Cellular Billing?- Expect Over $600 Billion of It by 2013!

Cellular billing?  Who would have thought 30 years ago it would be the next generation of payment method for internet sales?

When I got my first cellular phone in the 1980’s, it looked like an over-sized 8-track tape (remember those?) with an antenna.  The battery lasted about 2 hours and calls were over $1 per minute.  The next improvement in cell technology was the “bag phone”.  Those were the ones you carried around in a small leather bag, with a cigarette lighter plug for power.   Fast forward today to the smart phones and unlimited call time we see, and we’ve embarked on an entirely new generation of technology.

It’s just a natural progression that the next step for smart phone applications would be for the device to become an actual method of payment for the purchases the phone browsers allow us to make on the internet.  No longer do we have to fiddle with our wallets or purses, looking for that elusive credit or debit card.   Internet merchants now have the opportunity to add a direct cellular billing option to their checkout pages.

Below is an example of the screen shots the customer will see when using the cellular payment option.

The Customer merely enters their cell phone number, they are then prompted for their home zip code

Within seconds, the Customer receives a text message on their cell phone with a Purchase PIN, they then enter it in the field below

And the purchase it completed.  The customer receives a confirmation and is automatically redirected back to the Merchant.  No fooling with expiration dates, CSV’s, or any other information. Nice, fast, simple, and secure.

The billing clearinghouse collects the money from the cell ular companies, deducts it's fees and then ACH's the balance to the merchant's bank account.

Before the creation of direct cell phone billing, a lot of options were tried with limited success.  There were programs that asked identity questions, asking questions like year of birth, month of birth, last 4 digits of your social security number, zip code, etc.  This would generate a credit type search for an individual and if located, would generate a direct bill.  This worked OK but was very expensive for the merchants, paying postage and printing costs with limited collection return.  there were also lots of credits and people denying they ever ordered the services.

Then there were the “Premium SMS” programs where a merchant would send a text message to a consumer’s cell phone for a certain amount of money.  These were processed via short codes and were expensive and time consuming to create.  And the cellular companies kept ~45% of the sale!  Not a great return on the dollar.

Paypal emerged as an option but it still requires linking a credit or debit card to open the account.  After that you can deposit funds into Paypal but then you’re tying up your money, in anticipation of going shopping later.  Not a great budget plan…..

It’s my opinion that the cell phone billing option is here to stay and will be as big a hit with consumers in the United States as it has been in Europe.  Cellular billing is widely accepted across Europe and Asia and according to Wikipedia, the total world-wide mobile billing market will exceed $600 Billion annually by 2013.

To find out more on cell phone billing in the United States and to see if your company qualifies as a candidate, contact me @DaveHanron on Twitter or at d.hanron@earthlink.net

How to Close Deals With No Credit

Are you looking for more revenues for your internet business? Tired of all the web page statistics showing how many people abandoned your checkout page without a purchase?

If you’re one of the many internet businesses feeling this pain….then I have a solution for you!

Let’s start by figuring out why so many people don’t complete their on-line purchases. There are a couple of main reasons….

Price….Many people, like it or not, use the internet to comparison shop. They’ll “Google” a product before going to a local store to set a price point for the item. Once they get the price point they’re willing to pay, many consumers will then continue their shopping, searching for the lowest price…period. These consumers might return and make a purchase, they might not. These are the hardest abandons to close. Your only tool against these customers is simple…..keep your price competitive!

Trust….if you’re a digital merchant selling through sites like Amazon, pay close attention to your ratings. Email follow ups to consumers who’ve recently purchased your product, asking for a recommendation, are an absolute necessity. Make this a priority. Good reviews help increase your rating as a merchant and increase sales. Every Customer wants to think they made a good decision, and buying from a merchant others have trusted reinforces this emotion.

Payment methods…this is an important one.

Does your checkout page contain purchase options other than credit card or check? If not, you need to add them. Consider adding Paypal. Paypal can be set up quickly on-line and allows consumers a safe alternative to revealing their credit card information. Paypal helps to eliminate payment security concerns for many consumers. However, even if you add Paypal, there is still a sizable group of consumers who for a multitude of reasons, simply will not make a credit card purchase on line.

This could be caused by identity theft concerns, credit limit issues, lack of a credit or debit card, or a simple aversion to using any type of recurring credit. Problem is, this group of people can represent up to 20% of your potential customers who do not have access to traditional credit (http://tinyurl.com/ybaecdv )

So, how do you make sure you have a purchase option available to 1 out of every 5 potential customers? By adding a “Bill to Phone” option.

Landline phone billing for digital goods has been around for many years and has developed a mixed reputation because of some past fraud from some of the merchants. While this was a troubling trend in the past, the local phone companies (like Verizon, CenturyLink, and AT&T) and the billing clearinghouses (like ILD Teleservices) have worked hard to clean this payment method up to the point that it is now a truly valuable asset to add to your online business. Merchants will go through a stringent approval process before the OK is given to begin Local Exchange Billing (more commonly referred to as “LEC Billing”) with the phone companies.

The rapidly growing mobile phone market has added yet another curve to the phone billing market. Early returns a couple years ago using “Premium Short Message Service” or otherwise known as “PSMS” billing methods had mixed results for merchants.  The merchant would ask the consumer to enter their cell number on the checkout page and then the consumer would receive a text message which, if accepted, would automatically add a predetermined $ amount to the cell bill.  The consumer would then receive a code to enter on the checkout page to complete their transaction.  As the wireless companies kept a sizable portion of the sale, the returns were poor, representing typically less than 50% of each dollar being passed through to the merchant. The PSMS method did increase closed sales, but because the returns were so low, it wasn’t fully accepted as a truly viable option.  If you're still utilizing this method at your company....keep reading.

Today, the brand new concept of direct “Mobile Carrier Billing” allows merchant to place a product directly onto a potential customer’s cellular invoice and list the merchants name on the bill, reducing chargebacks and adjustments. Returns have improved to match or even exceed the returns realized through landline phone billing and provide a valuable tool to help e-merchants close the sale with that “1 out of 5” consumer who doesn’t have access to traditional credit. E-merchants will typically see a 20% “lift” in sales when they implement a bill to phone campaign, utilizing both landline and cellular billing. “Direct Mobile Carrier Billing” can be set up and approvals received to start billing as quickly as 3 weeks, meaning within a month, you could be closing sales with the group of “1 out of every 5” consumers that you cannot sell to today!

If you are interested in learning more about adding a “Bill to Phone” program to supplement your current e-merchant business payment options, contact me @davehanron on Twitter or via e-mail at Dave.hanron@ildmail.com. My company has processed in excess of 1 billion phone billing transactions and can help your business gain access to this growing market.

I’d enjoy hearing any experience you may have had in the e-merchant sales world, good or bad…..after all, we can all learn something new each day……