VanillaPlus: Sleeping giant Part 1: The $142bn carrier opportunity

John Milliken, COO of Infomedia
 
This article appeared in full in VanillaPlus and can be read here.
From Apple, to Amazon and Spotify – DBC is making mega brands millions. However, despite almost all carriers having the ability to support the payment method, they haven’t continued to grasp the DCB opportunity with quite as much gusto as they could have.
 
Direct carrier billing (DCB), which first came into use several years ago when it was used internally by carriers to apply charges for bundled services, has advanced far beyond its origins. Today, thanks to the rise of smartphones, it has become a convenient way for developers to monetise their apps, and a powerful tool for mobile carriers to grab a piece of the “app economy” that is estimated to be worth $6 trillion in five years.
 
So, what do operators need to know about the $142 billion opportunity at their fingertips?
 
Mobile as a platform has historically driven the highest engagement but experienced the lowest conversion rates. By losing the need to register card details, DCB finds a way to remedy that. DCB conversion rates are up to x10 higher than credit cards and the market is growing at the rate of knots. Carriers can, therefore, expect to receive a moderate (and growing) percentage from a significantly large number of customers.
 
The Phone-paid Service Authority’s (PSA) Annual Market Review recently revealed that in 2016 the UK paid phone services market grew 4.5 per cent year-on-year to £700 million, with mobile accounting for 75 per cent of total revenues. Driving this is the continued growth of DCB – which saw revenue spike by 31.4 per cent. On a global scale, analysts at Ovum have suggested that carrier-driven payments could make up as much as 11% of total m-commerce revenues ($142 billion) by 2020.
 
You only have to look east to see how consumer behavioural change is driving this mass movement to mobile payments. In China, cold hard cash is fast becoming an endangered species with the country’s mobile payments hitting $5.5 trillion (roughly 50 times the size of America’s $112 billion market) according to consulting firm iResearch.  Whilst much of this is driven through linking WeChat and AliPay to your bank account, in Japan, DCB is the most popular payment method accounting for more than 50% of all ‘online’ transactions. Certainly, Amazon is taking advantage of this trend with its recent announcement to allow Japanese customers to purchase and bill directly through their mobile phone bills.
 
In Part 2 John will bust a few common myths and beliefs about DCB and share some learnings from the Japanese market to consider to realise the full revenue potential for carriers in the UK.

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