Bango's BilltoMobile acquisition puts spotlight back on direct carrier billing
Bango's acquisition of Danal Inc.'s BilltoMobile direct carrier billing division in the U.S. last week set in motion a series of events in an industry that's often ignored here, but continues to give mobile carriers worldwide an opportunity to increase their bottom line as they face dwindling revenue streams from voice and messaging services.
On the same day that U.K.-based Bango made its acquisition for $3.5 million, Las Vegas-based Axiologix Inc. announced that it had entered into a joint venture with SLA Mobile, a direct carrier biller with headquarters in Malaysia and the U.K.
The next day, Austria's Dimoco purchased Italy-based Onebip for an undisclosed amount.
While consolidation is bound to happen in any industry, these deals show that this market is still healthy. It's expected to bring mobile operators some $12 billion in revenue by 2022, according to a prediction from research firm Analysys Mason.
"I think it's an indication that this industry is moving along," said John BaRoss, founder and president of Fincclude, a mobile money and direct carrier billing advocacy group. "Whether these moves are about belt-tightening to appease investors or they are moves to try to excite investors to show them they are making moves beyond waiting or organic growth, I'm inclined to say [this consolidation] is a positive sign."
For Bango, the BilltoMobile acquisition came at a time when the company was seeking a way to reintroduce itself to North America.
Bango does have a relationship with Blackberry that dates back to 2009. It also has deals in place with the major app stores, including Amazon, Google, Samsung, Microsoft and Mozilla, for consumers outside the U.S. to use direct carrier billing as a payment method.
Bango's BilltoMobile acquisition makes it the only processor of carrier billing transactions across all four major U.S. mobile network operators, according to the company.
"The U.S. market is important to us partly because the carriers there are significant, influential players," said Anil Malhotra, senior vice president of marketing and strategic alliances at Bango. "Second, although the percentage of customers who select carrier billing is lower [in the U.S.], it's still a material number of people [tens of millions] and they are very high spenders. The incremental revenue is extremely significant."
Indeed, BilltoMobile brings with it to Bango some $80 million in transactions from 2015.
Bango, however, does face some obstacles in the U.S.
As mentioned earlier, direct carrier billing is an afterthought in the U.S. because other payment methods such as credit, debit and prepaid are embedded in consumers' minds as a preferred way to pay for digital content. Bango and other providers don't face this issue in emerging markets because plastic penetration is not as high.
Bango will need to continue to adhere to standards set forth by government agencies, particularly the Consumers Financial Protection Bureau, and even the carriers themselves are doing what they can to protect consumers from unwanted mobile bill charges since premium text messaging services were shut down.
"The carriers here have been vigilant about protecting the consumer and they continue to be so," said Jim Greenwell, CEO of Danal. "They are not tolerating any cramming. BilltoMobile was the only survivor [from the premium SMS days] because it adhered to high standards."
Malhotra believes that Bango has three opportunities to increase direct carrier billing in the U.S.
Firstly, premium video services such as YouTube Red and Amazon Prime Video do not currently allow U.S. consumers to pay for those subscriptions with direct carrier billing.
"There are a number of adjacent products and services that fit the carrier billing sweet spot really well and they're not using carrier billing yet," Malhotra said.
Secondly, Malhotra believes that Bango can use its custom-analytics engine to drive consumers to buy more content from app stores.
"When we talk to the app stores about the issues they see, the biggest thing is they don't have enough people in the store buying stuff," he said. "Our idea is to get more folks to buy more stuff using a convenient payment method."
Thirdly, in addition to premium video services, Malhotra believes that direct carrier billing can be a logical payment method for services such as Uber and Lyft.
"Maybe something like Uber would work," he said. "We think there are interesting areas like that which have yet to be explored."
And the carriers would welcome such potential partners.
One of the things Malhotra did ahead of the BilltoMobile acquisition was to visit with U.S. carriers about how they viewed direct carrier billing.
He presented them with three options: maintain the status quo; slowly close it down; or grow it.
"All of them said they want to grow it," Malhotra said.
Whether Bango can grow direct carrier billing in the U.S. as it has in other countries remains to be seen, but the market overall is healthy and leaders have emerged.
Bango and Boku have an edge because they have a global presence and have more revenue opportunities compared with regional providers.
"In my view, carrier billing will succeed in emerging countries where other payment forms aren't as deveolped," Danal's Greenwell said. "So, we're seeing a ton of penetration in developing countries. Bango and Boku are going into markets that others haven't been into."
As for Danal, Greenwell said that direct carrier billing is thriving for the South Korea company who is a majority owner in Danal, U.S. Danal, U.S. is a prviately held company headed by Greenwell will now put its full focus on mobile authentication and identity products.
"[Bango] wanted to penetrate [the U.S.] market in the worst way and with our focus on mobile identity and the momentum we have there, we decided to focus on that core and spun off [BilltoMobile] to Bango and it's in much better hands," he said.
Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.