Market Insight

Amazon launches retail store carrier billing in Japan with Bango

June 06, 2017

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Amazon has partnered with UK-based mobile carrier billing vendor Bango to enable its Japanese retail store customers to charge transactions to their mobile phone bills.

At launch, Amazon will support billing for customers of NTT Docomo and Au (KDDI), which claim a combined total of over 120m subscriptions accounting for around 75% of the Japanese market according to IHS Markit data.

Our analysis:

Japan is an ideal market in which to extend carrier billing support

Japan has always been a leader for carrier billing adoption going back to the pre-app store mobile internet days. Japanese operators were also quick to support billing for Google Play (then Android Market) when it launched paid content in Japan in 2009. More generally, mobile payments adoption is more advanced in Japan compared to mature Western markets with Japanese customers using mobile payments for public transit since the mid-2000s. In addition to its advanced mobile market, Japan is also one of Amazon’s major territories, ranking third behind the US and Germany for total sales in 2016. Japan is one of the most strongly post-paid mobile markets; contract subscriptions make up over 99% of the customer base. IHS Markit understands that individual operators will establish credit limits for customers ranging from JPY 10,000 (USD 90) to up to JPY 100,000 (USD 900) per month at an average of around JPY 50,000 (USD 450).

The conditions in Japan are favourable for further carrier billing support, but progress could still be slow as carriers may face a challenge in persuading long established Amazon customers to switch payment method if there are no incentives or advantages to do so.

Historically, a major challenge for using carrier billing for retail and other non-digital goods has been to balance the operator’s revenue share and the potentially lower margin for physical sales. This will have been less of a challenge in Japan, where operator revenue shares have traditionally been lower than elsewhere.

Carrier billing is not just for emerging markets

Carrier billing is frequently used as an example of a payment method that can drive monetisation of consumers in markets with low payment card penetration, but Amazon’s launch in Japan shows that it is also a significant payment method in mature markets. Bango’s other active partnership with Amazon is in another mature market, Germany, where it has enabled carrier billing for Amazon’s app store since 2014. Bango will hope it can leverage its global agreement with Amazon to bring similar initiatives to more markets. Amazon currently has an active retail presence in thirteen countries but it is increasingly looking to expand. It made its video service global in late 2016; adding carrier billing support for video would help it attract paying subscribers in emerging markets. India is also an important Amazon market – and one in which Bango is active, having launched support for Google Play payments in 2016. The Indian government’s “de-monetisation” policy aimed at promoting digital transactions over cash payments could also drive activity there. If Amazon is successful with carrier billing support in Japan, this will encourage Amazon to further expand carrier billing services in both emerging and other mature markets – but it will need to adapt its approach to prepaid lower ARPU markets.

Retail progress has been slow

Carrier billing vendors have looked to extend beyond traditional digital transactions into retail and physical goods payments for some time. US-based vendor Boku secured its e-money license in Europe in 2013 and launched support for ticketing and magazine subscriptions the following year. Bango first partnered with Amazon in 2012 and its Japanese launch is only its second active partnership with the US company. The slow process of extending carrier billing support for retail shows the challenges of adapting the technology for non-digital goods, including managing extended refunds, delivery and regulations. Meanwhile competition is increasing, with other mobile payments services are developing quickly for both online and in-store purchases, such as NFC based Apple Pay, Samsung Pay and Android Pay, as well as QR code based approaches in less mature markets with mVisa and Masterpass.


Research by Market
Mobile & Telecom
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