Carrier billing: safe and smart

In 2015, the value of mobile and online physical, virtualised and digital goods sales in Europe passed the ¤500 billion mark for the first time, reaching ¤570 billion, according to Juniper Research. Overwhelmingly, the momentum for growth comes from the mobile (smartphone and tablet) sphere with these devices becoming primary mechanisms for the access, payment and – for digital goods – the delivery of services.

The online gambling world is no different. When Paddy Power Betfair reported its interim figures for the first half of 2016 in late August, over three- quarters of all sportsbook revenues came via the mobile. Overall, the number of mobile gamblers will exceed the 100 million mark by 2018, according to yStats.com.

The pure telco payment method of carrier billing is one key reason why the gambling digital content market, like other segments, will keep growing. Simply put, carrier billing will play a major role in development of the gaming sector for years to come.

Carrier billing accounts for a still negligible proportion of European online casino wager of just under ¤112 billion in 2016 (rising to ¤165 billion by 2021). But it is likely to increase in popularity among casual players of slot-style gaming, eclipsing ¤100 million in annual deposits by the end of the forecast period.

The array of advantages for all stakeholders

The advantages for the iGaming industry are evident and multilayered for all involved parties, whether consumer, merchant or mobile network operators. This payment option brings significant opportunity to service providers. It provides direct connectivity to the billing platforms of the major telecoms network and offers unmatched convenience and customer satisfaction compared to traditional payment methods, such as credit or debit cards.

For consumers, carrier billing delivers a clear overview of charges on their monthly carrier bill or are directly deducted from their prepaid SIM card. The service’s fast track registration, with no previous registration needed, allows a spontaneous and one- tap payment. In addition, with security features like PIN entry, it is a very secure payment method.

When it comes to merchants, the seamless and time-friendly payment experience boosts the conversion rates. It’s penetration rate is also reassuring for sellers. Carrier billing is backed by an almost total billing reach. In fact, the mobile coverage in every EU country is more than 100 percent, as, in some markets, nearly every second person has two phones with separate mobile numbers.

While sellers tend to see carrier billing as only a payment method, there is a gold mine of information behind each phone number that can be utilized for marketing purposes and possible marketing cooperation between mobile network operators and merchants to distinguish an additional array of marketing opportunities.

Beyond those valuable elements, capped transaction amounts are particularly useful in the gambling industry. Limits per transaction or monthly caps give consumers a sometimes-needed safety net that is sometimes valuable, considering the preconceived notions that come with the gaming business.

Carrier billing opens untapped customer pools

The huge and untapped potential lies in gambling customers, who are not yet betting online, not typically sitting at their laptop or PC, but rather used to walking down the road to place a wager at their local betting shop. Rather than the niche market of high rollers using a platinum card, these are the casual mass market of blue collar players, spending an average of ¤30 per transaction.

While they may still place bets at brick-and-mortar locations, all of these customers own a mobile phone. A potential payment option, which is simple, hassle- free and quick, can cater to the needs of these consumers even if they are less tech-savvy or, perhaps, time-poor. Like most people, these players are looking for the simplest way to both make their bet and pay for it. They just need to be aware that the phone in their pocket could be the answer, as well as their tablet, laptop, PC or connected TVs, securely identified via their carrier networks, as all those options can lead to instantaneously participating in the iGaming experience.

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The key is to make the connection between gaming and carrier billing as a billing option. Consumers are likely already familiar with the concept of carrier billing. It is one of the top three payment methods on Facebook. If brought to their attention, a large swathe of any gambling operator’s potential audience will be aware of this service.

This awareness is essential because so many potential customers may not realize the option for those lacking credit or debit cards. Indeed, Europe has an average handset penetration rate of 124.2 percent with more than 1 billion devices available. But, at the same time, only 68.5 percent own a debit card and only 36.9 percent of adults own a credit card. This low-credit card penetration to handset ratio offers optimal conditions for carrier billing to support digital content production and monetization. Carrier billing enables those with a mobile phone – but no credit card, no bank account or no back-up funds – the ability to purchase and pay for goods, both physical and digital, via their handset. The mobile phone number is the identifier and no further proof of identity or credit is need. It provides instant, one-click functionality without the need for further time-consuming number input.

Carrier billing brought to the UK iGaming world

Earlier this year, carrier billing was integrated and activated for the first time with a serious international iGaming operator, in the motherland of online gambling – the UK. This pioneer market is worth more than £4.6 billion, according to the UK Gambling Commission. The functionality in this market will allow players to use the ‘pay-by-mobile’ payment option and directly charge the amount to their monthly invoice with their operator.

The payment method is completing the mobile value chain. We currently see a gap between the great mobile product and the payment check-out. The mobile product and offering is constantly being adapted to the demands of the consumers, but, alas, in the payment sphere, nothing changed for years. When it comes to mobile payments, the iGaming industry is years behind other digital content industries. This means there’s an opportunity to seize and close the value chain circle.

The result is a significant increase in customer retention and conversion rates for providers. In our case, we leverage DIMOCO’s direct billing connectivity to the major telecoms networks, such as Vodafone, 02, EE and Three. As a result, our partners will gain billing reach to more than 70 million UK mobile numbers.

Backing responsible gambling

Consumers and merchants have the benefit of realizing and profiting from the benefits of carrier billing as a “responsible payment method”, a fact that has been recognized by the Gambling Commission. Content providers have to go through a strict registration process. This is a requirement that mobile network operators and DIMOCO impose, meaning consumers gamble in a secured environment, which is less prone to fraudsters.

Also, gambling is often associated with consumers losing control over their spending, which has in many cases resulted in financial difficulties and associated problems. Through carrier billing the invoice is always set against either a pre- or post- paid mobile number. In both cases, the maximum spending is capped and acts as a security measurement for the consumer, who can’t get easily carried away as they would with other payment or gambling methods. If the consumer holds a prepaid number, there has to be sufficient funds backing up the number and these can’t be exceeded. In case of a post-paid number most mobile network operators institute caps as well. As a further protection, a cap is defined and agreed on. It is then part of the contract with the merchant.

The gambling industry may be one of chance, but the implementation of carrier billing is a choice that is win-win for all parties involved.

About DIMOCO

Launched in 2000, the Fintech Company DIMOCO is a European-wide regulated payment institute for carrier billing and holds a payment service act license from the Austrian Financial Market Authority (FMA) since January 2016, as its license was passported to all 28 EU member states. As a trusted partner of local and global mobile networks it enables almost 1 billion European subscribers to purchase goods and services from merchants and aggregators with their mobile devices which are charged via the operators’ billing system. dimoco.eu

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