Analysys Mason Direct Carrier Billing Mar2013 Sample TOC RMA03

8/20/2019 Analysys Mason Direct Carrier Billing Mar2013 Sample TOC RMA03

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Direct carrier billing: giving CSPs a share of the mobile payments market

Research Report

Direct carrier billing: giving CSPs a share of the

mobile payments market

March 2013

John Abraham and Justin van der Lande


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Contents [1]

5. Executive summary

6. Executive summary [1]

7. Executive summary [2]

8. Recommendations

9. Recommendations for CSPs [1]

10. Recommendations for CSPs [2]

11. Recommendations for vendors

12. Market definition

13. Direct carrier billing is only one of many mobile payment options butoffers the best opportunity for carriers to generate mobile revenue

14. Direct carrier billing provides another payment option at checkout

15. Process flow between the entities involved in direct carrier billing

16. DCB has to support a multi-channel delivery ecosystem that is changing

rapidly driven by technology, economics and regulations

17. The role of mobile payment vendors within direct carrier billing

18. Business environment

19. The business environment in 2013 is encouraging mobile operators to

develop new value-added service revenue

20. Mobile payments are set to grow as the world continues to move to

mobile devices – 400 million European users will pay for mobile content

in 2016

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21. In developed markets, including Europe, CSP revenue from voice and

messaging is declining, so is their share of mobile content and apps

22. The potential market for DCB addresses not only the ‘unbanked’, but all

users of smartphones worldwide

23. Younger consumers use more apps, indicating that teenage users are a

ready target for direct carrier billing

24. CSPs should initially target contract customers because they are more

likely to have smartphones and margins are better

25. DCB has much lower drop-out rates than other payment methods, so

although settlement rates are lower, overall revenue can be higher

26. Direct carrier billing

27. CSPs’ DCB revenue will grow significantly during the next 10 years and

will replace PSMS as the payment option for CSPs

28. Direct carrier billing functionality is provided through managed services

as well as traditional on-premises software

29. Developments in the direct carrier billing market

30. Regulation of the direct carrier billing market

31. Trends in direct carrier billing

32. Revenue splits [1]

33. Revenue splits [2]

34. Market drivers and inhibitors

Slide no. Slide no.


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Contents [2]

35. Direct carrier billing market drivers [1]

36. Direct carrier billing market drivers [2]

37. Direct carrier billing market inhibitors [1]

38. Direct carrier billing market inhibitors [2]

39. Use cases

40. Facebook offers direct carrier billing as a payment option for its platform

purchases

41. Skype implements direct carrier billing to widen its market reach

42. Virgin Media offers direct carrier billing as a means to pay for digitalcontent

43. SFR implements direct carrier billing as a means to generate revenue

from the burgeoning mobile apps market

44. Vendor snapshots

45. Aepona

46. Bango

47. BOKU

48. Fortumo

49. MACH

50. Netsize

51. Payvia

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52. Vendor analysis

53. Vendor analysis [1]



56. Mergers and acquisitions

57. Mergers and acquisitions in the direct carrier billing market

58. About the authors and Analysys Mason

59. About the authors

60. About Analysys Mason

61. Research from Analysys Mason

62. Consulting from Analysys Mason

Slide no. Slide no.


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List of figures

Figure 1: The mobile payment ecosystem

Figure 2: Segmenting mobile money

Figure 3: The entities involved in DCB process flow

Figure 4: Typical DCB process flow

Figure 5: DCB ecosystem relationship

Figure 6: Types of role that vendors play within direct carrier billing

Figure 7: Mobile handset content and applications subscribers by region,

Europe, 2011 –2016

Figure 8: Messaging revenue by type and its share of total mobile revenue,

Western Europe, 2009 –2017

Figure 9: Frequent users’ share of total mobile content and apps user baseby age

Figure 10: Smartphone ownership by pricing model

Figure 11: Publisher revenue, credits cards versus direct carrier billing

Figure 12: CSP revenue for direct carrier billing, worldwide, 2012 –2023

Figure 13: Vendor revenue from direct carrier billing software solutions,

worldwide, 2012 –2017

Figure 14: Revenue splits for direct carrier billing

Figure 15: Revenue splits for traditional payment methods

Figure 16a: Direct carrier billing market drivers

Figure 16b: Direct carrier billing market drivers

Figure 17a: Direct carrier billing market inhibitors

Figure 17b: Direct carrier billing market inhibitors

Figure 18: MACH’s billing relationship with Skype

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Direct carrier billing: giving CSPs a share of the mobile payments market 5

