Direct Carrier Billing (DCB) could be a game-changer that not only makes life easier for mobile users but opens up new markets and opportunities for merchants. But it’s also proving a tempting opportunity for fraudsters and if they aren’t stopped, the technology’s potential could be fatally undermined.


So What’s The Big Deal With Direct Carrier Billing?

Direct Carrier Billing is a simple but powerful payment method. It’s where mobile phone customers can make online purchases and have the payment either added to their monthly phone bill or deducted from their pre-loaded phone credit. There’s no need for any bank card: the SIM card acts as the identification tool to confirm the purchase.

Customers can buy almost anything using Direct Carrier Billing, which is great news for everyone: phone users, carriers and retailers. This could be apps, subscription services, donations to charity and even micro-payments to vote for a TV reality contest. Technavio forecasts that between 2018 and 2022, the DCB market will grow by 9% a year. DCB’s success is great news for mobile operators as well. Not only does it open up massive revenue potential, but by making mobile phones a more valuable part of everyday life, it reduces the risk of customer churn.

The technology has two advantages that appeal to a broad range of customers. The first is the sheer convenience, making it suitable for small and impulse purchases where the need to type in credit card details or sign up to an online account would be a deterrent.

The second advantage is that it’s often the only way that people without financial accounts can make online payments. That could be the key to opening up the vast potential of emerging markets with huge populations. In 2017, 48% of spending through Direct Carrier Billing was in the Asia Pacific region. We’re not simply talking about making payments more convenient: we’re talking about people making purchases that would otherwise be impractical or even impossible.


Why 1-Click Payments Is The Killer Feature

Big as DCB already is, there’s one thing that’s really going to put it over the top: 1-click payments. This uses a technology called HTTP Header Enrichment, which builds user account details into the data transmitted to websites. This means customers can pay for something online with a single click or tap.

It’s the same concept that’s been hugely successful for Amazon, but with the payment charged to the phone bill rather than a bank account. This added convenience and reliability should be enough to make Direct Carrier Billing a natural choice for buying physical goods to be delivered by mail. It’s not hard to imagine how this would revolutionize the market for online retailers who could now reach customers who don’t have bank accounts.


How 1-click payments work:


Fraud: The Deadly Threat To The Technology

All of this would be perfect if it wasn’t for the threat from fraud through mobile malware. What makes this fraud so disruptive is that all the legitimate players lose out: end users, advertisers, merchants and mobile network operators (MNOs). It’s not just that people lose out financially, but it undermines the potential of DCB altogether.

The end user losing out may seem the easiest to notice. In some cases the fraud involves bogus DCB charges that directly steal money from the customer. In other cases it’s all about stealing personal information that can be used for identity theft. And in others, the fraudsters are hijacking the phone to carry out bogus ‘clicks’ on ads. That uses up mobile data, which is often a valuable and expensive resource for the type of phone user who most benefits from DCB.

But the damage goes far beyond the customer. Merchants who benefit from DCB payments are also victims. Every dollar stolen from a customer is a dollar they can’t spend on legitimate services and products, plus they may even become wary of using DCB at all and merchants lose their credibility.

Mobile operators also lose out. When customers find their data or their credit balance depleted without explanation, they’ll often blame the phone provider. At best this can mean wasted time and resources with call center staff dealing with complaints. At worst it can mean customers losing trust in their phone service, possibly abandoning using mobile data at all, and spreading the word on social media, damaging the provider’s reputation.


Don’t Let Malware Ruin Direct Carrier Billing

Dimitris Maniatis, Head of Secure-D at Upstream recently warned that mobile malware could pose a fundamental threat to the technology:

“Online ad fraud threatens carrier billing in the digital era, both in emerging and developed markets. The kind of ad-fraud we have found directly leads to the depletion of the end users’ data and their airtime balance. It is imperative for the future of e-commerce in emerging markets that operators work to eliminate fraud related to online transactions, protecting revenue streams for themselves and the viability of the most widespread form of digital payment in the world today.”

Mobile malware won’t kill DCB but it could seriously slow down its growth. Especially today that new legislations will be adopted giving more opportunities to DCB extend from digital content to the purchase of physical goods, more “opportunities” will open for fraud, as well. That’s bad news for customers, online sellers and mobile operators. But arguably it’s bad news for wider society because DCB lets people join the digital economy even if they don’t have access to traditional banking. The fight against malware is a battle that simply must be won.