The age-old challenge for app developers is actually making money off their apps. In the smartphone age, Apple, Google and other vendors have provided developers with the only viable method of processing payments on their apps. That might be changing.
That is because for developers, there is a simple problem with this: these third-party vendors take a substantial chunk of each sale in fees. On the iTunes Store, for example, Apple collects approximately 20% of every app sale. Given that iTunes handles every part of the transaction from processing the credit card to transferring the file to the buyer, this is a price that most app developers are willing to pay.
However, it should be no surprise that many developers would prefer to get more from each sale.
Customers are also frustrated by traditional billing services. Entering credit card information is an extra, annoying step. Some people also have privacy concerns even with respected companies like Apple and Google.
Finding a realistic alternative to iTunes/Google Play-like services has been nothing more than a fantasy for developers looking to monetize on the biggest platforms and customers looking for convenient access to apps.
Enter Direct Carrier Billing
Increasingly, direct carrier billing is seen as an attractive option to processing transactions. Here’s how it works: instead of transactions going through iTunes or another vendor, the cost the transaction is simply added to the user’s monthly phone bill.
The lower fees attached to direct carrier billing are appealing to developers. According to Erdolo Eromo of Payvia, a popular direct carrier billing service, “With Apple and Google taking the lion’s share of revenues from game developers, direct carrier billing through companies like Payvia has become an attractive option for developers everywhere.” This is one reason he points to why Payvia has processed over $2 billion in transactions.
Direct carrier billing services also point to the advantages from the consumer side. Consumers do not have to enter their credit card information. Instead, they get instant access to their purchases and don’t have to worry about paying them until they get their monthly phone bill.
This is the pitch direct carrier billing services like Payvia make. Their strong growth and acquisition of big-name clients like Skype and even the 2012 Obama campaign caused some analysts to believe that this may be an important industry going forward.
Challenges Ahead
Whether or not this is enough to chip away at the massive volume of sales process by the big vendors remains to be seen. Direct carrier billing services still have technological and standardization challenges.
In addition, Apple and Google are well known for adapting and even staying ahead of market conditions.
That said, there is no doubt that the kind of innovation represented by direct carrier billing services – refining the experience for customers and giving developers better ways to monetize their products – can lead to nothing but positive developments in the evolving world of mobile apps.
At the very least, they will put pressure for the “big dogs” to innovate and enhance the app buying experience for consumers and developers alike.
