Amazon’s Carrier Billing Lets You Pay for Digital Purchases in Your Monthly Phone Bill

This, made even easier.

Photo by Justin Sullivan/Getty Images

The big Amazon news of the day is the company’s sudden release of six new devices: four Kindle Fire tablets and two Kindle e-readers. Slate technology writer Will Oremus tried them all and reports that “each is either a successor or a variation on some device that has come before” and “not one is revolutionary.” 

On the other hand, a quieter announcement involving Amazon on Wednesday might come closer to qualifying as revolutionary. Bango, a mobile payments company, said yesterday that it is working with Amazon and wireless carrier Telefónica Deutschland to let customers in Germany on Telefónica’s O2 network pay for digital items such as e-books, music, and in-app purchases in their monthly phone bill starting next year.

This payment model is known as “carrier billing” and, according to Re/code, is common in emerging markets, where millions of people who own smartphones do not have credit cards. At the same time, Re/code notes that carrier billing is “gaining momentum” in Europe and other developed regions. Bango a month ago said that it was working with Deutsche Telekom to offer the same service across a variety of app and content stores, including BlackBerry World and Facebook.

Carrier billing is one of several systems vying to partly or entirely replace credit and debit cards. The new iPhone 6 and 6 Plus come equipped with Apple Pay, the company’s stab at creating a global transactions empire. Google in March redoubled efforts to push Google Wallet and apps like Venmo are already well adopted among many smartphone users. What’s interesting about carrier billing and other forms of mobile payments is the underlying assumption that access to smartphones will at some point exceed access to credit and debit cards.

In 2011, Farhad Manjoo dismissed the notion of universal mobile access as impractical, writing in Slate, “If we’re looking for a payment method that everyone can use, we ought to choose something that everyone carries with them. You know what that isn’t? A smartphone.” But the growing popularity of carrier billing in emerging markets would seem to suggest otherwise. (A better point from that same piece: “Perhaps we should avoid it for security reasons. If someone steals your wallet but not your phone, at least you can call the police and your bank to report the crime. What do you do if your wallet is your phone—call them with your wallet?”)

As things stand, carrier billing still represents a small subset of mobile purchases. According to online data site Statista, charges to a phone bill in 2013 made up just 4.4 percent of mobile payments in the U.S. Credit and debit cards facilitated the vast majority of those transactions, at a combined 95 percent. Carrier billing is also limited—at least in the form described by Bango for Amazon—to being used for a relatively narrow type of purchase (digital goods).

That said, in 2013 there were an estimated 245 million people worldwide making mobile payments with an estimated global transaction volume of $235 billion. Statista projects those figures will grow to 450 million global users doing $721 billion in transactions by 2017. And just because carrier billing is currently constrained to digital purchases doesn’t mean it will stay that way forever. It does sound dangerously convenient for consumers—and enticingly lucrative for retailers—to have phone charges and other purchases all appear in the same monthly bill.