It makes a lot of sense for smartphone users to be able to add the cost of their app or music downloads to their monthly phone bill.
This method of payment is known as "carrier billing." While some app stores, notably Apple's App Store, shun it, others have embraced it.
Google has been smart in recognizing that people would find this method of payment convenient, and has moved aggressively to broker deals with wireless carriers across Europe, East Asia, and North America to make carrier billing possible on Android devices.
At last count, Android users in 21 countries can pay for Google Play goods on their phone bills: apps, music downloads, and in-app purchases.
Carrier billing is often unfairly painted as a payment method that's mainly popular in poor countries where people don't have access to credit cards. But Google's work with carriers has actually focused on wealthy economies, with thriving app stores, including in Japan, the U.S. and the U.K.
The table below, compiled by BI Intelligence, shows the wireless carriers that Google has signed on to support this payment method, known as "carrier billing," which is proving more and more popular with consumers.
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Here are some key points from the full report:
- As we imply above, although it's often associated with emerging markets, some carrier billing companies actually make most of their money in developed markets like North America and Europe.
- In terms of numbers, we estimate carrier billing powers $3 billion in mobile transactions, or 12% of the global market for mobile digital content.
- Mobile operators charge fees between 25% and 40% of the total cost of purchased goods. But as carriers struggle to keep their revenue numbers up, and realize they are missing out on a big opportunity in digital goods, they are beginning to compromise on their rates in hopes that they will see a higher volume of carrier billing sales.
- The holy grail for carrier billing is to reduce rates enough so that people adopt it as a method for purchasing physical goods via e-commerce sites and apps. If this happens, as it has in South Korea, the carrier billing opportunity would be truly massive, as it would begin to compete head to head with credit cards as a payment method.
The report also:
- Explains the complex set of relationships between wireless carriers, app stores, platform vendors, and app developers, upon which carrier billing depends.
- Includes interviews with executives from four leading carrier billing companies on challenges they are encountering in their market and the health of the industry as a whole.
- Assesses just how big the carrier billing opportunity is, where it has the most potential for growth, and the hurdles it will have to overcome in order to expand to be a commonly used method of payment among consumers.
- Analyzes how and why carriers are beginning to lower their once-prohibitive fees for powering carrier billing transactions.
BII