Here’s another way to pay for Amazon Prime Video: Just put the charges on a mobile phone bill. That is what Bango, a tech company that enables online payments, and the eCommerce operator have just launched in the U.K., news that presents the opportunity to explore the prospects for carrier billing.
The payment offering enables consumers there to buy subscriptions to the Amazon video service without having to use cards or other methods, but by making a few clicks on their mobile phones, authenticating themselves, then making sure to pay their monthly charges.
The Bango-Amazon launch in the U.K. follows the two companies’ recent partnership in India for “Bharti Airtel, India’s largest mobile network operator,” Bango said. “Bango technology ensures that entitled mobile customers receive uninterrupted access to Amazon Prime Video from the moment they become active, for as long as they continue to subscribe and pay their mobile bills.”
Carrier Billing Forecast
So, how lucrative is carrier billing? By 2022, carrier billing will bring in $9 billion annually for mobile operators, according to research released earlier this year from Juniper. That compares to $2.9 billion in 2017.
Carrier billing is designed to appeal to consumers who would rather use the payment method instead of cards because of faster checkout, an aversion to sharing card data or because cards are just not widely available in a particular market. Carrier billing also appeals to consumers of digital content.
“Growth is increasingly being driven by bundled content such as Spotify (across Europe) and Netflix (in markets including the Philippines and Mexico),” Juniper said. “By using carrier billing for acquisition, OTT content providers can reduce marketing costs by leveraging the brand name of local mobile operators.”
Mobile operators are not the only players that benefit from carrier billing. Retailers and service providers, making the sales to consumers using the payment, acquire consumers and, according to billing providers, experience higher conversion rates because those transactions are completed more quickly than purchases that require the entry of card data.
“Due to a shorter checkout flow, merchants report up to 10 times (higher) conversion rates with carrier billing than with credit cards,” said Fortumo, a provider of carrier billing services.
How It Works
The process of carrier billing can vary according to the provider, but Fortumo provides a good general overview.
A consumer enters their mobile phone number, then is sent a one-time passcode for authentication. After the consumer confirms the purchase, Fortumo checks with its partner mobile operators to make sure that consumer is a subscriber, and that it's not in arrears or, otherwise, unable to pay for the purchase. Fortumo then instructs the carrier to add the charge for the purchase and tells the merchant to go ahead with the transaction.
At the end of the month, carriers transfer the relevant funds to Fortumo, and the company puts the money owed to merchants into their accounts. The average payouts to merchants average from 70 percent to 80 percent, the company said. “Generally, direct carrier billing offers lower payout rates than card-based payments, which is, in turn, compensated by the significant increase in reach and conversion,” it said.
Mobile operators have their own rules, too. For instance, Verizon limits purchases made via carrier billing to $100 per month, and only from merchants approved by the mobile operator.
Carrier Billing Challenges
It’s not only Amazon that is deepening its use of carrier billing. Other heavyweights keep expanding their carrier billing options — that includes Google, which recently launched carrier billing for Google Play in Cambodia, Chile and Peru. Earlier this year, that payment option was offered to consumers in Kenya via a deal with M-Pesa.
The main reason for such activity is the relatively low penetration of credit cards in such markets, combined with a high rate of mobile phone ownership. M-Pesa has some 30 million customers in Kenya, a country with a population of about 45 million, and most of the 13 million smartphones on Safaricom’s network there run on Android.
Carrier billing faces challenges, too, especially if the companies behind that payment method want to gain significant ground on other firms.
Juniper said, “For operators to compete effectively with card payments and players such as PayPal, they would need to accept a lower revenue share, reducing their cut from 15 percent or more to the single-digit range.”
It also said that operators need to do a better job of promoting carrier billing. Generally, limited resources for mobile operators’ marketing departments hamper that effort, as does the overwhelming focus on “smartphones and package differentiation,” Juniper said.
Still, there is little reason to believe that carrier billing will not continue to grow, as the forecasts predict and the ongoing participation of major digital firms indicates. The question is how vital it will become to the daily commerce lives of consumers all across the globe.