Andrea Boetti, VP of Global Business Development at Fortumo
The current crisis has impacted classifieds companies’ revenue from listing fees and value-added services. How do you get ahead of competitors when things start to recover? One way is by providing sellers with an improved user experience.
Sellers expect classifieds portals to help them get their listing up and sold as quickly as possible. Those who are in a hurry will pay extra for featuring fees and other value-added services. Portals put a strong emphasis on improving their user experience, but improving the payment experience for value-added services has often lagged behind.
Put yourself in the seller’s shoes. You’ve taken the photo, added the listing description and now you’re given an option to feature it for an extra fee. Whether you take up the offer is a split-second, impulse decision. The longer it takes to complete the payment, the less likely you are to follow through with it. Today, the standard payment process looks something like this:
Enter your name
Select your credit card provider
Enter your credit card number
Enter the card expiration date
Enter the card verification code
Enter your address and ZIP code
For most sellers, featuring or other value-added services are not a critical, high-intent activity. This means every extra form field makes them reconsider whether they’re willing to complete the payment. Especially so if they’re adding the listing from a mobile and have to fill out all the fields on a small smartphone screen.
Improving the seller’s user experience during the payment process isn’t about people who are already paying users - for them, credit cards clearly work. It’s about all the other users who have decided to skip the payment.
Carrier billing as the alternative payment method
Carrier billing is a payment method used by all major companies selling digital or virtual services. It’s used by the world’s leading app stores (Apple, Google Play), streaming services (Amazon Prime Video, Spotify) and game developers.
Carrier billing doesn’t ask the user for their personal details or credit card number. Instead, payments can be charged to their phone bill. Here’s how it looks in practice.
With credit cards, sellers have to provide 6 different pieces of information to complete the transaction. Carrier billing only requires the user’s phone number and confirmation of the payment through 2-step verification. This shortens the time it takes for users to complete the payment, and as a result, increases payment conversion and revenue.
What are the use cases for carrier billing?
Classifieds portals have people already paying for value-added services with other payment methods. The goal of carrier billing is to capture those people who are not paying yet. There are several reasons why sellers are likely to turn into paying customers when carrier billing is added:
Some sellers don’t have a credit card: In fact, globally only 20% of people are credit card owners
Some sellers don’t want to go through the lengthy checkout process: If you need proof, check the abandonment rates of your currently offered payment methods
Some sellers are concerned about privacy: Especially for first-time users, online identity fraud is a serious issue; with carrier billing, no personal data is collected.
We see that when carrier billing is launched, there is an immediate uplift in payment revenue. This holds true for app stores, streaming services, games and also classifieds portals. Industry-specific research on classifieds using carrier billing is limited. However, SuperData tracks the usage of carrier billing in digital gaming, where the payment method is used by 14% of consumers in Western Europe, 21% in Eastern Europe and 18% in Asia.
How does carrier billing impact classifieds portals in practice?
Fortumo has been working with OLX in the Polish market since 2018. In their case, approximately 10% of sellers choose to pay with carrier billing due to its convenience and simplicity. If you’re interested in learning more, check out the case study.