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Big deal: Idea to launch carrier billing for Google Play Store apps

Idea umbrella

(By Nikhil Pahwa and Shashidhar KJ)

In what is a significant breakthrough for Google in India, telecom operator Idea Cellular will provide carrier billing services for its customers so that they can pay for apps and content on the Google Play Store, reports Gadgets360. A Google spokesperson confirmed the development with the publication.

Carrier billing allows users to pay for digital content (like apps from the Google Play Store) via their telecom operator: in the case of prepaid users, which is over 95% of India’s mobile connection base of over a billion, the amount is deducted from their remaining balance. For postpaid user, the amount is added to their bill at the end of the month.

This is Idea Cellular’s second such deal: It enabled carrier billing on Windows Store in India as far back as December 2014, but the deal was probably not of much consequence since India is largely an Android market. What took Google so long? Probably, that they went after a bigger prize than Idea: MediaNama readers might remember that in 2012, Google had tried to do a similar deal with Airtel for the Play Store, but the deal never materialized, despite reports of the deal almost closing in 2014. Airtel, the largest telecom operator in India, is a tough nut to crack, though it had once integrated with the (then) Nokia Ovi store, and even once with the Samsung store.

Google has had it so tough cracking these deals that they went down the offline gift card route to allow people to pay for apps.

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In that context, we identified three things that need to be done in order to open up carrier billing in India. do read: On making Carrier Billing independent of Carriers in India

It’s all about the revenue share

If you set aside issues of ego and power, this is eventually about extracting as high a revenue share as possible from a transaction. Revenue sharing isn’t easy when money is split between four parties: Firstly, the Indian government takes taxes (WPC charges), then the telecom operator takes its money, and finally, the platform (in this case Google Play), and finally the content owner.

Typically, telecom operators, when they work in a standardised manner, used to get 70% of revenues from carrier billing, post government taxes. Vodafone had tried to standardise things as much as possible by opening up their billing and location API, and pay partners anything from 60-70% (and keep only 30-40%) but we’re not sure of how successful that has been, and whether the company has truly been open. What we know about revenue share arrangements from 2014, when they opened up:

…two levels of partners for this platform – aggregators and non-aggregators. Aggregators get paid nothing if revenues are up to Rs 10 lakh; between Rs 10 lakh and Rs 5 crores, they get 60% of the net revenues (after taxes have been deducted), and beyond Rs 50 crores, they get 70% of net revenues. Non-aggregators have it easier: they get paid nothing up to Rs 1 lakh; between Rs 1 lakh and Rs 1 crore, they get 60% of the net revenue, and beyond Rs 1 crore, they get 70% of the revenues.

The only information we have is historical, from Fortumo, where they said that operators get 40-45% of what a customer pays, but that is data from 2013.

Why carrier billing?

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– Because very few people use cards for transacting online: There are currently over 645 million debit cards and 25 million credit cards in circulation in the country. However, the majority of the transactions are at ATMs and cash is the prevalent mode of payment in India. But, there are over 350 million smartphone users and growing. Against this back drop carrier billing simplifies buying content as downloading a ringtone.

– Because carrier billing works:report by  Fortumo points that over 80% of payments for digital content in India are from mobile devices. The report added that a majority of content consumption in India still happens over feature phones, even though smartphone penetration in the country is rapidly growing.

– Because having a Two factor authentication for card-not-present transactions still is cumbersome, as payment has to go through multiple hops (about four in may cases) to complete a transaction. Sunil Kulkarni, managing director of Oxigen Services, says that a break in the payment chain will lead to a 25% failure of transactions.

– Because wallet payments are still now allowed as a payment option on any of the major app marketplaces.

Other notable carrier billing deals

  • Idea had entered into a carrier billing agreement with Rovio in November 2015. Idea would have a co-branded portal, which will have in-built mechanism for charging from the users balance. The company also has enabled in-app purchases for both Angry Birds Classic as well as Angry Birds 2.0, although it seems like only games downloaded through its portal will be able to  use carrier billing, while those downloading via Google Play would have to use more traditional methods like card payments.
  • In March 2014, Gameloft started offering its old and existing games, as part of the subscription and as an inaugural offer, with Idea via carrier billing.
  • In March, online video streaming application HOOQ partnered with Fortumo for direct carrier billing in India.
  •  Sony LIV also partnered with Fortumo in December 2015 to offer operator billing on the platform. This will enable users to pay for movies on Sony LIV through their prepaid or postpaid mobile accounts with Airtel, Vodafone, Idea or Aircel.
  • In February 2014, Saavn added operator billing support for its premium service. It charged users Rs 5 for a day, Rs 30 for a week and Rs 110 for a month of Pro Lite subscription that can be used to cache up to 3GB of songs for offline listening. The carrier billing option was available available for Vodafone and Airtel connections.

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