Direct carrier billing emerged as an early way to simplify mobile commerce by allowing consumers to purchase digital content without entering credit card or other payment credentials. The model offered particular advantages for purchases such as games, music, movies, and other digital goods, where eliminating steps from checkout could make transactions faster and more convenient. For wireless carriers like AT&T, partnerships with specialized mobile payment providers also offered a way to participate in the growing digital content market without having to establish direct relationships with every publisher.
By working with companies such as Zong, Boku, and Billtomobile, AT&T could expand its reach while simplifying the infrastructure required to support purchases. Consumers could charge eligible digital goods directly to their mobile accounts, while publishers gained another payment option for reaching customers.
Wireless giant AT&T is trying to expand its access to digital goods revenues like in-game purchases, as well as more traditional digital content. Its past efforts at attracting digital publishers were modest because, among other things, it asked for 40% or more of the revenues. Today, largely because the iTunes and App Stores have set the benchmark, publishers are willing to give up 30 points. So, to speed up the process and simplify its own life, AT&T has signed up with mobile payment service providers Zong, Boku and Billtomobile. These entities work directly with the publishers. AT&T just has to integrate its billing system to these merchant aggregators. For AT&T, costs go down, reach goes up.
U.S. carrier AT&T is exploring more ways to allow mobile and smartphones to be used in transactions, with its latest move to soon allow customers to purchase digital music and movies with a telephone number. The carrier has formed a partnership with Zong, Boku, and Billtomobile to allow its customers to pay for digital goods with a mobile number rather than having to enter credit card or PayPal billing information, and those charges will appear on a customer’s phone bill.
AT&T’s strategy demonstrates how direct carrier billing could create a more streamlined relationship between wireless carriers, digital publishers, payment providers, and consumers. Rather than requiring AT&T to negotiate and integrate individually with a large number of content providers, mobile payment aggregators could manage publisher relationships while connecting transactions to the carrier’s billing infrastructure.
For consumers, the model addressed one of the most persistent challenges in digital commerce: checkout friction. Allowing customers to make a purchase using their mobile number and have the charge appear on their phone bill eliminated the need to enter credit card or PayPal information. That convenience could be particularly valuable for smaller digital purchases, where a lengthy checkout process might discourage consumers from completing a transaction.
Direct carrier billing also gave AT&T another opportunity to participate in digital commerce at a time when mobile devices were becoming increasingly important for content consumption. Working with established payment intermediaries could reduce the carrier’s costs while expanding the number of publishers and digital goods available through its billing system.
The partnerships illustrate a broader shift toward making payments increasingly embedded within the customer experience. As consumers become accustomed to purchasing content directly from their mobile devices, payment methods that minimize additional steps can help merchants improve conversion while giving carriers another role in the digital payments ecosystem. For AT&T, outsourcing much of the publisher relationship while maintaining the billing connection offered a potentially more scalable approach to capturing a share of digital commerce.
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