Exploring Carrier Billing and Innovation with DIMOCO

Speaker A: Foreign. Voices in payments. Expert insights for a digital payments world.

Speaker B: Welcome uh, Klemen Sleiter from Democo, uh CEO of this um, licensed uh entity. Before we start, Klimitz. Nice um to meet you. Um, let me briefly introduce myself. I'm head of the consultancy department at Paymachines. We are about uh, uh 10 people in our Ozilchi team. Next to the recruitment and interim and marketing teams. Uh we're focusing on the full payments value chain from the card schemes to large merchants. Uh, we would love to uh, learn about DiMocco, uh a bit more. Can you introduce your company and when it was uh, founded.

Speaker A: Thank you so much. Yeah, thanks. Um, yeah Dimoco is an Austrian based company. Um as a licensed payments institution we are experienced on the market since almost 25 years now. Um, we are providing design PTX solutions for what we call the on demand economy. Um by providing our acquiring services through these industries but also providing an extensive portfolio of other payment methods. Uh and one of our specialty is, which is making us quite unique um, is uh, um, carrier billing. What we have within our portfolio and yeah and this is positioning us on the market quite unique combining traditional payment methods and uh, uh the extensive APM portfolio in combination with carrier billing.

Speaker B: Perfect. And is this all part of the PSP platform, payment service provider?

Speaker A: Um, yes, um, we are, we are having one PSP platform, uh what we are offering uh here towards our clients. Um and for carrier billing we have been um, one of the first uh for the carrier billing market. Um, we are doing so since 24 years already. Um but of course being that long time on the market, uh we have adapted uh to the changes uh um on the market especially also to carrier billing and have worked uh in regards to carrier billing on the competitiveness and the uh commercials to become a real commercial payment method with this.

Speaker B: Perfect. Yeah we definitely want to learn more about that one because it's uh, quite unique uh as an APM and it fits really nicely with subscriptions models I can imagine but also to onboard new customers. Perfect. What's your role in the Moocco?

Speaker A: Um, yeah, I'm CEO of the Moco payments um since uh, um early 2023. Um, I've worked for Democo starting in 2006 already. Um and I've been with Democo for quite some while. Um after I think almost 15 years I've left the company then and worked for another international acquirer um for Finaro now shift four and in the, in the beginning of 2023 I have rejoined uh in the New role as the CEO here at the company.

Speaker B: And what's the origin of the company? Did it start as a technology company or how did it uh all started?

Speaker A: Um yeah the founding idea was carrier billing. Indeed. Um this is where it have started. Um and I think it was in the year 2000. So now 24 years later, um we are now meanwhile a licensed payments institution of course. Um ah licensed by the Austrian Financial uh ah authority and um, yeah we are providing beside carrier billing uh um all the other payment methods uh via OneAPI. Um I think this is one of our benefits which we are uh providing towards our target base. Um and uh, we are working as an acquirer and PSP across various industries. Um and the high risk industry in need.

Speaker B: Perfect. Ah you mentioned we are also an acquirer. Um of course there are many acquirers out there. Uh how do you make sure that um you stand out? Do you have specific industry expertise or verticals that you focus on?

Speaker A: Um first of all the MOCO is not just an acquirer. We um, see ourselves meanwhile as a full stack payment provider. And I think whatever you're doing meanwhile in the payment landscape uh the industry expertise is more or less mandatory. Um, it's a must have nowadays within the payment space. Um and I think you cannot serve merchants without having this expertise um because otherwise it would have the effect that merchant would not be able to perform and uh to compete uh with their peers in their industries. So meanwhile almost every industry is having uh their specifics and different needs especially when it comes to payments. Um so you really have to understand the client needs and what the industry specifics are um to serve those. And uh, we are doing this um, uh in a very practical modus um and going into the industries and providing them our expertise and uh, our expertise in special is founded uh originally as being a carrier billing payment provider, uh in the past um, ah with a long lasting focus on um content industries and the micropayments economy. And uh, this is how we have done it for many years now, um, changing and adapting over time uh to the needs of the clients and also um, the involvement of our portfolio. Um starting as a carry billing provider and now uh, uh being a full fledged payment provider. And throughout this course uh we have built up the knowledge ah to serve our clients needs.