Executive summary

Recommendations

Market definition

Business environment

Direct carrier billing

Use cases

Vendor snapshots

Vendor analysis

Mergers and acquisitions

About the authors and Analysys Mason


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Executive summary [1]

Direct carrier billing (DCB) enables communications service providers (CSPs) to directly participate in the over-the-top market by

providing a payment option for consumers directly on to their mobile phone bills. CSPs can take a margin for providing the paymentservice, which might grow to provide significant revenue.

Analysys Mason forecasts that DCB will provide CSPs with more than USD12 billion in revenue in 2022 – a significant stake in the

growing mobile payments market.

DCB (also known as ‘direct operator billing’ or ‘billing on behalf of’) enables consumers to pay for goods and services from third-

party publishers, merchants and applications stores via their mobile phone bills. This builds on established payment methods

offered by CSPs via premium rate SMS and phone numbers, and earlier WAP initiatives.

The DCB market has huge potential for growth, but regulatory challenges and competitive pressures from other payment

technologies mean that CSPs will need to address a number of issues to win their share of the payments market.

DCB has several limitations when compared with other mobile payment options. The most significant limitation is the type and value

of goods that can be purchased. Addressing these legal and trade restrictions will require industry-wide co-operation.

Although it is considered that DCB will be most successful in emerging markets with low penetration of formal banking services, we

are aware that DCB services are taking off in developed markets where ‘unbanked’ teenagers and the convenience of DCB are

helping to drive adoption. Conversion rates – that is, the percentage of mobile consumers who buy digital content – are reported to

be ten times higher in markets where DCB has been implemented than in markets that only have other mobile payment options,

largely because of DCB’s ‘frictionless’ checkout capabilities.

In the past 18 months, CSPs have begun to:

partner with payment intermediaries in order to support as many applications, merchants and developers as possible

work within a lower margin framework compared with premium SMS to enable them to compete with credit-card-based payment

systems – in some cases, when transaction values are low, credit cards can be more expensive than DCB in terms of the pay-

out rates to merchants and stores.

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Direct carrier billing is only one of many mobile payment options but

offers the best opportunity for carriers to generate mobile revenue

Worldwide mobile payments are expected to reach over

USD600 billion by 2016. DCB offers CSPs the ability toparticipate in this significant and growing revenue stream.

DCB has been available for many years for telecoms

services – for example, in the form of payments via premium

SMS and premium-rate calls. However, the technology has

evolved significantly in recent years to include payments for

digital content.

Large CSPs such as AT&T, Rogers Communications,

Telefónica and Vodafone have adopted DCB to provide anopen standard for a growing number of applications.

DCB involves payments that mobile CSPs can credit to

customers’ monthly phone bills (in the case of postpaid

subscribers) or debit from their prepaid balances. Currently,

purchases are limited to mainly digital goods and services

such as mobile games, films, music and in-app purchases.

Other related areas include mobile banking applications,

mobile payment terminals and the interaction with vouchers,

which may represent some opportunities for CSPs.

