Direct-to-carrier billers believe they have a calling, especially among consumers wanting to make secure small-ticket transactions.
Consumers often relay their fears about using a credit or debit card online when they abandon purchases at checkout because of security concerns. That, in turn, has cost merchants billions in yearly revenue.
Indeed, 79% of consumers would buy more digital goods if merchants supported payment options that were safer and easier than using a credit or debit card, suggest new survey data from Javelin Strategy & Research. Moreover, 56% of respondents said they would prefer charging small-ticket transactions to their mobile bill.
Javelin surveyed 2,000 consumers online in September for its research. Direct-to-carrier billing provider PaymentOne Corp. commissioned the survey.
“What this survey brings out is that consumers still have concerns about security, personal data being misused and identity theft,” Brad Singer, PaymentOne executive vice president, tells PaymentsSource.
Privacy and security topped respondents’ concerns about using plastic to shop online. Some 55% were concerned a merchant or website would start sending them junk mail, and 54% worried that their the merchant would sell their personal information to others.
Just more than half, 51%, of respondents were concerned a third party would intercept their credit or debit card information. And 41% were concerned merchants would misuse their credit card information.
Consumers’ concerns also extended to mobile payments.
Though 95% of respondents owned a mobile phone, just 36% had used one to make a payment.
Javelin predicts merchants annually lose nearly $110 billion in revenue from shoppers who refuse to pay with plastic online. Digital merchants such as those that provide mobile video-game credits or mobile applications could add up to $89 per month from each potential customer if they expanded their payment choices at checkout, the research company contends.
Multiple direct-to-carrier billing providers made moves this year to help merchants boost their payment options.
Danal Inc.’s BilltoMobile in May launched a payment service for e-commerce sites to route payments through the phone bills of more than 200 mobile carriers across 60 countries (
Merchants are more willing to add direct-to-mobile billing because the companies involved have worked to drive down the transaction price for each purchase, Singer says.
Historically, most digital content purchased through a mobile phone has relied on a method called premium short message service, or SMS. Vendors use such messages to deliver digital content, such a ring tones, to a mobile phone. The carriers, however, required the merchant to pay as much as 50% of each purchase as a transaction fee similar to interchange.
Direct-to-mobile billing has a transaction-billing rate that falls between 10% to 20% of the sale, Singer notes.
“That’s still a premium rate compared to cards, but that is a huge shift and now merchants are saying they can accept that rate better,” he says.
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