Why Carrier Billing Fits the Bill (and Premium SMS Doesn’t)

Premium SMS became popular in the 2000s as a way to pay for digital content using offline media. Simply put, Premium SMS charges the end user an additional fee on top of their mobile plan to send or receive a text message.

There has been a steady decline of Premium SMS as the migration to Carrier Billing intensifies. PSMS was worth $5.1 billion in 2018 and is estimated to be worth only $3.98 billion in 2023. It is expected to experience dramatic falls in revenues and will account for just 14% of the VAS market.

So why are so many moving on from Premium SMS and becoming Carrier Billing converts? Limitations and problems such as scams, user refunds, taxes and delayed SMS messages have seen Premium SMS left behind, and here’s exactly why Carrier Billing is winning over PSMS for mobile operators.

Security

• Premium SMS has got some bad press when it comes to scams and bad practices
• Malware that tricks people into downloading apps or subscribing to services by sending messages unbeknown to the user is a real risk that goes hand in hand with PSMS
• Demand for regulatory compliance has now meant more mobile operators are looking elsewhere when it comes to billing and purchase strategy
• Carrier Billing offers mobile operators a low risk solution when it comes to fraud in comparison to their role as PSMS providers. Add third party fraud prevention to the mix and the result is minimal complaints and significantly reduced refunds

Customer Experience

• Unlike Premium SMS, Carrier Billing allows customers to make purchases quickly and seamlessly without the hassle of sending a message to a shortcode
• Frictionless transactions and streamlined checkouts with Carrier Billing mean higher conversion rates for purchases and more paying customers  
• Carrier Billing offers users transparency via their bill and supports the self-service model preferred by today’s customers. Spending limits are easily set to avoid bill shock and keep customers happy
• There are also opportunities for mobile operators to better leverage data about their customers through Carrier Billing reporting and analytics, so they can deliver more personalised content experiences

Charging

• Premium SMS is dependent on successful SMS delivery reports used to make a yes/no decision on whether content can be downloaded
• The problem with this is that users have to be reachable via SMS message, and lack of network availability etc. can result in delayed SMS messages and delayed delivery reports
• If the window for the delivery report times out an OK will not be given to access content, but the user may still be charged
• Delivery reports for PSMS can also be unreliable and not in real time, meaning an OK may be given regardless of the user having insufficient funds
• With Carrier Billing a yes/no response is delivered quickly through the billing interface, eliminating problems with over and undercharging, and keeping refund requests to a minimum with enhanced user experience

Pricing

• With PSMS shortcodes are tied to a rigid price and management of multiple shortcodes for varying price points can be a complex and time consuming task
• Higher price points and limits are available with Carrier Billing, as is flexible charging for one-off, subscription and in-app payments, not to mention partial charging for those with insufficient funds
• Carrier Billing subscription revenue can also be automatically billed daily, weekly or monthly, allowing you to collect revenue seamlessly and effortlessly

Carrier Billing is expected to account for 1 in 5 digital sales by 2024. It’s no wonder mobile operators are making the transition to Carrier Billing, offering more choice to customers, maximising revenue potential and advancing in their market, all through secure and frictionless payments.

SLA Digital can help you power new mobile revenue streams with our low-risk carrier billing solutions. Talk to us today to find out how.