However, low spend limits curb opportunity for mobile operators
The value of digital content transactions paid for by carrier billing is expected to reach $47 billion by 2020, more than four times 2015’s figure of just under $11.3 billion.
According to the new study from Juniper Research, Apple’s decision to test carrier billing in Germany and Russia is likely to herald a substantial number of further deployments in the medium term. It argued that the move will be essential if Apple is to monetise unbanked owners of refurbished devices in emerging markets, who would otherwise be limited to paying for content via iTunes gift cards.
It also claimed that carrier billing solutions could be a key means of monetising content purchased within an array of environments, including connected cars and for in-flight infotainment.
However, the research found that the operator practice of setting daily or monthly carrier bill spend limits at a low level to minimise exposure to fraud or compensation claims was counterproductive.
According to research author Dr Windsor Holden: “If you have a daily spend limit of $20 in place, consumers are severely constrained in the amount of content they can purchase, particularly given the fact that many content bundles – such as Clash of Clans gems bundles – are priced at close to this level. Any savings from customer care time spent dealing with inappropriate or unauthorised purchases can more than offset by customer care time spent on failed purchases.”
Meanwhile, the report argued that while other payment mechanisms including PayPal were likely to experience significant growth, the majority of payments (69% by value in 2020) would continue to be made via debit and credit cards. It claimed that this would also remain the case for purchases made on mobile devices, with consumers increasingly using smartphones and tablets to pay for higher-value content which is subsequently consumed on connected TVs or games consoles.