Low Credit Card Usage Means Carrier Billing Could Catch On In Emerging Markets

Direct carrier billing allows mobile phone users to pay for goods by adding the cost of a transaction directly to their mobile bill.

Right now this method of billing is mostly used for digital goods like tokens bought within mobile gaming apps. However, it could conceivably be used for physical goods or other online transactions as well.

Direct carrier billing has the greatest potential to catch on in developing economies where the number of people with credit cards is relatively low; it provides a method for people to make payments when they don’t have payment cards.

Carrier billing is also attractive for m-commerce and e-commerce transactions because of its simplicity. It usually only requires one or two clicks to make a payment, whereas using a credit card requires entering additional information.

We looked at three developing markets to get a sense of the opportunity direct carrier billing presents:

  • In India, there are 543% more smartphones and 5,105% more mobile phones than there are credit cards; there is only one credit card for every 50 people.
  • In Russia, there are 135% more smartphones and 521% more mobile phones than credit cards. That means there are four credit cards for every 25 people.
  • In China, there are 169% more smartphones and 262% more mobile phones than credit cards. There is one credit card for every four people.

The bottom line is that there are millions of people in each of these countries who do not have a credit card that allows them to purchase goods online. But many of these people do have phones and could potentially use direct carrier billing to make those purchases.

Download the charts and data in Excel.

It’s important to keep in mind that the credit card data is from 2012 so the number of credit cards in each country is probably higher now. (Mobile phone and smartphone data are from last year.) But that shouldn’t change the thrust of the opportunity for direct carrier billing in these countries, because the gaps between mobile phone ownership and credit cards are so huge.

Also, the data does not include debit cards, which are probably more common in these countries than credit cards. But because carrier billing allows users to delay payment for purchases until they receive their mobile bill, we believe carrier billing is more comparable to credit cards than to debit cards.

Here is a look at credit card and mobile penetration among the population. We calculated credit card penetration based on the number of total credit cards in the country divided by population size to give another sense of the disparity in credit card usage versus mobile phone usage. But the actual percentage of the population with credit cards is likely even lower than our data indicates because many people with credit cards have more than one.


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