Where next for DCB?

Carrier billing is going great guns across developed and emerging markets, but a raft of wallets and other alt.payments are snapping at its heels. What now, asks Paul Skeldon?

Carrier billing is surging in popularity the world over. Already it is forecast by Juniper Research that more than a fifth or all mobile phone subscribers worldwide – that’s around 1.5 billion people – will be using carrier billing (DCB) to buy either digital content, physical goods, or digital tickets, in 2025. Meanwhile, Facts & Factors suggests that where the global carrier billing market was worth around $30 billion in 2021, steady growth of around 8% year on year is going to be maintained and the sector is likely to be worth in excess of $48 billion by 2028.

Interestingly, the largest growth in DCB use is set to be seen in the US, however it is the rest of the world where it is really coming into its own. According to the Facts & Factors’ research, the rapid growth in cloud computing is what is pushing carrier billing. Cloud

computing has detonated an explosion in digital content and services and people the world over are wanting to get a piece of the action. However, adoption of credit cards in these markets is poor and so DCB has been a handy alternative.

This is why Juniper predicts that so many people will be using DCB this year – that an MNOs increasingly now seeing it as a small but necessary new revenue stream as their core earners – voice, messaging and data – become ever more commoditised.

MANY ALTERNATIVES

However, there are many impediments to how far carrier billing can go and, as research shows, many of these developing markets – especially the ones that are relatively new to the digital world, such as Vietnam and the Philippines, for example – are adopting wallets and other alternative payments instead (see panel). This is becoming a universal issue. Digital wallets are garnering significant interest from users because they offer more than just the ability to pay for things. They may well be comparable to carrier billing terms of one-click payment, but they can often support multiple payment mechanisms – cards, bank transfers and, potentially, carrier billing too – all with the enhanced security of tokenisation, encryption and biometric authentication.

But it is their versatility that really appeals to users. Digital wallets provide additional services like budgeting tools, loyalty programmes and cashback offers, which enhance user engagement beyond simple payments. With this in mind, it is easy to see how, in 2023, digital wallets accounted for 44.5% of ecommerce transactions and 33.1% of POS transactions globally and, by 2026, more than 60% of the global population is expected to use digital wallets.

THE MENA CONUNDRUM

While wallets and alternative payments are garnering users across different markets, their uptake in MENA is slow. Here DCB dominates and looks set to for some time to come. Wallets account for around 20% of spend across MENA – 18% in Saudi Arabia – and young people are erring towards them as they are more of a mobile-first payment tool, but there is still a propensity to use DCB in the region.

Much of this is driven by a reliance of cash, which is much easier to buy pay-as-you-go mobile airtime, which can then be used to purchase goods through DCB. There are also significant infrastructure gaps that make mobile broadband-based services unreliable. Interoperability issues across networks is also a problem. However, even in MENA, there is a slow move towards using more than just DCB for mVAS payments.

ORCHESTRATION

The rise of wallets is being seen in all markets and is part of a trend towards consumers using a wide variety of payment tools to do the things that they want to do. This can be a challenge for merchants as, where once you could build a business around using DCB to sell content to mobile users, now you have to manage a raft of payment tools alongside DCB – and manage a process where users graduate from maybe starting their relationship with a merchant through DCB to one where they use a wallet, card or instant payments

This sees many players having to look at how to orchestrate these payments, something that payment provider Celeris has been quick to capitalise on. It orchestrates payment tools for merchants by acting as a central platform that connects and manages various payment gateways, processors, and other financial service providers. This allows merchants to access multiple payment options and tools through a single interface, streamlining their payment processes and improving efficiency.

By centralising payment management, Celeris simplifies the entire payment process for merchants, reducing the need for multiple integrations and interfaces. This orchestration allows merchants to optimize their payment processing, leading to higher approval rates, reduced fraud, and lower costs.

Such orchestration platforms are also flexible and scalable – who knows what the next tranche of payments technology will bring – and help manage and mitigate fraud. They also bring an enhanced user experience to merchant sites.

Wallets of the world

Developing markets are increasingly adopting digital wallets over traditional carrier billing for payments due to their convenience, accessibility, and integration with other financial services. Some notable trends include:

• India and China: Countries like India and China lead in digital wallet adoption. India’s UPIbased wallets, such as Paytm, PhonePe and China’s Alipay and WeChat Pay have transformed payment ecosystems, handling billions in transactions daily.

• Africa: Mobile money services like M-Pesa are driving financial inclusion by connecting unbanked populations to financial services. Wallets are expanding into microlending and insurance through partnerships.

• Latin America: Wallets such as PicPay in Brazil are integrating features like customizable insurance and e-commerce services, helping underserved populations access financial tools.

• Southeast Asia: Wallets like GCash in the Philippines offer integrated banking services, including savings accounts and investments, making them a one-stop solution for users. These wallets are preferred over carrier billing due to their ability to provide broader financial services, enhanced security, and seamless integration into super-app ecosystems.

To learn more about billing and payment, go to: www.dubai.wtevent.com