Bettina Sommer, Vice President, Sales Division Online Media at DIMOCO Carrier Billing, shares her outlook on DCB’s bright future in Online Media
What does the future hold for online media?
Carrier Billing or direct carrier billing (DCB) has long established itself as a recognised payment method in the online media industry and as an integral part of the payment landscape for billing digital goods. Our research proved that in 2016, € 132 million of European adult content revenue was monetised through direct carrier billing, predicted to grow a staggering 134.1 percent (to € 309 million) by 2021. A key driver affirming that revenue generated through DCB will exceed the prediction is that we are seeing (and billing) greater deployments of DCB to monetise products and services beyond digital goods, namely physical goods, ranging mostly from supplements to toys. Falsely merchants may assume that DCB is exclusively an option for micropayments. Admittedly, your next pair of Prada heels will not be billed through your mobile operator, but merchants often underestimate the value they can actually charge via DCB, especially in countries such as Czech Republic, Norway or Sweden, with limits varying from country to country.
What are the current trends impacting credit card processing?
Although DCB plays an important role in the online payment landscape, we couldn’t ignore the fact that debit and credit cards have been the primary mechanisms for online payment since the beginning of eRetail. European card spend, though under heavy competition fire, on digital content will grow at an average annual rate of 7.9 percent over the forecast period, reaching €36 billion by 2021. Furthermore, their attraction to merchants has increased since the implementation of the CVN (CVV/CVC2) and the strict security protocols demanded by card schemes such as Visa, Mastercard and American Express. There are an array of hot topics in regards to mergers, Visa charge back rules and regulations floating in the market, leaving it somewhat impossible for merchants to see the forest for the trees and calling out for a PSP specialised in not only processing, but adding a human touch through personal consultancy, service and assistance. So therefore, we decided to cater for this exact trend and need. Further strengthening our position in the payment landscape, we in late 2016 founded DIMOCO Payment Services, a payment service provider offering services to merchants, enabling them to process their payments from eCommerce-environments. This addition to our DIMOCO product portfolio meant that we completed the online payment eco system. With 17 years of market expertise in direct carrier billing and a firm foothold in the online media market, we can now offer all major payment options to our clients already operating with DIMOCO on a direct carrier billing basis as a one stop shop solution.
A very solid one indeed! Direct carrier billing is on the rise, the online payment method that everybody literally already holds in hand is becoming more popular and familiar with consumers, already ranking top number three payment option at Facebook. As consumer affinity with the online environment grows, digital content purchase activity is expanding beyond what was in effect a second wave of ‘walled gardens’ (the app stores) into the wider web. A mobile device turns into a progressive payment instrument for online and physical goods, an ideal solution for those maybe less tech-savvy, simply in a hurry or even unbanked. More and more industries are adapting to the trend of providing a quick and easy option and becoming an increasingly vital and irreplaceable part of today’s mobile payment landscape, as the payment option has become a standardised and widely accepted.
How are changes in regulations impacting the billing of online media?
The most relevant change for all billing of digital goods, including online media content, is most definitely the revised Payment Services Directive (PSD2), implemented in all European Union (EU) member states. Although the date of implementation, namely the 13th January 2018, seems far away, it is vital to be ready and comply with all 117 articles, separating the wheat from the chaff. The PSD2 will truly be a game changer in the industry, and many direct carrier billing providers will be filtered, due to not being fit for the new regulative environment. Only regulated suppliers will be able to operate, this wasn’t the case with the initial PSD. Direct Carrier Billing is statued as a regulated payment instrument in the new regulation, under strictly defined regulations. The new governance will bring a large shift to the world of direct carrier billing, which previously has seen a lack in regulations and control. A fundamental piece of PSD2 is the product of a review of the original Payment Services Directive and requires payment service providers (PSPs) to make a significant number of changes to existing operations. The main objective is to make payments safer, increase consumers’ protection and advance innovation in an increasingly integrated EU single market. The Austrian Financial Market Authority (FMA) granted DIMOCO a payment service license by back in January 2016 and the license was then passported to all EU and EEA member countries, meaning the institute is deemed fit as a FinTech for direct carrier billing of micropayment transactions across Europe.
Although this all may sound daunting, as long as merchants have the right PSP and DCB partner, most importantly licenced, in addition understanding the directive in its depth and complying with the regulations, there is nothing to worry about!
What billing best practices can your company recommend?
You can have a state-of-the-art website, an exciting product, even an amazing marketing and sales team; you will not reach your revenue goals if you offer credit cards as your only payment option. It is a simple equation: users cannot pay with something they do not have and will not if they find the checkout process too much hassle. We never tire to repeat how low the credit card penetration, especially compared to the US, in Europe actually is. Italy for example stands at only 40 percent, Poland at 17 percent and Hungary at 11 percent. The beauty of DCB is that it is fast and anonymous and therefore a perfect match for the online media industry.
Whilst hugely responsible for boosting conversion rates that typically occur, resulting in a significant revenue uplift as the payment is easily facilitated by a simple one click (trans-) action, it is ideal for impulse purchases, available on all mobile devices. All facilitated by a single API connection to bill customers internationally.
It is important for merchants to offer an array of payment solutions; a holistic approach guarantees that a potential customer, willing to spend his bucks is excluded in the checkout process because you don’t allow him to spend his money with your site, he will surely find another competitor to do so. The two DIMOCO entities now handle online payments at their core as payment service providers. Our newest entity offers services to merchants, enabling them to process their payments from eCommerce-environments.