Speaker B: They are perfect and we, we do believe and agree with you that they need to be somehow a vertical specialist nowadays in the highly competitive market. And it's got some usps like you have carrier billing. What kind of reach do you offer? With carrier billing, is it all the European telcos or is it um focused on a few countries?

Speaker A: For example, we are covering more or less whole Europe um with carrier billing. When it comes to the countries, what we are covering to offer carrier billing, um, but from a merchant perspective we are targeting merchants on a global scale.

Speaker B: Perfect. Yeah. So some merchants do take your carrier billing solutions for the European market, but you're uh, acquiring service for um, multiple regions.

Speaker A: Yes.

Speaker B: Um, well merchants are always looking for comfort and security. Um, and how do you um, um take those core needs, um uh, how do you take care of them?

Speaker A: Um, I think comfort insecurity, uh those are both terms which are meanwhile must haves, uh uh, for merchants, um, to. To provide test. Um and I think no one nowadays would deny that those things are important, especially when we are looking into comfort. Uh, um. This nowadays means that you need to provide reduction ah of complexity towards your merchants. Um because the payments world is as you know, tending to get overwhelming complex for the merchants. Um, for example, if you're thinking about uh, uh, the number and the complexity of the EPMs just across Europe. Nevertheless if you look into Asia, it's getting even more crowded. Um, so by considering this and that payments should more or less unlock growth, um by itself, um, it's so important that payments is well done. And here uh, you as a, as an acquirer and a payment provider, you have a very special role to unlock this growth. And therefore we are. We're working quite closely with our merchants first of all to understand the needs, uh and to see what, what potential they are not using which they might have. And we see this quite often with their unused potentials. And once uh we have a full overview, we are of course then in a situation, uh, uh to make suggestions to our clients and uh, to improve further than their payment setups, um, which is then creating of course the additional value towards our clients. Yeah. And for doing so we are, we are uh providing our clients a dedicated team with whom they are working on um, uh their topics, um, where they have a direct access to um and by this, by doing so we are, we are creating some kind of relationship and partnership um where our clients will then in a further step feel uh accordingly confident to go. To go beyond the basics, um of payments and this is how we also call it internally, um and towards our clients which we call the growth mindset, uh, powered by payment.

Speaker B: That sounds like music to our ears because we are as a consult you also focused on helping our customers to create a strategic capability out of payments and it feels like you are pursuing the same goal. There's way more than just the payment uh functionality itself. Also how you organize them. Um in our um practice we see a lot of uh embedded finance conversations running. It's a hot topic in the industry. Is it also something that you see will affect your business model?

Speaker A: Um embedded finance is for sure uh uh a very important topic for several providers um by providing some seamless banking and payment experience. Um but for us right now it's not something which we are focusing on it um we see for us as timoco more important topics to work on and to explore further.

Speaker B: And how about the size of your customers? Are those um enterprise merchants large uh or medium enterprises?

Speaker A: Um we are working quite a lot um jointly together with scalabs M especially uh with scale ups who are suffering what we call the scale up syndrome. Um that means that merchants uh growth is blocked or hindered uh by the payment setup. Uh like problems could be uh that they have some unexplained error codes or high level of card abandonment or some search in their chargebacks. Um and this by being onboarded um at Stripe for example or some other uh uh providers who are targeting the ah Long Tail or the startups um being onboarded as a smaller business um with a volume acquirer you might not get uh the attention which you require for solving those mentioned problems. Um and this of course is a nightmare for them and therefore we are focusing also um on those special um vertical I would say.

