In the last blog, I highlighted three examples of DCB payments, all of which took place in the UK. These included app/in-app payments, subscription services like Spotify and donating to charities. All of these examples are universal, but DCB is used much more broadly in other parts of the world. In this post, I want to delve into a few interesting examples. I’ll also cover some of the market dynamics at play and why businesses choose to offer DCB as a payment mechanism.
In Japan credit cards are widely adopted, but used less frequently online compared to other countries. It is still common for online purchases to be paid with cash on delivery – which makes it an ideal contender to promote DCB as a safe, alternative online payment method. In fact, it is the market where Amazon has first offered DCB in its commerce store. Using the Bango Platform, Amazon.co.jp allows users to charge physical goods to their mobile phone bills. This could be anything from low value goods such as batteries or books to high value goods such as perfume or televisions. In Japan, there is a low bill payment default rate, which means mobile network operators (MNOs) are happy to give their customers a much higher credit balance than offered in other parts of the world. Bango is the sole DCB provider for Amazon in Japan.
The US has similar market dynamics to the UK, consumers are largely banked and there is widespread credit card adoption. The use of DCB in the USA is broadly similar to the UK examples in the previous blog. However, there are a few interesting use cases to take a look at. Bango powers DCB for AE Tolls in the US. This enables drivers to pass through highway toll booths, adding the charge to their mobile phone bill as they pass through. No need to have cash on hand – quick, simple & user friendly!
In India, there is extremely low credit card adoption, just 3 credit cards for every 100 people (vs 32 cards per 100 people in the US ). This means that businesses need to think outside traditional payment methods or risk losing access to 97% of their customer base – making it an ideal candidate for ubiquitous payment methods like DCB.
The DCB market:
The direct carrier billing market size was valued at $28.90B in 2020 and is projected to reach $68.17B by 2028, growing at a CAGR of 11.34 % from 2021 to 2028. 
Emerging market geographies account for roughly 60% of the DCB market by value. This is not surprising when you consider the high penetration of mobile phones vs the size of unbanked populations in emerging markets. In the Middle East & Africa, 50% of the population is unbanked, reaching as high as 70% in countries like Morocco, and in Central & South America, nearly 40% is unbanked .
In largely unbanked markets, carrier billing is often the only means of online payment consumers have access to. They simply top up their pay as you go bill and can begin spending. For those with postpaid mobile phone bills, it could also be the only source of credit they have access to.
This translates almost directly into growth rates. End user spend via carrier billing is expected to grow fastest in Latin America at 41% CAGR to 2025, with Asia (excluding Far East & China), Africa and the Middle East not far behind, growing the second fastest at 24% CAGR to 2025.
Even in geographies where a high percentage of the population is banked, DCB provides opportunity. Looking at younger generations, there is lower credit card adoption and, as an age group who grew up with mobile phones, DCB is a more natural option. In the US for example, only 50% of GenZ have a credit card and for those that do, use is far lower at 1.5 cards on average vs 4 credit cards for the average American.
For businesses, direct carrier billing is an obvious win. Here’s a few reasons why:
- Access to more customers (including those without bank accounts)
- Improved conversion (transactions made using DCB have lower abandonment rates)
- Enables provision of an enhanced user experience (great for repeat business)