Germany is in general a late adopter to many new digital technologies, which is causing concerns amongst legislators. Things like cashless payments have not taken off in the same way as in markets such as the UK or parts of Asia. Visitors to Germany are often surprised by the continued ubiquity of cash, with many restaurants and bars being still cash only. However, this state of affairs has actually in some ways been to the benefit of direct carrier billing. Credit card penetration in Germany, although increasing in the 2020s, has historically been lower than in economically similar countries such as the US and UK, largely due to the German aversion to debt. Therefore, DCB has been able to fill this gap in certain verticals, so that service providers can bill for digital (and other) goods.
The German DCB Market
The volume of direct carrier billing payments is show in this Statista report. In 2020, Germany was second only to the UK in DCB payments volume amongst European countries, and by 2025, it is predicted that it will close this gap, with DCB payment volume increasing significantly
Why Do DCB Payments Work Well In Germany?
Direct Carrier Billing (DCB) is a popular payment method in Germany for several reasons:
Wide Accessibility
DCB does not require a credit card or bank account, making it accessible to a broad range of users, including those without traditional banking facilities. This is particularly appealing in Germany, where a significant portion of the population remains cautious about sharing credit card details online.
Ease of Use
Payments via DCB are simple and intuitive, requiring only a mobile phone number. Users can make purchases with minimal steps, enhancing the customer experience.
High Mobile Penetration
Germany has a high rate of mobile phone adoption and a robust telecommunications infrastructure, making DCB a natural fit for digital payments.
Trust and Security
Consumers trust their mobile operators to handle payments securely. DCB reduces the risk of fraud associated with sharing sensitive financial information online.
Versatility
DCB supports a variety of purchases, from app store content and digital subscriptions (e.g., music or video streaming) to transport tickets and gaming credits.
Regulatory Support
The European Union’s Payment Services Directive (PSD2) ensures DCB transactions are secure and transparent.
Convenience for Digital Goods
DCB is well-suited for microtransactions and subscription services, which are common in Germany’s entertainment and gaming sectors.
Adoption by Major Mobile Operators
Companies like Vodafone, Deutsche Telekom, and Telefónica actively promote DCB, integrating it into their services and increasing consumer familiarity.
Case Study
In October 2020, DIMOCO designated Telefónica Germany, Telekom, and Vodafone as payment agents under its financial license. This enables these German MNOs to process payments for goods and services beyond the digital realm, including physical products, by operating under DIMOCO’s payment license. Previously, under the PSD2 regulation’s telecommunication exemption effective from January 2018, MNOs were restricted to processing payments solely for digital goods, ticketing, parking, and charitable donations. By adopting DIMOCO’s agent model, these operators can now facilitate a broader range of transactions, such as car sharing, taxi services, e-scooter rentals, and electric vehicle charging. MORE
Direct Carrier Billing Providers Germany
Boku
Boku, is a leading provider of Direct Carrier Billing (DCB) services in Germany. By partnering with major mobile network operators such as Vodafone, Deutsche Telekom, and Telefónica, Boku enables consumers to charge digital and physical purchases directly to their mobile phone bills. Boku supports various applications, including app stores, gaming platforms, and digital subscriptions, while adhering to Germany’s stringent regulatory standards under PSD2.
DIMOCO
DIMOCO is a prominent European provider of Direct Carrier Billing (DCB) services, playing a vital role in Germany’s payment ecosystem. Using its financial license, DIMOCO partners with major German mobile network operators like Vodafone, Deutsche Telekom, and Telefónica. Through its agent model, DIMOCO enables these operators to expand DCB applications beyond digital content to physical goods and services, such as e-scooter rentals, public transport tickets, and electric vehicle charging. This innovation works with Germany’s high mobile penetration and regulatory frameworks, offering a payment alternative to traditional methods like credit cards.
Case Study
Vodafone Germany, in collaboration with messaging company HORISEN and billing firm DIMOCO Payments, has introduced the world’s first public transportation ticketing system utilizing Rich Communication Services (RCS) and Direct Carrier Billing (DCB). This innovative solution, powered by HORISEN’s Business Messenger Platform, enables users to purchase public transport tickets directly through an RCS chat, with payments charged to their mobile phone bills. The process involves scanning a QR code at the bus stop, selecting the desired fare, choosing carrier billing as the payment method, and then boarding the vehicle. This initiative is part of Vodafone Germany’s UPLIFT project, which focuses on fostering innovation in areas like sustainability, data analytics, and artificial intelligence. The solution was showcased at Germany’s largest B2B Startup Expo and Conference. MORE
Direct Carrier Billing Verticals in Germany
DCB is used across many different product and verticals in Germany.
Digital Content
Includes purchases of apps, mobile games, music, eBooks, and access to video-on-demand or subscription streaming platforms like Netflix and Spotify.
Transport and Ticketing
Facilitates payment for public transportation tickets, parking services, event tickets, and even long-term mobility solutions like e-scooter rentals and car-sharing services.
Charitable Donations
Enables users to make quick and secure donations to nonprofit organizations and disaster relief efforts directly from their mobile phones.
Gaming
Covers in-app purchases, gaming credits, premium memberships, and access to gaming platforms, making it easy for users to enjoy seamless entertainment experiences.
Physical Goods and Services
Emerging as a significant area, largely thanks to the agent model, allowing users to pay for tangible goods like food deliveries or services like electric vehicle charging via their mobile accounts.
Utilities and Microtransactions
Ideal for recurring small-scale payments like digital tipping, online polls, and premium subscriptions for specialized services.
Adult Content
A longstanding application of DCB, allowing users to access premium adult entertainment websites, chat services, or video content discreetly, with charges applied directly to their mobile bills.
Market Insight
Germany’s Direct Carrier Billing (DCB) sector is undergoing significant advancements, positioning it as a leader in Europe. The German Federal Financial Supervisory Authority (BaFin) has granted InternetQ GmbH a payment service provider license, enabling the company to offer DCB for both digital and non-digital goods, such as ride-sharing and electric vehicle charging. This development allows transactions exceeding the €50 limit set by the Payment Services Directive 2 (PSD2) exemption. Additionally, German mobile network operators (MNOs) have introduced the brand “Zahl einfach per Handyrechnung” (“Simply pay by cell phone”) to enhance consumer recognition and trust in DCB services. These initiatives are expected to accelerate the mainstream adoption of DCB across Europe, especially as the forthcoming Payment Services Directive 3 (PSD3) may remove existing exemptions, necessitating a shift to the payment provider-agent model. MORE
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