SMS Billing Remains an Appealing Option in Some Territories

Alex Henderson

With the smartphone revolution, mobile devices are being used for everything from checking sports scores to getting local weather forecasts to sending e-mail. And the use of mobile devices for accessing digital adult content has grown by leaps and bounds, making billing by SMS (short message service) an attractive option in some countries.

Many consumers are not only using mobile devices to access erotic content, but also, to pay for it.

Whether we are talking about adult billing/processing or mainstream e-commerce, there has been a huge trend towards making purchases on mobile devices. -Mitch Farber of NETbilling

“Whether we are talking about adult billing/processing or mainstream e-commerce, there has been a huge trend towards making purchases on mobile devices,” explained Mitch Farber, founder and CEO of NETbilling. “This includes tablets, phablets and smaller smartphones. More and more consumers are moving away from traditional desktop purchases as these mobile devices have become bigger and easier to use. This trend will continue to move in this direction. E-tailers need to continue to adapt their offerings to look good, load fast, and make the purchase/checkout process as seamless and quick as possible.”

SMS billing has been an option for paying for mobile adult content in many European countries, but direct carrier/operator billing remains Europe’s dominant form of mobile billing for adult content.

And Peter Rabenseifner, head of business development for the Barcelona-based ExoClick, cited parts of Latin America as examples of growth markets for SMS billing.

“We see a growth in SMS billing especially in tier-three countries such as India, Mexico and Brazil, where there are still many feature phones — low end mobile phones — out there,” Rabenseifner explained. “With smartphones becoming more available in these markets, the trend is for consumers to buy smartphones rather than laptops.”

Rabenseifner added that SMS billing can also be used to pay for desktop-related activities. “Across all territories, more and more product owners are exploiting the fact that SMS billing works well for their desktop services,” Rabenseifner observed. “There are good conversion rates especially for dating, webcams and movie streaming, where users can upload credits and pay via SMS.”

One of the main advantages of SMS billing is the fact that mobile phone users can easily make payments without needing to have either a credit card or a debit card: all they need is a mobile phone.

Oliver Crane, product manager for MobileCashOut, explained: “SMS is traditionally targeted at countries where credit card penetration is low. If you look at tier-three territories such as India, Mexico and Brazil, only 10-20 percent of the populations are worth billing — and also, the conversion rate can be low. However, because of the huge volume available, it is worthwhile trying to monetize these markets with SMS billing-based products.

“SMS still works in the above countries, whereas in Europe, SMS billing penetration is very low because of the success of WAP billing on 3G traffic — which is the focus of most product owners.”

Although SMS billing is sometimes used as an alternative to credit cards in Europe, it takes a back seat to direct carrier billing in European countries. Julia Dimambro, founder and managing director of the Barcelona, Spain-based mobile specialist Cherry Media, pointed out that for many European consumers of mobile erotica, carrier billing rather than credit card billing remains “the standard.” And adult companies that are selling mobile content in Europe, Dimambro said, need to be aware of what types of content carriers do or don’t allow.

“If you only work with your own content, you’ll see which territories allow your grading of content,” Dimambro explained. “Many producers are now producing softer content with each hardcore shoot because very few countries in Europe will allow you to sell +18 adult content using carrier billing, and some countries have made it illegal to allow access to any kind of soft erotica. You are forced to cut access using geo-targeting.”

Dimambro added that the standards for carrier billing in Europe not only vary from country to country: even within the same country, different carriers can have different standards. One European carrier, according to Dimambro, might be willing to bill for hardcore adult content, while another European carrier in the same country might only accept softcore content. And when it comes to carrier billing, Dimambro said, adult companies need to analyze Europe on not only a country-by-country basis, but also, on a carrier-by-carrier basis.

Dimambro said, “The matrix for selling adult mobile content in Europe is as follows: first, identify and order your biggest selling territories. In each of those territories, then see what grading level of content can be sold: non-nude, bikini, topless, nude, adult, etc. You then need to match this up with properly edited and graded content.”

Farber said that internationally, he is especially bullish on credit card billing. But he expects SMS billing to increase. “Online processing has become a truly international affair,” Farber observed. “With European consumers sometimes preferring debit, it is important for merchants to be able to qualify users’ locations and offer default billing methods based on that region’s popularity. Worldwide, this will continue to be typically credit card sales. However, ACH, debit and SMS billing should continue to rise in popularity as well. Typically, merchants who have merchant accounts outside of the U.S. have better conversions processing for international clients, whereas U.S.-based merchant account clients convert better with U.S. credit cards.”

Gary Jackson, managing vice-president of sales and Internet markets for CCBill, said that in 2015, adult companies will need to have a multi-platform outlook: they will need to keep in mind that erotic content is being consumed on laptops and desktops as well as a variety of mobile/wireless devices. And SMS billing, Jackson said, will still have its place in the mobile adult experience.

Jackson predicted that 2015 will be a year of “multi-screen purchases and access management. This is already a big issue for merchants trying to serve the consumer in markets with mobile, desktop, tablet, TV, game consoles. The trend is still to buy on desktop, but upgrades, upsells and management is happening on multiple devices — which makes the need for easy upgrades a vital piece of the puzzle.”