December 11, 2017

Google and Idea: India gets operator billing today, and yes it is a big deal

Google will on Thursday, formally announce a partnership with Idea Cellular offering operator billing for purchasing apps and other services. This is the first such arrangement in the country, and will in all likelihood be rolled out to other service providers too.

The advent of operator billing is a big deal. Despite the size of the market, India has traditionally been a low revenue destination for most mobile apps and services. That is because given the low credit card penetration, Indians have been reluctant to pay for these services. While the Apple users do tend to pay a bit given the way the ecosystem is structured, Android users — close to 90 per cent of the market — don’t even bother entering their payment details on phone.

With operator billing, things will change. Users will be able to buy an app in one click with the amount being added to their monthly bill or being deducted from their prepaid balance. The one-click is important as often in-app purchases are impulse buys, and adding layers to it only reduces the chance of a final transaction taking place. The biggest impact hence is going to be on mobile gaming, music and other content purchases.

This will also be a huge boost for the internet economy in India. While there are quite a few successful apps in India, none have really been able to monetise their subscriber base within this geography. Now, they will finally have the option of reducing their dependence on the ad-funded model and monetise almost their entire subscriber base. However, just having operator billing will not do, the content will have to be compelling enough to be bought.

Also, there could be an influx of premium services like Spotify, which were holding on till now due to the lack of a good payment system. Plus, India is likely to be pioneer the micro-payment model for mobile purchases where users would buy a song, or a book or a newspaper article at a nominal rate, instead of buying a more expensive subscription.

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