26 JUN 2018

Is it faster to launch carrier billing directly or through a partner?

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Mattias Liivak

Head of Marketing & PR, Fortumo

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Digital service providers usually start looking at alternative payment methods when growth with their existing payments setup is slowing down. This is usually the result of reaching a saturation point in their core markets, conversion rates not being satisfactory or after launching in new countries where KPIs are smaller than expected.

In these cases, carrier billing is usually the first choice, illustrated by the fact that it’s the only alternative payment method used by all the world’s leading digital companies, including Apple, Google, Spotify and Netflix. Carrier billing is the only payment method available by default to any phone owner which requires no additional information from the consumer. This leads to wider coverage, shorter checkout flows and eventually, more revenue.

With the benefits quite clear, how to go about launching it? The logical approach would be for the operations team to pick out additional payment methods to integrate and the in-house engineering team to launch them. After all, integrating Braintree can be done in 30 minutes so how difficult can carrier billing be?

The reason why companies like Fortumo exist is that doing launching telcos on your own is not scalable. One integration with credit card processing companies gives access to all bank card owners, but integrating one telco gives access only to the subscriber of that telco. Most countries have 3-4 telcos which means 3-4 integrations to achieve full market coverage.

For service providers focusing on one country, it can make sense to integrate directly with the local telcos and cut out middlemen. It doesn’t hurt to ask, but if you are planning on launching carrier billing on your own, here are a few things you should expect.

Prospection, negotiation and agreements

While relevant people at payment processing companies can be easily reached through their website and most also provide self-service set-up, with telcos each carrier billing launch is reviewed on a case-by-case basis.

With bigger telcos, different service provider segments (such as gaming, music and video) are often managed by different people and carrier billing is also managed by different teams (VAS, payments, marketing, business development etc.) so finding the right person to talk to can be tricky. LinkedIn will be your friend for finding the suitable contacts and reaching out to them.

When you initiate discussions, you may find yourself in a different role than you’re used to. Credit card companies are vendors who offer a service to you, but in case of telcos, you may find the power role shifting and yourself in the vendor role who is being checked for eligibility.

How big is the estimated volume you plan to achieve through carrier billing? What is the value of the service to subscribers? How does your service help telcos grow their business? What sort of marketing do you plan to conduct for your service? Be prepared to answer these questions or better yet, anticipate them and put together a telco-focused deck about your service.

Once you do establish discussions, prepare to be patient. Telco organizations are huge which means decisions take a longer compared to what could be considered standard in the digital industry. At the end of the post, we have estimated negotiations to be the most time-consuming part of launching partnerships, as the initially proposed contract will likely be very different from what you’ve seen from other payment processing companies.

Integrations and on-boarding

If you successfully sign with a telco for carrier billing, next comes the part of connecting to their platform. Getting telco connections up and running needs to be done one-by-one. There are a few exceptions such as large telco groups with a single platform, but even with them subsidiaries in some markets operate their own platforms. Initiatives by multiple telcos to build a unified platform for carrier billing in the past have failed as they add more complexity instead of simplifying the process.

The vast majority of telcos will require a separate technical integration due to custom-built platforms. This means your payment engine will need to support multiple versions of platforms and APIs. Beside the payment processing part, make sure to also ask about what kind of analytics and reporting capabilities are available.

Your tech team will need to study the integration documentation of each telco separately and they will likely have additional questions, especially if it’s their first carrier billing integration. Once the integration itself is complete, UAT will also have to be conducted together with the mobile operator to make sure users are being successfully charged and receiving the access to the content they’ve paid for.

User checkout flows

In addition to integrating the telco back-end, the checkout flow needs to be displayed to your users as well. For most countries, the merchant is responsible for creating the checkout flow. Be cautious of telco-hosted flows as they are in some cases more complex than even card-based payment flows. While there are some standard requirements that all telcos usually ask for to be included, each telco is also likely to have some custom demands due to internal policies or country-specific regulations.

These can be related to how pricing is displayed, what kind of legal disclaimers have to be included, whether local language needs to be used, which customer support contacts to provide etc. Generally it’s a good idea to share mockups of how the payment flow is going to look like with the telco before starting actual development of the user interface.

Operational activities

In order to keep carrier billing up and running after launch, your team will have to allocate some time to operational activities as well. These processes should be reviewed with the telcos during the negotiation phase in order to have clarity on who is responsible for which activities. Here are the key things to check for:

  • What additional activities are related to changing the existing service setup or launching new services in the future?
  • What sort of fraud prevention measures are in place? Who is responsible for monitoring the payment traffic for any suspicious activity and what happens if it does occur?
  • In case of consumer payment issues, who handles customer support? What should the customer support SLA-s look like? How are refunds done, are they automated or is there a manual process in place?
  • How is platform maintenance communicated and done? Who are the technical and business contacts on both sides in case of escalations?
  • How does the settlement process look like? Who is responsible for paying taxes?

The answer for most questions is: the service provider will be the one required to manage the activities on a daily basis.

How much time does it take in total?

Based on our experience of launching more than 350 telcos for our merchants, here’s an estimate on the average amount of time you should expect your very first direct telco launch to take:

  • Prospection and negotiations: 4-8 weeks
  • Agreement review and signing: 6-8 weeks
  • Integration, consumer UX, testing: 4-6 weeks
  • Daily operations: 2 hours per telco per week

From a people perspective and to ensure rapid launches, the minimum size of the carrier billing team should be:

  • A business development person for prospection, negotiation and agreements
  • A technical project manager to administer the integration process
  • 2-3 back-end developers for payments integration
  • A front-end developer for the consumer UX
  • An accountant for the reporting and settlements process
  • An operations specialist taking care of daily matters (fraud, customer support, refunds)

In total, you should expect your first carrier billing launch to take approximately 3-5 months. If that seems slow, the good news is merchants working with Fortumo do not have to deal with the majority of the activities listed. We are connected to most of the worlds telcos and the team working on operational matters is already in place. This means most merchants are able to launch carrier billing through Fortumo in less than 2 weeks, with global coverage and through a single integration.

If you are looking for new routes to growth and to expand your payment reach with the most widely available payment method as quickly as possible, get in touch.

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