Speaker B: Yeah, uh yeah, super nice. Um from your perspective what would be what you see as the greatest development in fintech over the last uh 10 years? Is this something that stands out?

Speaker A: I think there are many of them uh to be honest um I would like to highlight maybe not the most prominent uh development within this industry but uh uh carrier building I think um and its involvement uh over the last 10 years is quite impressive um and for sure still many uh of the industry especially in the payment industries are still underestimating it. Um but we see that it's becoming more and more competitive and relevant in the market by stretching its boundaries. Ah and operators are also quite keen um and seeing uh to develop it further and seeing the potential within the payment space for itself um and if we are looking a little bit more closer into it, dropping uh also some numbers um by a payment method where everyone is having it within their pocket all the time. Um so naming in detail for example the French market where currently uh ah something around 12 million people are regularly using carrier billing um which is almost 20% of the population in France. Um, even though considering the carrier building is currently used in France only for some specific industries. Yeah. Beside this in Germany we see that around 10% of the population are using carrier billing on a regular basis which is also quite uh, I um, think a nice fact to know. Um. Yeah. Ah and this is what I meant before, um, that it's underestimated um also by payment specialists, uh, um, who are not directly in charge of carrier billing or dealing with it. And we see a high adoption uh within this niche that people are making use of carrier billing uh and this on a regular basis. Yeah. So and this is the potential, what it has, what it makes it so exciting and this is what we are trying here at Imoco, uh, uh to unlock this potential in collaboration of course with the carriers and our key uh, client.

Speaker B: Yeah, actually I used it myself quite recently with uh, my Google Play subscription and my Netflix subscription and it was really a convenient uh process to onboard was with kpm. So now it's on my monthly uh invoice. So for subscriptions it's super convenient. How do you feel about AI? Will that affect um, your business?

Speaker A: I think AI as for many of the providers, uh, independently if uh, uh we are talking about payments or other industries, I think AI will drive optimization and personalization across all industries or various industries. Uh and it will be once again a game changer within the payment industry. Um and for sure also especially for the early adopters, uh, um, impacting the competitiveness of their setup, uh in relation to other providers. So AI, I think it's quite an important topic and uh, of course it's hyped. A lot of, a lot of things are happening in there. Um but as a payment provider you need to work on it and need to consider it otherwise you might be at risk that you're um, outdated or not competitive enough anymore.

Speaker B: When you look at the global payments market then cards are definitely the preferred payment method for digital transactions. Uh what do you see as viable challengers in their near future?

Speaker A: Yeah, as I have said the Visa, MasterCard and the other card networks have done their job and made cards uh, uh to a very reliable and familiar option uh for the shoppers, uh over the past decades. Um but for sure the recent trends are showing that the consumers are more and more preferring wallets uh due to their handiness, easiness and value added services which they might provide. Uh and on the other side the merchants are attracted by uh, the commercial competitiveness of account to account payments, um, to reduce Costs on their side. So what, what we expect is uh, that on one side that the rise of apms will continue and that they will gain further market adoption. Um, what we are not expecting is that at an end there will be a winner who will take it all. Um, so it will stay a fragmented, fragmented landscape, uh, uh, the payment landscape and uh, the consumer will uh, ask for having choice, uh according to their preferences based on their buyer situation and on the vertical, um, depending on various factors. I think so, um, and once again looping to carry a billing, uh, I think in this regard it will also get its piece of its cake, uh, the piece of its cake of the cake. Um and will especially in some of the cases in mobility have great gains, um, um and further market adoptions because just very simple reasons people are on the go in mobility cases for example and if they have to pay, therefore it needs to be seamless and fast and frictionless. And this is what carrier billing is provided here for. Sure in future cards will stay relevant especially where they are seamless. Um, they will not disappear. Um, and uh, ATMs will take over in verticals where their service, what they are providing is just better um for the consumers. Um, and account to account payments will also grow over the next two to three years especially um, driven by the merchant itself and their desire for optimizing the costs when it comes to payments.

