As a follow-on from the TPC2018 panel discussion on Frictionless Mobile Payments, here’s some detail on what the new legislation is and how Direct Carrier Billing is becoming a viable and attractive payment method for mobile ticketing.
New EU legislation – PSD2 is here: is your ticketing business ready?
PSD2 is a game changer as it brings European payment services into the 21st century. Ticketing companies should embrace the innovations it will bring in online and mobile payment methods, including Direct Carrier Billing (DCB), and offer consumers frictionless payment options that go beyond PSD2 compliance. DCB allows you to charge digital purchases directly to a customer’s mobile phone bill avoiding having to rely on credit and debit cards.
What is PSD2?
PSD2 is an acronym for the Second Payment Services Directive, a new piece of EU legislation that came into force on 13th January 2018. Its main aim is to modernise Europe’s payment services for the benefit of both consumers and businesses, so as to keep pace with this rapidly changing market.
Under the new regulations, consumers will no longer be asked to pay a surcharge for debit or credit card payments, regardless of whether this is happening online or in store. They will also have better rights when it comes to remote, online payments, including a reduced liability for non-authorised payments.
PSD2 is also expected to be a catalyst for business change as it promotes the development of innovative and online mobile payments by banks and other payment service providers across the EU. This is particularly relevant to the ticketing industry as ticket sales increasingly take place on mobile devices and PSD2 has specifically categorised tickets as ‘digital content’.
Alternative Payment Methods
PSD2 legislation will encourage increased competition, opening up interesting opportunities for Alternative Payment Methods (APMs).
A key APM is Direct Carrier Billing (DCB) where the cost of a digital purchase made on a mobile phone is charged to the consumer’s mobile phone bill rather than to a credit or debit card. During the panel discussion, one thing that leapt out was just how much information you DON’T have to put in when completing a transaction using this payment method.
In Europe, DCB is currently most effective for smaller, micro transactions so a VIP ticket to a Bruno Mars concert will be out of reach. However, for lower cost tickets for smaller events and venues, DCB provides a quick, convenient and cost effective payment method.There are also a number of opportunities to bundle ticket sales with other value-added services consumer might purchase at a later stage – for example a flash promotion on an exclusive digital album download at the end of the Bruno Mars concert.
DCB can step into the limelight as an attractive alternative to existing online and mobile payment methods, especially where low cost purchases combine with a need for speed. The increased conversion rate of DCB also offers robust strategies to move distressed inventory.
PSD2 has put somewhat of a spanner in the works when it comes to consumer demand for frictionless payment. This is partly because of the higher security standards that make online payments safer and more secure. Strong Customer Authentication (SCA) will be necessary for all electronic payments initiated by the customer above €50 or €300 per month on subscription (unless the payment qualifies as low risk).
In practice, this means that consumers will have to provide at least two separate elements out of something they know (password or PIN); something they own (bank card or mobile phone); or something they are (fingerprint or iris scan).
However, layers of verification disrupt the frictionless payment experience. Customers will have to wait for an authentication code to come through and then type it in before being taken to the next stage in the payment process. For merchants, it increases the risk of shopping cart abandonment as distracted consumers navigate away from completing the transaction.
However, digital tickets purchased through carrier billing will be exempt from the two-step authentication process that PSD2 introduces. This presents a unique opportunity for more services to adopt this payment method and takes advantage of the exemption. It will allow merchants and operators to offer a much lower-friction payment method to customers – one that already delivers up to 10 times higher conversion rates compared to card payments.
When buying parking tickets for example, consumers currently have to put up with complicated voice-controlled mobile card payment systems. First-time users can spend up to 10 minutes providing personal and financial information before the payment is made by which point they will be behind schedule, possibly missing a train or appointment. Carrier billing can reduce this friction by removing the need to provide credit card details altogether.
In order to benefit from this new opportunity, mobile payments providers must work together with operators and merchants to streamline carrier billing services – offering a single, simple payment option that consumers demand and therefore, driving revenue for all parts of the value chain without compromising on PSD2 compliance.
If you would like to hear more about how to use Direct Carrier Billing for frictionless ticketing payment methods, please contact. Mark Robinson at Infomedia on firstname.lastname@example.org or call him on +44 (0)1604 498900