More on Bill to Phone...

As a Payment Services company, we, at ILD, think so. A chief problem with the internet and for digital merchants remains the limitations around payment acceptance.  With more than 150 million U.S. wireline subscribers reaching across all demographics, the traditional telephone bill appears to be a likely solution for certain online purchases and subscriptions.

Bill to phone payment provides substantially less consumer risk than credit card payments and is, therefore, a more viable option among consumers who have a legitimate fear of credit card fraud and those concerned about identity theft. With risk-management measurements in place, including validation and authentication services, fraud to the phone bill is less likely. The bill page then becomes a vehicle for digital content providers to reach those consumers who elect to not use a credit card for online payment and to those consumers who are considered "unbanked." 

According to the U.S. Federal Reserve, 23 percent of U.S. households do not own credit cards. Additionally, there are approximately 10 million U.S. households without credit cards that are online. This means there is a clear need for secure and reliable alternative payment methods for this demographic. It also means there is a market of 10 million households that, should they wish to make an online purchase, have no other option than to disclose their personal banking information, when available. In the limited cases where it is available by the merchants, these households pay for services via an automated clearinghouse (i.e., e-checks) or a service like PayPal. Ultimately, these statistics show the market for online payment alternatives, like the phone bill, are viable.

Traditional LEC billing is evolving as a feasible option for e-commerce. The largest LEC in the United States is now allowing businesses to use the phone bill page to invoice certain pre-approved information and entertainment services over the Internet. This opens up the reliable phone bill page to include payment for online services, such as music, movie and software downloads, gaming and other online communications-related services, in addition to local and long-distance telephone services. 

The challenge to businesses, however, is the cost of phone billing when compared to traditional credit-card billing. On average, LEC billing can cost a merchant 1 percent to 3 percent more than a credit-card transaction.  However, given that these customers most likely would have abandoned the cart during the check-out process due to limited billing options, the minor incremental cost associated with such sales is reasonable.   

Phone companies are growing aware that by accepting non-traditional charges on their invoices, there may be an opportunity for their bill page to do more -- ultimately creating a stickier customer by bundling multiple services on the same bill. Even today, certain LECs let consumers pay for their satellite television through the LEC bill and realize discounts for doing so. The bundled bill page makes it less likely that the consumer will change providers or give up their dependable home phone.   

We’re looking at a world of unique new marketing opportunities ahead of us as we expand the way we choose to pay for services. It certainly allows content providers, like e-entertainment (ringtones, gaming, dating, software, music, movies), e-marketing (online directory assistance, local searches, national searches) and e-business solutions (Internet service, Web hosting, voice mail) to reach the widest audience possible. In turn, this increases the stickiness of the LEC bill page, making a wireline consumer think twice before giving up that landline.

Once perceived to be declining along with traditional wireline long-distance subscribers, LEC phone billing is proving to be a viable payment option to new growth markets with substantially less consumer risk. 

With the consolidation of telecommunications providers, and realignment of business models over the next five years, we will see the convergence of voice and data take shape, as VoIP and IPTV continue to evolve. Phone companies will place more focus on utilizing the billing page as a marketing and retention tool by offering multiple services on one integrated invoice.

As such, we will see the addition of various communications-related paid content services billed to what was once the traditional phone bill. Like voice and data, wireline and wireless will converge, and as such paid wireless communications content like ringtones, games and cellular multimedia will be billed on what will become the “communications” bill.

As published in Phone Plus Magazine http://www.phoneplusmag.com/articles/07marsoap.html