Direct carrier billing makes the transition from digital content to physical goods (Part 2)

mobilepaymentstoday.com

By John BaRoss, founder and president, Fincclude Inc

As more consumers and merchant accept, appreciate and understand direct carrier billing, regulators and telecoms are making the necessary changes to deal with this payment method's rise in popularity. 

Lawmakers are adjusting regulations while carriers modify their economic models to help unleash the potential of direct carrier billing for online merchants selling physical goods. I've spoken with global industry leaders involved in emerging direct carrier billing for physical goods initiatives and two (parallel) value propositions are evident:

1. Physical goods harness the array of direct carrier billing benefits (merchants realizing incremental revenue, reaching larger addressable markets, superior conversion rates, etc.). There is also an increased focus on direct carrier billing helping to advance financial inclusion, which is a differentiated strength of direct carrier billing as its purpose since the beginning was to reach the unbanked.
2. This combination of direct carrier billing for physical goods also shows a new twist for those familiar with carrier economic models because it involves margin advantages. Carriers have established a reputation for charging a premium for direct carrier billing. Merchants decide whether the incremental business via direct carrier billing was worth its premium (lower margin to merchant).  As a variety of environmental factors have evolved over time, a trend is emerging with carriers becoming more competitive with their margins, and in some markets the direct carrier billing margin is providing a better margin compared to certain alternative payment options.

What does the current global landscape look like for direct carrier billing and physical goods? 

There are several of these partnerships, including ARPUPLUS/T-Pay, Bango, Boku, Centilli/Infobip, Danal, DIMOCO, Docomo Digital, Fortumo, Mobile Embrace, SLA Mobile and others. In the 12-to-18 months prior to 2016, some examples of direct carrier billing for physical goods included: 

• Singapore: Singtel, Fortumo and Rovio partnered to support direct carrier billing for Angry Bird toys
• Spain: Docomo Digital and three main carriers (Orange, Telefonica and Vodafone) for over a year have successfully helped National Express (ALSA in Spain) riders use direct carrier billing from the mobile web or the native app. This is a unique case in Europe with multiple carriers at the same time for private/non-public transportation).  
• U.S.: Sprint and Danal BillToMobile partnered with LevelUp to support in-store purchases. Danal recently sold that division to Bango.
• Japan: KDDI, Docomo and Boku enabled direct carrier billing to reload gift cards for Ueshima Coffee Co., the country's largest coffee house chain.
• Sweden: WyWallet enables users of Telia, Tre, Tele2, Telenor, Comviq, Raspberry and Halebop to fund their wallet via direct carrier billing for remote digital and physical goods.
• Turkey: NeoMobile's OneBip and Turkcell used direct carrier billing for BiTaksi, Istanbul Ferry Services and the Turkish Football Federation. NeoMobile recently sold OneBip to DIMOCO.

In 2016, the pace has picked up with more examples: 

• Germany: DIMOCO and the Verkehrsverbund Rhein-Sieg transport network support direct carrier billing for a four-trip ticket using the SWB easy.GO app.
• Switzerland: Swisscom and Docomo Digital support direct carrier billing for online purchases of physical goods from MediaShop Group.
• Lithuania: Tele2 secured an e-Money license
• Finland: Gemalto Netsize supports tickets for the Helsinki Transport Network
• Japan: NTT Docomo supports Suica, a transportation card/mobile app for Japan's biggest rail company. Riders can use direct carrier billing to top off their balance. Users can also buy physical goods at convenience stores, grocery stores, electronics stores, restaurant chains, vending machines and more.
• Singapore: Singtel Online Gifts, the first digital gifting/digital voucher buying platform in southeast Asia, offers gift cards from over 35 merchants including Apple. Consumers can use direct carrier billing to buy the gift cards, which can then be used to buy physical goods. Singtel's Dash mobile app supports direct carrier billing as a funding options. Dash users can use the app for train and bus tickets, taxis, and at over 20,000 locations FairPrice, Watsons, Food Republic, BreadTalk, 7-Eleven and more.         
• EU: At least Docomo Digital and Boku have secured e-Money licenses and passported their respective licenses E.U.-wide.
• U.K.: Boku has partnered with O2, EE, and Vodafone to support companies selling magazines and bus tickets. Boku and major carriers will also support direct carrier billing purchases for foods and beverages at sporting and entertainment venues via Verteda's innovative Qjacker app.  
• Estonia: Tele2 secured an e-money license
• Singapore: Singtel’s Singtel Dash mobile payment app supports the DCB funding option. A Singtel Dash user can make payments on buses, taxis and trains as well as at over 20,000 locations including 

Of special note is the pioneering leadership of direct carrier billing in Japan. 

NTT Docomo has championed extending the upper bounds of direct carrier billing for physical goods by providing an example to carriers worldwide that committed leadership is key. Consumers use direct carrier billing in Japan to purchase clothing and shoes, kitchenware, cosmetics and similar items, electronics, exercise equipment, food, home goods, toys and much more.  

Another pioneering direct carrier billing initiative is Mercari, a fast growing flea market that allows users to both buy and sell clothes and goods. Consumers in Japan have direct carrier billing post-paid spending limits of between $500-to-$800 on certain demographics. 

The growing success and knowledge of direct carrier billing is now going through a significant phase of accelerating expansion thanks to more permissive regulations worldwide, to evolving DCB tax policy (the recent debut of Google Play in India that found a way around a tax barrier), to visionary pioneering leadership at carriers, carrier-partner/suppliers, merchants and others in the ecosystem.

Leaders from carriers that encourage and reward innovators help leadership at other carriers where the task of building leadership alignment backing has a vastly greater probability of success when proof-of-concept evidence is demonstrable. However, as leaders of initiatives know, issues with go-to-market planning and execution, through scaling can be countless.  A traditional companion for helping an industry to advance is via the assistance of industry associations which can help assist with at least common problems (lobbying, awareness driving, advocacy, etc.).

Direct carrier billing, along with carrier-backed mobile money schemes, are two multibillion dollar sectors of a rapidly emerging space increasingly being recognized as carrier commerce. These two established sectors, along with about three dozen emerging carrier commerce sectors, are helping to advance global financial inclusion.

Financial inclusion is a top global initiative for the Global Partnership for Financial Inclusion, which includes all G20 nations, the United Nations, 100-plus donor foundations, bi-lateral and multi-lateral agencies, private donors and investors who have contributed over $31 billion annually in recent years to help advance financial inclusion to reach some 2 billion consumers who remain unbanked worldwide.

The Bill & Melinda Gates Foundation has assisted the non-profit Alliance for Financial Inclusion with millions of dollars in funding. A major role of the AFI is to help facilitate the cross-pollinating of financial inclusion success-knowledge to policy makers (government, carriers, banks, etc.).  Downstream from policy is operational execution financial inclusion strategies and tactics (spanning proactive planning to reacting to time sensitive challenges that arise).

Non-profit FINCCLUDE (Financial Inclusion Now, Carrier Commerce Leading a Ubiquitous Digital Economy) is downstream from AFI, uniquely exclusively serving the carrier commerce industry at the intersection of financial inclusion by helping to facilitate the cross-pollinating of financial inclusion success-knowledge to operational leaders in carrier commerce (when necessary, as a rapid response unit). FINCCLUDE’s growing base of free members in carrier commerce  are experienced, insightful and passionate about this space, willing to help global stakeholder colleagues by sharing relevant (non-proprietary) success-precedent/knowledge (for no fee or obligation) to help the industry advance at a greater pace, thus helping advance financial inclusion faster. You can learn more at www.fincclude.org.