Direct Carrier Billing and the Benefit of Digital Subscription Services
Digital subscription services is set to increase the total spend of Direct Carrier Billing, as the overall value will reach $100 billion for the first time by 2025; rising from $37 billion in 2020. The increasing shift to subscription-based models, such as games, video streaming and music, will be key to the market; realising a substantial growth rate of 172% over the next five years.
Whilst mobile operators will benefit from this shift, DCB could also benefit players across the value chain, including content developers, content publishers, aggregators, and consumers. This includes increasing the monetisation opportunities for the providers of both digital and physical goods.
However, it is important to consider the impact of the COVID-19 pandemic, as the implementation of social distancing and quarantines to limit the pandemic had an immediate impact on DCB payments. Indeed, more people were at home and making use of digital commerce. Companies including Boku, DOCOMO, and SLA Digital all reported gains in transactions.
A large part of this came from entertainment. There was a huge increase in streaming, while gaming platforms saw more use by casual gamers. There was also a rise in health and fitness purchases, with a 40% rise in downloads of health and fitness apps and a rush to eLearning, with Coursera seeing an eightfold increase in uptake for some courses.
Carrier Billing Drivers
Larger merchants are starting to take an interest in DCB; increasing the opportunity for providers. Adding any new payment method can be advantageous, as the more ways there are to pay, the more people will end up paying. Beyond this, some specific factors are driving the adoption of DCB.
DCB offers a practical alternative for many unbanked consumers, as well as those with bank accounts but not credit cards. Payments are made in familiar currencies, transactions are simple, and payment is completed using a bill the customer is already paying.
Juniper Research estimates that 28% of the adult population are unbanked in 2020, with this falling to 18% by 2025. Regions such as North America and West Europe are estimated to have a proportion of unbanked adults that is below 5%. However, regions such as the Rest of Asia Pacific and Africa & Middle East are anticipated to have a large degree of unbanked adults over the forecast period.
The convenience of combining monthly subscription costs into a user’s monthly cellular subscription will be a key growth driver for carrier billing over the next five years. Carrier billing vendors should focus on expanding their partnerships with digital service providers; enabling consumers to pay via carrier billing and capitalising on the growing trend of monetisation via subscription. However, vendors will need to re-evaluate their monetisation models to compete with established payment methods, such as credit cards and digital wallets.
Our latest whitepaper on Direct Carrier Billing: Mitigating the Impact of COVID-19, highlights how carrier billing vendors can mitigate the short-term impacts of the pandemic, in addition to the long-term impacts arising from the subsequent recession. This is aligned to forecasts for total spend over direct carrier billing in 2025.
Download the Whitepaper: Direct Carrier Billing: Mitigating the Impact of COVID-19
Related Research: Direct Carrier Billing
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