Figure 1: The mobile payment ecosystem [Source: Analysys Mason, 2013]

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C

u s t om er

P u b l i s h er

(

A p p s , c on t en t

an d a p pl i c a t i on s t or e s )

Premium-rate SMS

Premium-rate voice

WAP


Mobile wallets

Online payment

Credit cards

Debit cards

Bank payments

Remote

selling

Bank

CSP

Mobile transaction


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Direct carrier billing: giving CSPs a share of the mobile payments market 58

Executive summary

Recommendations

Market definition

Business environment


Use cases

Vendor snapshots

Vendor analysis

Mergers and acquisitions

About the authors and Analysys Mason


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About the authors

John Abraham (Analyst) is a member of Analysys Mason’s Telecoms Software Research team and contributes tothe Revenue Management , Service Fulfilment and Customer Care programmes. He has more than 5 years’

experience in the telecoms industry. He has worked for a global OSS vendor and implemented revenue

management solutions for Tier 1 telecoms operators in Europe, India and the Middle East. John joined Analysys

Mason in early 2012. He holds a bachelors degree in computer science from Anna University (India) and an MBA

from Bradford University School of Management (UK).

Justin van der Lande (Senior analyst) leads the Revenue Management programme (formerly Billing), which is part

of Analysys Mason’s Telecoms Software research stream. He specialises in business intelligence and analytics

tools, the functionality of which cuts across all of the research programmes in this area. He also provides projectmanagement for large-scale projects within our Telecoms Software research. Justin has more than 20 years’

experience in the communications industry in software development, marketing and research. He has held senior

positions at NCR/AT&T, Micromuse (IBM), Granite Systems (Telcordia) and at the TM Forum. Justin holds a BSc in

Management Science and Computer Studies from the University of Wales.

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About Analysys Mason

Knowing what’s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the

complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialistknowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.

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Consulting

Our focus is exclusively on TMT.

We support multi-billion dollar investments, advise clients on

regulatory matters, provide spectrum valuation and auction support,

and advise on operational performance, business planning and strategy.

We have developed rigorous methodologies that deliver tangibleresults for clients around the world.

For more information, please visit www.analysysmason.com/consulting .

Research

We analyse, track and forecast the different services accessed by

consumers and enterprises, as well as the software, infrastructure

and technology delivering those services.

Research clients benefit from regular and timely intelligence inaddition to direct access to our team of expert analysts.

Our dedicated Custom Research team undertakes specialised and

bespoke projects for clients.

For more information, please visit www.analysysmason.com/research .


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Research from Analysys Mason

We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors,

through a range of research programmes that focus on different services and regions of the world.

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Alongside our standardised suite of research programmes, our Custom Research team undertakes specialised, bespoke research

projects for clients. The dedicated team offers tailored investigations and answers complex questions on markets, competitors and

services with customised industry intelligence and insights.

To find out more, please visit www.analysysmason.com/research.


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Consulting from Analysys Mason

For more than 25 years, our consultants have

been bringing the benefits of applied intelligence

to enable clients around the world to make

the most of their opportunities.

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Our clients in the telecoms, media and technology (TMT)

sectors operate in dynamic markets where change is

constant. We help shape their understanding of the future

so they can thrive in these demanding conditions. To do

that, we have developed rigorous methodologies that

deliver real results for clients around the world.

Our focus is exclusively on TMT. We advise clients on

regulatory matters, help shape spectrum policy and develop

spectrum strategy, support multi-billion dollar investments,

advise on operational performance and develop new

business strategies. Such projects result in a depth of

knowledge and a range of expertise that sets us apart.

We help clients solve their most pressing problems,

enabling them to go farther, faster and achieve their

commercial objectives.

To find out more, please visit

www.analysysmason.com/consulting .


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Published by Analysys Mason Limited • Bush House • North West Wing • Aldwych • London • WC2B 4PJ • UK

Tel: +44 (0)845 600 5244 • Fax: +44 (0)845 528 0760 • Email: [email protected] • www.analysysmason.com/research • Registered in England No. 5177472

© Analysys Mason Limited 2013. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical,

photocopying, recording or otherwise – without the prior written permission of the publisher.

Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any c lient-

specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only.

Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK

publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark.

Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or

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Analysys Mason Direct Carrier Billing Mar2013 Sample TOC RMA03