Speaker B: Perfect. Do you already see carrier billing for EV charging use cases for example in the mobility area?

Speaker A: Yes. So when we are talking about mobility, um, EV charging is one focus area which we are targeting. Um, when it comes to carrier billing, um, here we have already onboarded uh, um some clients within this space who are making use of the advancements or advantages of carrier billing. And this is what we are expecting more to come in future.

Speaker B: Excellent. Yeah, it makes sense. You ah, always have your smartphone with you so you can always pay with carrier billing. Also as a fullback payment method, um, you have developed something called the agent model. Can you explain what it is and how it works?

Speaker A: Yes, um, I think we have to start with the PSD2 here, um, um, which is the regulatory basis. And PSD2 is foreseeing that carrier billing can be used uh, and offered by the carriers itself under what is mentioned in there, which is TELC exemption, um, by not being a licensed payment institution itself. So this is the exemption and the comfort which the Ph.D. 2 is foreseen for the carriers that they can make payments or enable payments by not having a payment license. Um, but this exemption um, is foreseeing Some limitations for the carriers um that they can use carrier billing just for the purchase of digital goods and content. Um and for this uh they are on top of it forcing a cap of €50 per transaction and uh €300 on a monthly basis. Um and if the carriers want to go beyond that or outside of those caps and limitations, um they are having uh uh two options um for getting rid of this um or to operate outside of this exemption. And one of this is of course going um for their payment license on their own. So being also a licensed and regulated financial institution which of course coming uh with a lot of efforts and quite complex uh for such organizations uh uh being not a fintech on the other side and this is what we have developed and offering to them is to become an agent of uh an existing payment institution such as the mocrum. And this agent model is empowering then uh, uh the mobile network operator to facilitate uh uh uh the payment transactions on behalf of the payment institution without uh those uh limitations which they have under the Telecommunication exemption under PST 2.

Speaker B: Yeah, it sounds really interesting. And also a bit like the payfake model that we see in acquiring. Is it very similar in your opinion?

Speaker A: Um yes, I see what you mean here. Um, I think there are some similarities. Uh, I think that the difference with the agent model is um, that within the agent model um we are enabling an unlicensed carrier to collect money on behalf of the payment institution. And I think uh this is in fact a difference to the payfake model which is uh used in the cars world.

Speaker B: Um yeah, we learned that you are an advocate of course of carrier billing. One of the solutions that you bring to market is something unique. Um so you're promoting it and bringing that of its uh digital confines. Um do you think that there are specific um countries who are more challenging to operate carrier billing in or is it as easy anywhere in Europe?

Speaker A: I think the challenges for carrier billing on the country level are more or less the same everywhere. Um, I think here uh the European Union has done its job with PC2 and I think uh the ground is quite the same uh um throughout Europe at least. Um I think there is one common challenge which carrier billing is facing in all the countries. Uh um, and this is the awareness uh of carrier billing. I um think we have also discussed it before shortly, um that not everyone is aware of payment method carrier billing and also maybe sometimes if they are aware also underestimating it um and the potential in indeed. Um but of course also the carriers are seeing this um they are working on it and especially for example in countries like Germany and Austria, um, they are working for. They have created a brand, uh which is called Saleinfaktor Hengerechnung for example in Germany. And they are on the go for promoting this brand, uh bringing it out to consumers because they are also aware that the end game is not um. Um you need to solve that. People can make payments know the end game on the market is that people are choosing and opting for the payment method which they are preferring. Yeah. And therefore they need uh to prepare the ground therefore and we need to make the people aware of it. Uh and here um, the carriers are quite close to the consumer. So therefore um they are, are working in uh an existing relationship, um with the consumers already and this is what they are making use of, um, using this existing relationship, um, educating and uh, creating the awareness, um that they can use this mobile phone also as a powerful payment tool, uh for doing payments. Ah, as frictional as you have mentioned before Andy.

