Cellular Billing?- Expect Over $600 Billion of It by 2013!

Cellular billing?  Who would have thought 30 years ago it would be the next generation of payment method for internet sales?

When I got my first cellular phone in the 1980’s, it looked like an over-sized 8-track tape (remember those?) with an antenna.  The battery lasted about 2 hours and calls were over $1 per minute.  The next improvement in cell technology was the “bag phone”.  Those were the ones you carried around in a small leather bag, with a cigarette lighter plug for power.   Fast forward today to the smart phones and unlimited call time we see, and we’ve embarked on an entirely new generation of technology.

It’s just a natural progression that the next step for smart phone applications would be for the device to become an actual method of payment for the purchases the phone browsers allow us to make on the internet.  No longer do we have to fiddle with our wallets or purses, looking for that elusive credit or debit card.   Internet merchants now have the opportunity to add a direct cellular billing option to their checkout pages.

Below is an example of the screen shots the customer will see when using the cellular payment option.

The Customer merely enters their cell phone number, they are then prompted for their home zip code

Within seconds, the Customer receives a text message on their cell phone with a Purchase PIN, they then enter it in the field below

And the purchase it completed.  The customer receives a confirmation and is automatically redirected back to the Merchant.  No fooling with expiration dates, CSV’s, or any other information. Nice, fast, simple, and secure.

The billing clearinghouse collects the money from the cell ular companies, deducts it's fees and then ACH's the balance to the merchant's bank account.

Before the creation of direct cell phone billing, a lot of options were tried with limited success.  There were programs that asked identity questions, asking questions like year of birth, month of birth, last 4 digits of your social security number, zip code, etc.  This would generate a credit type search for an individual and if located, would generate a direct bill.  This worked OK but was very expensive for the merchants, paying postage and printing costs with limited collection return.  there were also lots of credits and people denying they ever ordered the services.

Then there were the “Premium SMS” programs where a merchant would send a text message to a consumer’s cell phone for a certain amount of money.  These were processed via short codes and were expensive and time consuming to create.  And the cellular companies kept ~45% of the sale!  Not a great return on the dollar.

Paypal emerged as an option but it still requires linking a credit or debit card to open the account.  After that you can deposit funds into Paypal but then you’re tying up your money, in anticipation of going shopping later.  Not a great budget plan…..

It’s my opinion that the cell phone billing option is here to stay and will be as big a hit with consumers in the United States as it has been in Europe.  Cellular billing is widely accepted across Europe and Asia and according to Wikipedia, the total world-wide mobile billing market will exceed $600 Billion annually by 2013.

To find out more on cell phone billing in the United States and to see if your company qualifies as a candidate, contact me @DaveHanron on Twitter or at d.hanron@earthlink.net