Direct carrier billing (DCB) is a mobile payment method that is an alternative to using a credit or debit card. The DCB market is growing modestly, but still accounts for a relatively small amount of consumer spend. Industry players such as merchants, vendors and operators should have a clear view on which countries or regions represent the strongest potential markets for DCB. Our market assessment framework identifies certain emerging regions (Central and Eastern Europe, Latin America, and the Middle East and North Africa) as particularly attractive markets for the deployment of DCB payment solutions.
Comparing the penetration of handsets and bank accounts enables an assessment of a market’s attractiveness for DCB
DCB can be targeted towards any user with an active mobile subscription. Therefore, the addressable market for DCB can be represented by the number of mobile subscribers – the higher the mobile penetration, the larger the addressable market for DCB. The addressable market for credit or debit cards can be measured by the number of people who have a bank account – the higher the bank account penetration, the larger the addressable market for credit or debit cards.
The market attractiveness for DCB therefore depends on the difference between the addressable market for each payment method (DCB and credit and debit cards). For example, an attractive market for DCB would have much higher mobile penetration than bank account penetration.
This framework is not comprehensive because it does not account for all the elements that can influence the market attractiveness for DCB. For example, in markets where security concerns about sharing personal details online are prevalent, people may be more receptive to using a method such as DCB. Users of DCB do not need to store personal details online because their details are already registered with the mobile operator. Therefore, even in a market with high bank account penetration, people may feel more comfortable using DCB to purchase goods online.
Markets can be split into four levels of potential for DCB
The difference between the sizes of the addressable market for the two payment methods allows us to identify four main levels of market potential for DCB (see Figure 1):
- Avoid: These markets have a very low potential for DCB because bank account penetration is much higher than mobile penetration.
- Low appeal: Markets with low or declining potential for DCB.
- Promising: Markets with an increasing potential for DCB.
- High appeal: Very attractive markets where people are expected to have a real need for a payment method such as DCB.
Using this framework we can identify how attractive a country or region is for deploying DCB. Our methodology compared handset penetration from 2013 (capped at 100%) with bank account penetration from 2011 (the most recent data available from the World Bank).
The output is illustrated in Figure 1, which shows that emerging regions are attractive markets for DCB. The results suggest that operators located in the ‘High appeal’ quadrant should seriously consider developing a DCB offer. However, the success of that strategy will also depend on the content made available to subscribers. The most successful content will address a specific local need. Operators can develop content of their own and can partner with merchants and content aggregators.
Two interesting results are Chile and Russia, which are in the most attractive quadrant for DCB.
- In Chile people are expected to be comfortable using mobile devices. The country is a fairly developed market, particularly its telecoms sector. However, the number of people who have a bank account is low (42%).
- Russia is similar to Chile in terms of the difference between handset and bank account penetration. However, what makes this country interesting is the sheer size of the potential market derived from a population of more than 140 million people.
Figure 1: Direct carrier billing market attractiveness assessment [Source: Analysys Mason and World Bank, 2014]
Key: CEE= Central and Eastern Europe; LATAM= Latin America; MENA= Middle East and North Africa, SEA= South East Asia; SSA= Sub-Saharan Africa; WE= Western Europe.
Source: Analysys Mason
