What Opportunities (and Risks) Will MNOs Find in the Carrier Billing Space?

Carrier Billing Allows eCommerce Vendors to Meet Modern Consumers’ Expectations

Historically, carrier billing was effectively the default payment method for digital services such as mobile device personalisation. However, the rise of app stores and increases in smartphone penetration in developed markets has been instrumental in driving the migration to carrier billing.

Carrier billing enables faster and smoother transactions in app stores, as well as offering greater transparency and control over purchases for subscribers. With the increased use of tokenisation to make digital purchases as frictionless as possible, one-click payments are now achievable. Consumers have now come to expect this smoother, one-tap payment experience for digital goods and services, and carrier billing meets this requirement.

Advent of 5G & MaaS Will Prove Vital to Growing Carrier Billing Adoption

While some areas of carrier billing are experiencing growth stagnation or decline (such as legacy value-added services), carrier billing still holds potential to offer benefits to players across the value chain: from mobile network operators and merchants to app stores and end users.

Of the key emerging opportunities within carrier billing, these include:

• Bundling: The arrival of 5G has opened up new opportunities in this area, which represents a significant future growth opportunity for carrier billing and may offer a chance for carriers to create real tangible use cases for carrier billing as well as recoup their investments into 5G infrastructure.
• Cloud Gaming: This is another area where 5G has created new opportunities for carrier billing, with potential for content to become fully mobilised.
• Mobility-as-a-Service: Carrier billing offers potential for the creation of new business models for the transport sector; bringing together multiple platforms and businesses and improving transport planning and management. At present, there are a number of disparate service providers and transport services that could be unified by an established billing ecosystem; providing a valuable opportunity for MNOs.

Fraudsters & Unreliable Creditors Present a Significant Risk to MNOs

Carrier billing offers a convenient method of purchase – often via a one- or two-click flow. However, this convenience makes carrier billing vulnerable to modern fraudsters’ toolkits; which now include malicious apps and fraudulent advertisements. As fraud incidence has grown, regulatory requirements governing payments have developed; payment security is also being increased by regulations with PSD2 pushing for two-factor authentication systems.

In addition, there is also the increased risk of unreliable creditors creating ‘bad debt.’ This is a receivable that cannot be recovered and can occur when credit has been extended to a post-paid customer who intentionally or unintentionally overextends themselves. This type of debt represents as much as 2% of telecom operators’ revenues; making this a critical issue for the future of carrier billing. 

 

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• Total end user spend via carrier billing will increase by 36% over the next two years; growing to $73.8 billion in 2024, from $54.4 billion in 2021.
• This growth will be driven by 5G-based mobile gaming and video subscriptions.
• Operators must expand the geographical reach of carrier billing; leveraging trust fostered between them and their subscribers, and becoming increasingly valuable partners to content providers.
• India will be a key target region for carrier billing stakeholders over the next two years, with smartphone penetration in the region expected to reach 50% by 2024.
• Carrier billing spend on digital ticket purchases will grow by 250%; from $141 billion in 2021 to $275 billion in 2024.
• The rise of new transportation modes, such as MaaS (Mobility-as-a-Service) will drive carrier billing spend for transit services by offering an improved user experience across a single app that can leverage carrier billing to process the payment.