Stefan Kostic, CEO,Centili
What’s next for mobile payments? It’s a technology that’s already improving lives for consumers the world over, creating visions of a ‘cashless society’ going forward. Although it’s unlikely that this technology will ever fully replace physical currency, it’s certainly causing major disruption across the globe and has already transformed the way consumers pay for goods and services.
Yet there’s no single uniform approach to introducing mobile payments technology. In fact, when we look closely at how m-payments are impacting consumers, it becomes apparent that this is an umbrella term for an incredibly diverse range of platforms and services, each different from the one before and designed to meet a unique set of needs in a particular market.And, perhaps unsurprisingly, it’s in emerging markets where this trend is particularly apparent and where the most innovation in payments technology and user experience is happening.
The current state of the market
World Bank estimates that in some developing countries fewer than 10 per cent of the population have access to what we’d define as financial services, and 20% of bank accounts sit dormant. For these markets, in particular, digital payments technology are acting as a way of meeting the growing demands for alternatives to physical currency that can’t be accommodated by existing methods.
High demand for mobile payments is emerging in sub-Saharan Africa and South East Asia. Here, payment methods such as debit and credit cards do not have the same widespread penetration that they do in the western world. Alternative payment methods have therefore been required, and eCommerce has also been a key factor behind this demand. Alongside increased smartphone usage, it’s fuelled the further growth of a particular mobile payments technology that is becoming more and more popular–Carrier Billing.
Growing demand for mobile payments
Carrier Billing (CB) charges the purchase amount of goods or services directly to a mobile subscriber’s bill, eliminating the need for a bank account or credit card. It also simplifies the entire process through a one-click payment flow. The benefit is that it makes it incredibly simple and convenient for consumers, especially when it comes to in-app purchases.
CB has come a long way since it was first introduced. The technology has evolved rapidly in recent years to now support desktop and mobile devices anywhere on the planet. It’s quick and straightforward to use, and doesn’t require a bank account. So it’s easy to see why it has proven so popular around the world – and India is prime example.
Over 43% of bank accounts lie dormant in the region. Yet India is one of the largest mobile markets in the world with more than a billion connections, 630 million of which have access to 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 Carrier Billing uptake.
The challenge here, particularly for app developers, is how to make purchasing on mobile easy enough to attract people to buy their app and purchase in-app content. Carrier Billing can address this problem. In fact, businesses running freemium models that integrate Carrier Billing into their offerings have seen much higher conversion rates as a result, rising by up to 30%.
The important takeaway is that CB is quick to use and it provides a seamless user experience for the end user – something which is especially important for app users and online payments. This convenience and the ability to implement CB into a wide range of business segments, including gaming, social networks and events ticketing, allows businesses to reach and monetise users across the globe. Not only this, but CB can be easily integrated on all platforms, whether it’s desktop, mobile or on an application for both one time and recurring payments.
A win for all involved
Similar to the fact that digital payments will never truly illuminate the need for cash, Carrier Billing will never fully replace other mobile payment methods but it’s not designed to. This technology fills the gaps where other methods can’t, or have failed, to provide an easy user experience in order to drive conversion rate.
The benefits CB provides to all parties involved, including developers, merchants, and consumers, are well documented and too good to ignore in many emerging markets. CB offers merchants flexibility and increased average spending rates, along with the growing popularity it has with consumers in these markets. For consumers, it’s one of the most accessible forms of payment,while being safe and easy to use.
So what does the future hold for CB?We’ve seen video and music streaming services as one example where users are adopting CB as a payment method of choice. In the near future, we expect that this will also ring true for more traditional services such as insurance and ticketing. One thing’s for sure though, with the appetite for mobile payments increasing across all markets, and as more and more consumers and merchants particularly in emerging markets accept and understand it as a method of payment, CB will only continue to thrive.