The market for mobile payments in recent years has passed through many stages. Today, mobile commerce (Direct Carrier Billing, DCB) becomes an international standard, which shows good results. Xsolla examines the history of the transition from paid SMS (Premium SMS) to mobile commerce as the main method of payment on smartphones.
Pay SMS (PSMS, premium SMS) is one of the earliest and most common ways to pay for services and goods using a mobile phone. The basics of PSMS should be familiar to everyone: the customer is invited to send a short message to a specified number and the cost of this message is several times more expensive than SMS.
Premium SMS was quite popular and widely used in the early days of mobile technology. With PSMS, you can pay for ringtones, goods in games and subscribe to newsletters. There are several ways to work with PSMS including mobile originated billing and mobile terminated billing.
Although in the early stages of mobile infrastructure development PSMS was quite prominent, today it no longer meets the requirements of users and companies operating in the sector. PSMS had a few shortcomings including:
- The complex process of payment. The user needs to send an SMS to an unknown number, wait for confirmation and perform many unnecessary actions.
- PSMS only works with fixed prices ($10, $15, $20), each of which correspond to a certain code. This limits the marketing opportunities and causes a variety of other financial problems.
The shortcomings of PSMS prompted operators to establish a new standard for mobile commerce (Direct Carrier Billing, DCB).
This is the next stage in the development of paid SMS. The world’s largest operators have already announced their intention in the coming years to switch completely to DCB. DCB provides a convenient way to pay for goods using a mobile account.
There are two types of DCB:
- The client must send a positive reply to the request of the operator.
- The customer receives an SMS with a confirmation code, which is injected directly into the game (Shops): quickly, efficiently and reliably.
The main advantages of mobile commerce are the following:
- Simple and transparent payment. The whole process takes seconds and is committed to pressing 1-2. Information on the funds spent is directly stated in the invoice for the services of the operator.
- Mobile commerce offers great opportunities for adjusting prices. The flexible system allows you to choose any numbers from 99 cents to 50 dollars per payment (in the US).
- Lower commission. The cost of mobile commerce is lower than paid SMS. For example, in Russia, this has one of the lowest fees in the world at only 15%.
- Faster and more convenient monitoring system. The operator can easily determine the status of the payment when purchasing to identify problems and solve them instantly with customers.
The Advantage of Mobile Commerce For Online Games
Most online games monetized by selling packets (virtual currency) at a fixed price. For example, the project can be accessed by a variety of packages worth 3, 5 and 10 dollars. Mobile commerce, offering flexibility to work with a price to pay, allows you to pay the required amount without over and under payments.
PSMS does not provide such an opportunity. In this system, the mobile operators offer a similar amount of packages, but they can not match the price in games. For example, PSMS can be used to access prices of 10, 15 and 30 dollars. In this case, if the user wants to buy a package for $5, they will not be able to as the package prices are fixed at set limited options.
This feature has an extremely negative impact on the level of user satisfaction. The user who was forced to purchase a $10 package when they only wanted a $5 package will have generated a level of dissatisfaction in the purchasing process and will no longer want to invest in the game as much. This is the main danger and inconvenience of PSMS.
Mobile commerce is a promising and rapidly growing method of payment for goods and services because of the smartphone. It is projected that in the next few years, this system will completely replace paid SMS from the market. Mobile commerce already holds a leading position in Singapore, South Korea, Russia, Indonesia, Germany, Austria and the Philippines.