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Direct to Bill: The hidden gem in the mobile payments story
By Joaquin Mata, Director of Financial Services at Telefónica Digital
How do you go about making it easy for people to buy apps and digital (or physical) products and services on a mobile or smartphone? What do you do if those people have no credit card or even a bank account? And how do you make the process transparent and secure for both buyer and seller?
These questions have been around as long as the mobile internet. Of course, companies like Apple with iTunes have been able to crack open the music market and the ‘freemium’ model has proven effective in apps, but the mobile transactional model is still cumbersome. It demands that you go to several different sites for your various needs, enter your details numerous times, remember multiple passwords and go through various sign-in processes.
Besides, a lot of people are reluctant to provide their credit card details to digital sellers, especially for small transactions – and that’s just among the relatively affluent. In many parts of the world, the majority of the population have no bank account itself – so bridging the gap between what’s available digitally and purchasing has been a near-insurmountable task. Our experience in Latin America shows that only 35% of their population have a bank account.
Today, a near universal challenge for the entire industry is how to monetise mobile and drive paid-for download sales. We believe companies such as ourselves can be a key part of the solution by using one of our most important assets – namely the billing relationship we have with hundreds of millions of people globally.
The ability to buy through a mobile phone bill (Direct to Bill) is a convenient and trustworthy way to buy digitally. And it works.
In Germany, where we already offer the capability, over 400,000 customers per month on average now pay for goods via their phone bill. And a trial of the capability in Argentina resulted in a significant increase in mobile content sales.
The power of Direct to Bill is already evident to key platform owners across the industry. We have recently signed deals with the likes of Facebook, Google, RIM and Microsoft to deliver the capability.
There’s no doubt that the mobile phone will ultimately replace the wallet – and we are putting our weight behind this notion by working on a range of new services from mobile wallets to contactless payments. In our eyes, Direct to Bill is an equally important part of the story and a key way of turning the mobile phone into a payment mechanism. And in the short term, we believe it will have the biggest role to play in driving mobile content monetisation.