Mobile app providers opt for billing tie-up with telcos to tide over low credit card usage.

Two years ago , India witnessed a tie-up between Nokia and Reliance that allowed consumers to download applications without using credit cards. Payments would be adjusted with monthly bills (for post-paid users) or pre-paid balance.

This was the first time when carrier-billing model or telco-billing model was talked about in the country. Nobody was sure how this would pan out in a country that was yet to witness its smartphone craze. But within two years the picture has become vastly different.

By 2012, Nokia had extended the offer for app downloads to three other telcos – Vodafone, Airtel and Idea. Paid downloads from the Nokia Store (previously called Ovi) went up substantially. (According to Nokia, post their tie-up, paid app downloads through both credit card and telco-billing models have gone up 25 times).

Ready for change?

And the burgeoning app economy – courtesy the smartphone penetration – is ready to embrace this model. Accordingly, handset-makers (with their proprietary app platforms) too are toying with the idea of introducing the carrier-billing model.

Globally, though the scenario is somewhat different from what it is in India. The preference of credit card or plastic money over the telco-billing model remains the norm.

Business managers at Nokia, however, say that although paid-for apps are downloaded both through credit cards and operator billing, consumers have always preferred operator billing over credit card payment.

According to BlackBerry officials, some factors such as paying app developers and coming up with a secure payment gateway needs to be figured out before a telco-billing model is introduced.

“Invariably, the carrier billing model is easier than billing through a credit card. But there are regulatory issues which restrict its implementation,” a BlackBerry official said.

According to market watchers, credit card billing is more popular across developed markets and it can be gauged from purchases across three major platforms - Android, iOS (Apple) and BlackBerry. “If we take Apple and Android as the benchmark, then we will see that globally, all app purchases from these platforms are through credit cards only,” an analyst said.

Similarly, the process of registering credit card details across these two platforms - Android and Apple - is a one-time process i.e. one need not key in his credit card details for each subsequent purchase.


Canada-based Research in Motion (RIM) – makers of BlackBerry; confirmed that it was exploring the possibility of introducing the telco-billing model in India. Plans are afoot to introduce the model with the launch of the company’s new operating system (OS) – BB - 10.

“We are planning to introduce the model in India with the introduction of BlackBerry OS 10,” Annie Matthew, Head of Alliances and Developer Relations, India, Research In Motion said. Interestingly, in emerging markets such as Indonesia, BlackBerry – which is a dominant player – has already introduced the telco-billing model.

According to Joby Babu, Head-Operations, Nimbuzz, off-take is pretty good with operators increasingly integrating with Google Play. There is an increasingly higher interest from telcos in different regions across the world to integrate an app developer ecosystem billing, he said.

“Telco-billing is mutually beneficial for telecom carriers and app developers. Considering the lack of penetration of plastic money and users’ level of comfort, telco-billing is the need of the hour,” Babu said.

Facilitating Consumers

Market sources said that the carrier billing model, for customers, will mean lesser paperwork and registration, no SMS or short codes / multiple clicks to complete a monetary transaction or make a purchase. The SIM card details double-up as identification.

For operators, who are looking for new ways to generate income through monetising content and digital services, it's a reliable and flexible model. Moreover, it is also cost effective.

Further, with the app ecosystem developing and paid applications becoming popular there is bound to be more interest for this model, market sources said.

According to Babu, if the telco-billing ecosystem doesn't evolve and support app developers, alternate billing modes might emerge and introduce a new economy on the mobile platform.

“In near future, we can expect more experiments around this ecosystem (carrier-billing) as the future of mobile content will be driven by app developers,” he added.

Poor Credit Card Penetration

Another big factor in favour of the model here in India is the fact that users need not reveal their credit card details. In India, the use of credit cards, still, has some stigma attached. Besides, the biggest hassle telco-billing takes care of is nullifying the need to enter sensitive credit card details.

Datamonitor's report (February 17, 2012) on the payment cards market in India shows that the pay later segment - and credit cards in particular - are still poorly represented.

India has the lowest pay later penetration rate in Asia Pacific, at just 0.02 pay later cards per person compared to the regional average of approximately 1.25.

According to Faisal Kawoosa, lead telecom analyst at CyberMedia Research, the basic idea for any app developer would be to lure interest in a paid app rather than merely opting for free content. “I think payment mode is not a matter here. One has to see how many people are willing to go for an actual app purchase,” he added.

(This article was published on February 1, 2013)
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