Speaker B: So in the agent model you are directly connected to the telcos, I imagine. Um, and is that the only way to connect to them otherwise when they are a licensed entity for example, or do you also use aggregators?

Speaker A: Um, no. We are, we are Timoco. We are working directly with the carriers, uh especially under the agent model. Um we are enabling the carriers uh for processing the payments outside the telecommunication exemption. And um, our position as a payment institution here is um to connect the merchants via our single API, uh and give them um the easy onboarding for using Carrier M or make use of carrier billing throughout Europe.

Speaker B: Does it mitigate all their liabilities for the uh M and Ops, um operations operators?

Speaker A: I think that's also a clear advantage of the agent model, uh um what we are providing here to the carriers, um that the carrier itself, uh if it's working as an agent, do not have any liability towards the regulator itself. Of course they're having uh liability towards the MOCO being the licensed uh payment institution. Um but for the carriers itself it's almost not changing, uh, uh their processes, um, uh which. Which we are requiring so they can more or less continue how they are doing, uh and executing the processes under the digital exemption. Um and all the regulatory liabilities are lying on the financial institution in terms of reporting, monitoring, ensuring, uh the PSD2, uh compliance, et cetera. Um and this is what the carriers are benefiting from, that we are overseeing this, uh, having this in place on our side. Um, and they, they do not need to tackle this from their Side uh. Um that much um because we are taking care of it and if they are working jointly with the Moco, um our solution for the carriers here is approved by the financial market Authority uh in Austria for more than five years now. So it's ah. It's a solution in operations and not something um which is uh where you are guinea pig. Um and it's also approved cross border with uh local regulators from Hungary, Poland or in Germany.

Speaker B: Perfect. Where do you see um the best fit to uh market needs? There are so many payment methods out there. Where does area billing uh fill in a gap?

Speaker A: Um I think it's, it's the same ratio behind it uh as it is for all the other APMs. Um um I think it's depending on the situation and on the consumer preference um where people are then opting for carrier billing. Um and here we see a good opportunity uh with some of the verticals like mobility for example um where carrier billing is uh an EDL solution for this industry. Um as mentioned or teasers already in this industry in mobility use cases payments needs to be fast and frictionless. Um so carrier billing is here creating uh the convenience for making this quick low uh value transaction uh which are very oftenly done um as in app purchases for parking tickets or for public transport. Um so the nature of carrier billing uh is more or less that it's um pre installed or something like a native payment method on mobile phones um which is exactly uh the reason for being that native or that uh um predefined for those kind of use cases by providing this fast and seamless attack usage uh without having lengthy registration requirements in place. Um and this all in combination with unbeatable uh broad reach which Carrie billing is provided. Yeah so it's more like a broadband that antibiotics for this industry being so frictionless and easy um and powerful tool for guest checks out for example or for mobile first users.

Speaker B: Excellent. And what are the key certificates that you operate in right now?

Speaker A: As said uh. One of it is the mobility space uh where we are offering uh and pushing carrier billing uh quite strongly in um something uh beside this is uh the igaming and the sports betting industry. Um so this industry we're also heavily targeting um uh with the differentiator and the strength of carrier building um because we believe in that carrier building is uh very well designed and very beneficial for the needs of this industry. Um here we are again building up on the knowledge uh which we have uh gained over the past uh decades. Um also the experience which is including the the regulatory frameworks which you need to consider and the compliance uh throughout all the restrictions um or for safeguarding uh and ensuring legal payments. I uh think that's a very important topic for those industry and this is what we are uh what we are providing with carrier billing throughout this industry. And for us carrier billing is most of the time the starting point with clients in within those industry. And by providing carrier billing uh we are creating partnerships who are then over time tending to grow beyond that that we are coming into the position for also providing our other services like acquiring services or other apms uh towards those industries. And uh therefore the uh IG industry is quite uh an interesting one for us too where we are heavily focusing on and last but not least uh I think what you have mentioned before with your Netflix example for example content um is the origin of carrier billing um all the digital space and this is still something which we are heavily focusing on with carrier billing. So all types of contents which are meanwhile usually streamed uh um we are focusing on for the same reasons as we have mentioned already before um enabling instant payments uh and instant access by providing payment uh options with a very low barrier.

