Direct carrier billing is forecast to have its day in the sun in the next year or so. Of all the services that telecoms companies can provide, direct carrier billing seems the most intuitive. Yet, it has never got the overall traction that it deserves.
That said, there are regions where direct carrier billing is second nature, such as Japan, China and South Korea – and much of Latin America.
By 2023, the market for direct carrier billing will reach almost $29 billion, and will be used by 1.5 billion people. Indeed, the research carried out by MobileSquared, suggests that 39% of people with a smartphone are forecast to regularly access ‘lifestyle and sports content, tickets, videos, news articles and more through direct carrier billing payments – up from 19% in 2018 and 26% today’.
DoCoMo Digital is bullish about the potential, a market that it has led through its dominance in Japan. According to an interview with the CEO of DoCoMo Digital, Jonathan Kriegel, the market is set to double in size in the next five years. Their success, according to Kriegel, is down to the design of their platform. It must be easy to access for merchants, highly scalable and intuitive for users to use, via a self-service portal.
The company has also focused on one particular Achilles Heel of this method – bad debt – which can be as high as 5% of overall transaction volumes.
Of course, direct carrier billing should also get a boost from the pandemic, as contactless payment methods become the norm.
There is a worry, though, that we have heard all this before. You have to ask why, with all that direct carrier billing has going for it, it hasn’t taken off in Western Europe, for example. The reason is possibly that contactless debit cards and systems such as Apple Pay are now so easy, seamless and quick that the need for another payment system is just not there. There is also the age-old problem of bill shock, of getting a monthly bill from your telecoms company and finding an extra $100 on the bottom.
DoCoMo Digital’s confidence and MobileSquared’s research might be reason for muted celebration but we must not ignore the in-built inertia in many markets and regions. And, of course, as Kriegel himself admits, even in China, direct carrier billing is finding competition from AliPay and Google Pay.
The payments battleground might be hotting up, and it will certainly be a fight worth watching. Who knows, direct carrier billing, with champions such as NTT DoCoMo might really be about to have its day in the sun.