Facebook likely paying carriers big cuts for mobile web payments system

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By Kim-Mai Cutler Comment

Now that Facebook finally unveiled carrier-powered payments for the mobile web yesterday, it’s time to look at what the potential costs might be. Last month, U.K.-based mobile billing and analytics provider Bango announced to shareholders that it had a new partnership with Facebook, but that it couldn’t disclose the terms. Bango powers billing for app stores and also has a deal with Amazon.

Here are Bango’s standard payout rates for the carrier partners Facebook mentioned yesterday. (Important note: These are not Facebook’s actual rates. These are Bango’s standard rates. It is possible that because of the social network’s clout and scale, the company might have been able to wrest slightly more favorable terms. But this should give you an idea of how expensive the carrier’s cut is for Facebook.)

Bango’s standard carrier payout rates:

AT&T – 60%
Deutsche Telekom – Unknown, because Deutsche is not a Bango partner.
Orange – 83%
Telefónica – 55%
T-Mobile USA – 57.5%
Verizon – Unknown, because Verizon is not a Bango partner.
Vodafone – 79.2%
KDDI – Unknown, because KDDI is not a Bango partner.
SOFTBANK MOBILE Corp. – Unknown, because Softbank is not a Bango partner.

Since Facebook pays out a 70 percent revenue share to developers, any time a carrier remits less than 70 percent, Facebook is taking a loss on facilitating these transactions. When you factor in the research and development costs of building the mobile platform, it’s almost certain the company will be losing money on this area of the platform for some time.

Now to anyone in the mobile industry, this really shouldn’t be a surprise. Terms for carrier billing have always been onerous. Facebook has dealt with this in the past as it’s been possible to pay through carriers for Credits on canvas games through the Zong partnership. Google is also in a similar position when it comes to in-app payments on Android via carrier billing.

Continue reading on our sister site, Inside Mobile Apps.