Speaker B: I liked your um mobility focus as well and uh I learned that micro mobility is part of the segments that you serve across Europe. Can you um um elaborate a bit on that on those use cases?

Speaker A: Um yeah I think micro mobility itself um I think it has also transformed uh transformed uh or have changed quite heavily over the past decade um micro mobility have transformed how people are moving around in cities. What um we are seeing is uh an increased usage of multimodal uh mobility within the city. So people are jumping over from uh uh the train to the subway uh to the bus doing uh them the last mile via scooter or a bike uh shared ah services um so users are very often switching between mobility providers and therefore we see a strong need of seamless and frictionless payment methods um which the wallets for example PayPal especially in Germany but also of course Apple Pay um and carrier billing are addressing um and therefore those payment methods uh are due to the mentioned reasons are in pole position for this industry. And again I think here there is no single payment method uh approach required or done by the merchant. I think you need to consider uh all your consumers needs uh and preferences uh so sure uh that in the long run no clients are getting lost. And here as mentioned carrier billing is ah quite a promising solution especially in use cases um where we see ad hoc payments uh required um and for example we are Working here, um, with larger rental providers, um, um for bike sharing for example or as already mentioned uh, with EV charging providers and within those industries, um, if I might add this, uh we can also see that carrier billing is getting um, some nice piece of the cake uh within the payment mix. Um so to say that the carrier billing can also reach up to 20, 25% within uh the payment mix, um, as a share. Um and I think this is quite a good point to start and we are looking optimistic into the future to even grow this.

Speaker B: Yeah, that's really impressive. 20, 25%. So then it's a must have you would say uh, final question M. The acquired landscape is quite saturated. There are many acquirers out there competing for merchant um contracts. How do you beat the competition at Democo?

Speaker A: Yeah, that's a tough one. Yeah. And uh, heavyweights too. So that's um, challenge accepted. And uh, there is just one way forward and I think this is by providing trust, trust into our expertise. Uh and this in combination uh with some piece of solidity. Um, and our clients can see this or our potential clients can see this on following criteria. Um but we are as mentioned at the beginning, we are experienced on the market since almost 25 years now, um, uh and are providing a very solid and reliable uh, uh, um basis for this regulated uh as a payment institution here in Austria and not at some point more exotic uh, uh countries. Um and on top of this what we need to consider that Timoku is still a private owned company um, which is enabling us for making our own decisions um, in interest of our clients. Um, and if you need to look into the merchants, especially if you are thinking about high brand risk industries, um, if they are working with um, for example stock listed companies, um, they cannot be sure um, if the decisions which there might be done at the board are in the interests of their merchants, um, so they are always at risk that there might be some decisions done who are not in their risk. Uh and this is ah the comfort and the solidity and the reliability what we are providing um, and which we see as oneness of our advantages which we are providing. And of course it's about understanding the client needs um, and to analyze them and to see uh, um that there might be also some risks, uh and to make sure that those uh, um that you're making according measures uh for mitigating those risks, whatever the risks are. Um. Yeah and this in combination being an acquirer on one side, uh, um, having on top of this a differentiator with carrier billing is putting us in a quite unique, uh, situation. And I think this is giving us a very competitive edge.

Speaker B: Yeah, perfect. Thank you very much, Klein and Sleidner, uh, CEO of D moco, for elaborating on how carrier billings should be part of our payments mix. Any merchants and BSPs will look into this with, uh, a lot of interest, and we will definitely follow the topic. So thank you very much for your, uh, expertise and considerations.

Speaker A: Thank you so much, too. Versus In Payments. Expert insights for a digital payments world.