How to reduce payment failures with carrier billing?

Fortumo - how to reduce payment failures with carrier billing

Billing failures don’t come as a surprise if you’re using card-based billing solutions to collect payments online. In a recent thread on Quora some merchants report involuntary churn rates as high as 50% with credit card payments. So what is the situation like with carrier billing?

On Fortumo’s platform, the average successful billing rate is 84%. For some merchants, it can be as high as 96% and for some it drops to 67%. Successful billing rates are different between merchants because of the different markets that they use carrier billing in.

The main reason for billing failures with carrier billing are prepaid SIM card owners who do not have enough money on their phone account to make a payment. While a majority of users in advanced economies have a contract with their mobile operator and can always make a payment as they are charged for services on their monthly phone bill, such contracts are relatively rare in emerging markets.

For example, 95.6% of people in India, 98% in Indonesia and 87% in the United Arab Emirates use a prepaid SIM card and top up their balance once they start running out of money. These users cause the majority of unsuccessful payments. Much like with credit cards, prepaid SIM cards without sufficient balance on them simply can not be charged.

So how to reduce churn from such users and what else to keep an eye out for in terms of payment failures? Here are the three main causes of failing payments and solutions for solving them:

  1. The user has no money on their account. If a user has failed to make a payment due to a low SIM card balance, display a screen asking them to check if they have enough money on their account, top up their account and retry the purchase; alternatively, you can offer them to purchase items at a lower price point instead (e.g. 50 Gold Coins or a 1-day Access Pass for $1 instead of 500 Gold Coins or a 7-Day Access Pass for $4).
  2. The user has incorrectly entered their phone number. For users who are paying for the first time and are on a desktop device or connected to WiFi, it is not possible to detect the user’s phone number automatically. This means that some users might incorrectly enter their phone number during their first purchase - and the payment fails because they can not confirm it. You can reduce these mistakes by asking for the user’s phone number up front (e.g. when they are filling out their profile during sign-up) and pre-filling the phone number using an advanced integration parameter.
  3. The user has hit a daily, weekly or monthly spend limit. In order to combat fraud, such as a large number of payments made from a stolen phone, Fortumo has capped off spending in all markets. These limits are based on average end-user behaviour and accounts for average transaction sizes and ARPPU (average revenue per paying user) in each country. If you see a significant number of end-users hitting these spending limits, let us know as we are able to whitelist specific users.

Carrier billing has better coverage and conversion rates than credit cards but as with any payment method, it is impossible to reach 100% billing success. However, using the methods outlined above, every merchant can significantly improve their billing rates.