By Ante Ukalovic, CEO, Centili
Paying for goods has changed drastically in recent years. Across the globe there is a great need for simple, mobile-driven alternatives to serve an ever-growing demand for digital and virtual services. Whether it is in developed nations, or emerging markets, payment methods have evolved and although cash will not ever be fully replaced by digital payments, the ecosystem is changing to see the two exist side by side. For developing markets this rings particularly true, as an ever increasing level of innovation in technology payments stems from these regions.
According to some sources, around 20 percent of bank accounts in developing countries go unused. The number of adults who struggle to get by without an account at a formal financial institution is still counted in billions.
For developing markets in particular, digital payments are acting as a way of meeting the growing demands within these regions that can’t be accommodated by existing payment methods. South East Asia is one example. It is a region where, until recently, there has been limited adoption of traditional payment methods such as debit or credit cards. This isn’t a significant issue, until you consider the appetite for online purchasing, then it becomes problematic. There is now a high demand for digital and virtual goods, and mobile payments, such as Direct Carrier Billing (DCB), are becoming more and more popular to meet the needs of these consumers.
Direct Carrier Billing is the process of using mobile pre-paid credit to pay for services, or cost of goods purchased to a subscriber’s pay monthly plan. Not only does this alleviate the need for card payments, it also speeds up the process greatly, opening up new opportunities for merchants.
In India alone, $1 billion is spent online each year. With this figure set to increase by 31% year-on-year, mobile payments are contributing more and more to the local economy. DCB has the potential to fuel this further as a technology capable of overcoming the country’s low debit and credit card penetration – whilst meeting the growing demand for alternative payment methods, it already has 630 million mobile subscribers in India profiting from the benefits that it affords. It’s quick and easy, and has the additional benefit of helping merchants to increase the average spending rates, whilst making virtual goods considerably easier to access.
Although DCB isn’t new, however it has evolved dramatically since it was first introduced. It can now support any mobile phone user across the globe. DCB specialists, in recent years, have advanced the technology by making it quicker and easier to use, introducing paved the way with multiple benefits for the mobile subscribers and companies that have embraced it. For instance, businesses running freemium models that have DCB integrated into their offerings have seen higher conversion rates than ever before, rising to up to 30%.
The evidence shows that the rise of mobile payments in emerging markets is having a tremendous impact on local economies where mobile payment capabilities are deployed, especially in light of low financial inclusion in many emerging markets. With mobile apps and digital content taking off at a significant rate, the lack of uniformity in payment methods around the world has left many app developers struggling to monetise their work – and it’s here that DCB can become a revenue generator, as an easy to deploy micropayments collection mechanism.
Opportunity knocks at the door of DCB
Developers are facing challenges on two fronts; how to make purchasing on mobile easy so that people will buy their app and in-app content, and how to enable people to make payments in markets where credit and debit card penetration is low. Africa and South East Asia are regions which have seen an explosion of innovation that uses mobile phones to deliver everything form medical information to mobile money. From a payments perspective, 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.
The key benefit is the accessibility; 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 for all parties involved.
A win for both sides
All parties involved are benefitting from this. Merchants are benefitting from the flexibility which DCB offers, along with the popularity that it has with the consumer in these markets. But the greatest winner here is consumers. The thirst for digital goods, combined with an easy, quick, and secure payment method has been satiated by DCB. With digital and virtual goods market growing at a sensational rate, DCB gives consumers access to this market in an easy, ubiquitous way to pay.