Mobile carriers have played a significant role in the African and South American payments markets, providing consumers with credit facilities and direct billing to their mobile account. Partnering with the payments systems providers they have fulfilled a large void left by the banking industry in these regions.
There are clear signs that this trend is now catching up in some of the more developed and mature markets in Europe.
According to a recent research from UK provider of mobile billing ImpulsePay, charge to mobile (known globally as direct carrier billing) reaches one and a half times as many consumers as credit cards and over four times as many as PayPal. The research proves that with over 85 million active mobile subscriptions in the UK alone, direct carrier billing has the largest share of users of any mobile payment option in the UK.
The study notes that online merchants have the potential to reach 93% of all adults in the UK by including a direct carrier billing option at checkout – an additional 47% when compared to a stand-alone credit card option at checkout, or an additional 325% more than PayPal.
The figures are compared to the 58 million credit cards that were in circulation in the UK in early 2014, of which only 66% were active, and the number of UK registered PayPal accounts, of which there are 20 million.
The comparison also takes into account similar smartphone apps that allow users to pay for goods direct from their mobiles such as Barclays’ Pingit, which in 2014 had been downloaded just 2.5 million times (equivalent to only 3% of active mobile subscriptions).
Direct carrier billing is the term for the technology that allows a customer to make a purchase via their phone, without entering their credit card data. The cost is then charged to the customers’ mobile phone account, or taken from the available credit if they are on a pay as you go tariff.
It has been estimated that by 2017, global financial transactions via mobile payments will reach GBP 1 trillion, with revenues billed to direct carrier billing expected to grow to GBP 3.9 billion by 2017, the study points out.
By allowing customers to pay for goods using their mobile phone number, many new potential customers are available for merchants, including under 18s or the hundreds of thousands of households that lack a bank account, who are otherwise excluded from making purchases via a mobile phone, the report concludes.
Australian carriers have yet to catch on to this trend and there are clear opportunities for differentiation and substantial revenue growth for those who make the first move.