Apple quietly expands into an industry poised to take off

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A year after allowing iPhone users to charge purchases to their phone bill, Apple is now offering the service in seven markets in Europe, Asia and the Middle East.

There's so much demand in Russia that Apple just signed its second carrier deal there, this time with MegaFon. And Etisalat in the United Arab Emirates announced on Thursday that carrier billing is available for "all your entertainment purchases."

In August, Apple introduced carrier billing with phone companies in Switzerland, Taiwan, Japan and Saudi Arabia.

Carrier billing allows customers to buy music, games, books and other apps and add the items to their phone bill, rather than paying by credit card. In countries with less bank account and credit card penetration than the U.S., carrier billing is a big boon to digital commerce.

Google got a major head start in mobile payments and has signed up carriers in 45 countries to power billing through the Play Store.

With the addition of MegaFon, Apple is now working with two of Russia's top three mobile phone companies. In December, the iPhone maker opened phone payments with VimpelCom's Beeline unit. That was only its second deal. The first was in Germany a month earlier with Telefonica O2.

According to research firm Ovum, the market is poised to explode. Carrier billing generated just $3.2 billion in sales globally in 2015, but could multiply more than 40-fold by 2020 to $142 billion. The biggest impediment to date has been the high fees that phone companies impose to handle transactions, when compared to how much credit card companies charge.

Those fees are coming down to a point where digital stores can make handsome profits.

Asia Pacific accounts for the majority of total revenue and is expected to remain the dominant area for carrier billing throughout Ovum's forecast period.

By Ari Levy

Source: http://www.cnbc.com/2016/11/04/apple-quietly-expands-into-an-industry-poised-to-take-off.html