John BaRoss, Founder & President FINCCLUDE Inc., is a Product Development Director with more than 20 years of experience and an international expert of Direct Carrier Billing. We had the opportunity to discuss with him about the origin, the future and the challenge of DCB. We are happy to share his inspiring vision of our amazing industry.
What is DCB and why is it a game changer?
DCB (Direct Carrier Billing) is really a quite simple idea. Today globally there are over 7B consumers with a telephone account. Besides communications, these represent known and trusted billing relationships between consumers and telcos. As we proceed deeper into the digital economy, transacting is increasingly done via a variety of mobile devices. For over 20 years DCB has quietly emerged as an alternative payment option that permits consumers to transact without placing any personal financial account information online ever. Further, sizable portions of populations (varying by country) remain unbanked. DCB allows these consumers to come off the sidelines of the digital economy. Since its inception in the late 1990s near the dawn of monetizing the Internet, DCB has helped online and multi-channel merchants reach larger addressable markets … from 10% to 30%+. Today DCB is available in at least 120 countries. Globally the DCB sector of the telco/’Carrier Commerce’ industry is estimated to be $12-14B, forecast to grow to $22-24B in 3-5 years.
How has DCB facilitated payments in different regions over the years, and why is that?
For the most part, DCB began as a payment option for premium digital content. Some visionary telco leaders understood the commoditization pressures on core telecom communications services thus understood the promise of DCB to be leveraged to differentiate acquisition and retention strategies while unleashing incremental revenues. The legacy business of communications strongly influenced the thinking of telecom leaders thus interest in DCB in its first decade was the exception. Especially in developed markets, many telco leaders viewed credit card penetration as so dominant that attempting to compete with credit cards was viewed as not viable. However, telco leaders who were DCB advocates understood that DCB was not necessarily competing with credit card but reaching incremental customers the credit card was not reaching.
Besides telco leadership’s appetite and commitment to DCB, the other key factor influencing how DCB facilitated payments has been regulatory climate. In markets where regulators are aggressive on behalf of consumers, DCB innovation and growth has been minimized. In markets where regulatory entities are open to enabling innovation, DCB has not only been firmly established but continues to expand from premium digital content to services to physical goods.
Why do you think DCB payment is so popular in today’s generation?
Younger people grew up with much of today’s technology, as well as the mainstream paradigm of premium content and alternative payments including DCB. When DCB was introduced over 20 years ago, while some online retailers understood that telephone bill billing as ‘the Holy Grail of eCommerce billing’ due to the near ubiquitous household reach of DCB, telco leaders and consumers were not quite ready. Early adopters helped establish a beachhead for DCB, however as The Great Recession approached, many of the ‘Phase 1’ DCB providers withdrew from the business as telco internal politics impacted telco commitments to implementation and scaling DCB. High telco rev share demands for DCB also slowed DCB acceptance by many web merchants. The ‘Phase 2’ DCB providers that began to emerge about a decade ago had the advantage of decision maker attrition in many telcos. New telco decision makers demonstrated a growing receptivity to DCB, helped also by major tech giants that helped pull the DCB industry to next levels (i.e.: Apple and Google).
How do you see the future of DCB payment in the future?
There remains an astounding upside potential for DCB. Over the last decade, telco operated mobile money has been the game changing innovation for financially including the unbanked in developing nations. The World Bank Global Findex triennial report of April 2018 hailed that over 1.1B adults have become financially included over the last 10 years. Per that same report, 1.7B adults globally remain financially excluded. Expanding beyond premium content, services and physical goods, DCB has begun to pilot being a funding source of various mobile money and eWallet accounts. As these proof-of-concept use-cases grow in numbers and prominence, expect increasing pressure on regulators to further open their markets to these beneficial services – where DCB can have a role in helping financially include and improve lives of the financially excluded.
DCB continues to expand from premium digital content to services to physical goods and other opportunities like being a funding option to mobile money and eWallets. At Telecoming we are happy to take part of this exciting challenge! If you don’t want to miss out on this unstoppable evolution, we invite you to subscribe to our weekly newsletter. Be aware of everything!