While the news about Amazon’s new Kindles, as well as the soon-to-come pre-installed Washington Post app, is making the headlines, a quiet move to “carrier billing” by Amazon in Germany may signal a bigger revolution in the card-not-present subscription billing arena.”Carrier billing” refers to the practice of allowing consumers to tack on digital purchases — eBooks, music, downloads, etc. — to their monthly phone bill. We previously covered the use of such billing methods in Brazil by Bemobi, which is a smart move for emerging markets where consumers are either lacking or suspicious of credit cards. But the new payment technology seems to also be catching fire in Europe, where direct debit (the practice of automatically deducting magazine subscriptions from a consumer’s bank account) is already a common practice.To some extent, this shift in consumer payment preferences was expected. In our 2013 Online Subscription Benchmark Report, we reported on consumer payment preferences in numerous international markets, with the chart below specifying German consumer preferences. As you can see, direct debit and bank transfers are preferred by a far greater proportion of the population than credit or debit card processing for online payments.
Amazon is seeking to capitalize on such market preferences by working with Bango and Telefónica Deutschland to let Telefónica customers tack on digital purchases to their phone bill. Ironically, because consumers are used to paying phone bills, and not used to paying through Google Wallet or Apple Pay (or Amazon, for that matter), this system might see more success.Slate writer Alison Griswold says, “What’s interesting about carrier billing and other forms of mobile payments is the underlying assumption that access to smartphones will at some point exceed access to credit and debit cards.” However, the most interesting feature of carrier billing is actually the lack of need for a smartphone — any mobile phone will do, making it more amenable to emerging economies and developed countries alike.