O2 UK expands carrier billing offering

The UK arm of European operator group Telefónica, O2, has outlined plans to cut the margin on its direct operator billing offering, meaning that participating merchants get a greater share of the revenue.  The firm said it is decreasing the margin in order to stimulate uptake, having seen some merchant revenue increase by over 200 per cent where mobile billing has been supported as an additional payment option.

The operator’s Charge to Mobile service will be available later this year and also offers merchants the ability to provide refunds and credit to O2’s customers through their mobile bill. O2 will also be increasing the price limit of goods that can be bought through operator billing to £30.

Danny Barclay, head of interactive at O2 Media, said that as internet usage through the mobile phone becomes more prevalent, the operator expects more merchants to take advantage of mobile billing to commercialise their goods and services.

“When O2 customers are provided with mobile billing as a payment option for online micro transactions, it immediately becomes a popular payment option,” he added.

Services such as Skype, Facebook and Google have all announced plans to provide mobile billing such services in recent weeks, and Roy Anderson, CEO at mobile billing solutions provider Bango, believes such services could now be reaching a “magical, musical” inflection point.

He said that until recently, the costs of operator billing have been slightly too high for a low-margin business such as selling music, but music in particular could now provide an immense opportunity for operators.

“We’ll wait to see what the numbers look like, but with O2 driving costs down we may soon reach a tipping point where selling music through operator billing is commercially viable for the big online music retailers, and we’ll see huge increases in sales volumes,” he said.

“This small change from O2 could make a massive difference, particularly when you consider that operator billing is mandatory to reach demographic groups without credit cards, which includes the young consumers who traditionally buy music.”

Operator billing is supported on all of the main UK mobile networks, with a common framework called Payforit, which aims to provide a secure and trusted transaction mechanism for both merchants and consumers.