Direct carrier billing in gaming: more than monetization
Fifteen years ago, I was trying to buy additional content for video games, online. An ordinary debit card was not enough, I had to get a special “internet payment card” from a local bank client I was, which was quite burdensome: I had to go to the bank, wait in line, sit at the counter, etc. – everything that has been overcome today thanks to online banking. In addition, in those good old days, it was not possible to return unused funds to the account. So, all these were serious obstacles to paying over the Internet, which most often resulted in giving up, that is, choosing that way only in the greatest need.
Although the reasons are different today (and banks have significantly improved their user experience), for many inhabitants of the planet, buying via credit or debit card is still a far-fetched option. For example, only two percent of Pakistan’s population has a bank account. Unlike the situation at the beginning of this text, Pakistanis today have one advantage over all of us from 15 years ago: smartphones.
Indeed, the smartphone revolution has turned the underdeveloped world into a potential hub of smart solutions, from ecology to engineering, and has greatly influenced the education of people in Africa and Southeast Asia. A small percentage of people may have a bank account, but over 70% of them have a mobile phone.
What exactly does this mean for game makers? This means that if you want to market globally, you need to think about how to reach those users who cannot pay for your product with a card or Paypal. The best way to do this is direct carrier billing, or DCB, which uses mobile operators as charge carriers. In other words, when you want to buy some content, you ask the seller to send an invoice to your operator, and then pay through them, whether you are a prepaid or postpaid user.
Direct carrier billing has opened up countless opportunities to place and consume digital content across the underdeveloped world. Mobile operators realized that digital content is an ideal lure for new customers, so they started offering data or packages that include free use of certain content, through the so-called bundling. Sales of value added services (VAS) flourished, but in addition to fun ringtones and the beginning of the sale of in-game items from games, fraud flourished, i.e. “pulling” users to subscribe to a service without notice. For example, you think you paid to download a CV template, but you actually subscribed to the “service” indefinitely.
Over the last ten years, a lot has been done to protect users from such scams, and now it is no longer possible to subscribe to the service with just one click, or remain uninformed. Stricter business policies have also contributed to this, i.e. advanced software from companies that offer payment services (such as Centili).
Unlike developing countries, developed countries do not have a problem with bank accounts. Most of the adult population has credit cards and almost all finances are done with the help of a bank. However, generations of users who want to buy micro-amounts cannot do that because they are – minors (or those who are suspicious of the digital trail, which I will talk about later). So you have children and young people who play games and download content from the net, but who cannot pay for them with bank cards. Direct carrier billing is an ideal solution, because the bill can be issued to the parents of teenage gamers, or they can “withdraw” the amount from their credit on the phone.
On the other hand, we also have a layer of distrustful people who are paranoid about leaving their financial data, so they do not want to use cards for micro-amounts. Research has shown that as many as 15% of users are concerned about the security of transactions when it comes to credit cards. Direct carrier billing is especially successful in monetizing such users: payment is made through mobile operators, who traditionally enjoy trust when it comes to cyber security. For them, DCB is a saving solution.
And the third, special category of DCB users are users who want comfort – as much as 64.2% of in-game purchases are not made due to too long check-out, because it is difficult for people to invest five minutes to fill out a small purchase form, which is understandable. DCB provides a two-click shopping experience, which greatly shortens the billing time, so that users can return to the content of the game as soon as possible.
* The cannibalization of the payment method – when one method “eats another” – is becoming more popular, so, for example, payment by credit card completely displaces the payment of Internet vouchers from the traffic.
DCB users from the developed world are not the only distrustful ones. Among digital content producers, DCB is the least popular method. Why, you will ask. Because mobile operators traditionally take a very large share of profits, justifying it with high infrastructure costs. In other words, credit cards take almost nothing from the content producer (although there are hidden costs, for example, just placing them in one of the mainstream stores means saying goodbye to part of the profits). Direct carrier billing takes the game maker about 20%.
Game makers, of course, don’t want to shoot themselves in the foot, so they don’t promote DCB. Some items in the game can be paid for through the operator, but mostly it is a semi-hidden option that is best left untapped. However, by looking at the behavior of users when paying, one of our clients, whose name we cannot say (yet), realized that there is no room for fear. Since they introduced DCB as a more equal means of payment, they have not noticed significant migrations from other means of payment to DCB. In other words, all the users who came are completely new users, as well as the consequent income.
In addition, the mentioned share of 20% that operators charge game producers, may not be a pure “tribute”, because it is these 20 percent that open the space for marketing costs to be significantly reduced. Namely, operators are often very willing to invest in marketing, i.e. communicate with their base of several million users directly in order to promote your game. Such marketing synergies can often significantly accelerate the acquisition of new customers and markets, losing 20% of the price share to a frightening effect.
Given the increasingly advanced UX that is relentlessly advancing in all imaginable fields, we have more and more aware consumers who demand an overall positive experience, it is obvious that it is imperative to offer gamers the convenience of paying – through a diverse offering.
There are predictions that in the future there will be a consolidation of billing methods so that the user experience will be uniform, but we are still quite far from that moment. The payment experience is becoming part of meta-UX, so it’s important to choose reliable partners who will be able to support you both technologically and business-wise, through better contracts. Another experience of our clients is that the process of selecting a payment service provider is slow and requires verification within the company, so it is important to keep the right players in mind.
Regardless of the future of payments, which is developing in the direction of cryptocurrencies and the consolidation of popular payment methods, one thing is certain: DCB is a very relevant source of new users and income.