people to make payments in markets where many do not have credit cards. Not only does Direct Carrier Billing bypass requirements for a credit card or bank account to make it easy for users to access paid content, it is easily integrated into any mobile or web app opening the door to potential profit almost instantly.
It works across both desktop and mobile browsers, and covers any mobile phone user in the world. The key here is a one-click payment flow for the user. It’s intuitive and quick, and can easily convert a free user into a paying customer. It doesn’t matter if it’s a social network, online or mobile game, digital or virtual content, the experience for the user is the same across all platforms, adding to the attraction of this payment method.
Ones to watch
With Direct Carrier Billing offering benefits for consumers and merchants alike, it has taken off around the world for everything from purchasing content through Google Play in Austria to buying virtual currency in Japan.Those countries seeing a rapid rise in the number of smartphones correlates with growth of Direct Carrier Billing, as developers are recognising the opportunity and are taking advantage by developing new apps and digital content available in those markets that can be accessed using this payment method.
India is another prime example – one of the largest mobile markets in the world with 1 billion mobile connections, 630 million of which have access to direct carrier billing. Online spending is currently over $1 billion and growing at 31% annually, and a very high click-through rate on mobile advertising of over 12% presents a fertile ground for direct carrier billing uptake.
Alongside India, it is regions with a high proportion of millennials that are seeing Direct Carrier Billing take off. In Thailand,90% of people aged 18-24 access the Internet predominantly via their mobile phones. The younger audience and relatively low credit card penetration within the country open up space for Direct Carrier Billing as a way of monetising digital content. Egypt is another fast-growing mobile market with a large young population that inevitably goes hand in hand with high smartphone usage and, therefore, a high demand for mobile and digital content. In Egypt, Direct Carrier Billing has increased the average sale amount to €1.57, as opposed to just €0.25 with the alternative payment method of premium SMS.
A complementary payment method
As with any single mobile payment method, Direct Carrier Billing is not going to displace every other technology. Yet it does complement them,filling a niche where other methods do not drive conversion rates or otherwise offer a poor user experience.However, despite its countless benefits, Direct Carrier Billing is only one piece of the puzzle.
Ultimately, the key to effectively providing mobile payments around the globe is having knowledge of each different market and the specific needs of individual countries, and then identifying which technology is best place to serve them.Mobile payments providers that have the expertise and insight to get this right will be the ones we see thrive in the continuing m-payments boom.