CallBack

A callback (call-back) is an arbitrage method of making phone calls via a 3rd party to lower costs. It was very popular for making low cost international calls. It worked because international phone rates were very asymmetrical, i.e. it cost much more to call in one direction than the other. For example, it might cost $0.10/minute for calls from the United States to Brazil, but cost $0.50/minute if the same call was made from Brazil to the United States.

With the advent of ubiquitous low cost VOIP much of the rationale for using callback services vanished. Some countries have tried to block VOIP usage to bypass their high rates, and have even threatened VOIP users with jail. But its been a losing battle, many countries have been forced to lower their high phone rates to remain competitive.

Here is how it worked:
Assume Jose in Spain wants to call Rose in Chile. The phone rates if Jose placed this call directly from Spain to Chile would be very expensive. So instead Jose used a call back service in the United States. The United States had cheap phone rates for calls to both Spain and Chile.

Jose in Spain calls a special phone number in the United States, he lets its ring once and hangs up before its answered, thus incurring no charge for the call.
The callback service in the United States, sees that Jose has called, places a low cost USA -> Spain phone call to Jose.
Jose answers the incoming call from the United States, he then enters Rose’s number in Chile using his phone’s DTMF keypad.
The callback service now places a second low cost USA -> Chile call to Rose.
Rose answers the incoming call
The callback service bridges the two calls together so that Jose and Rose can talk just as if they had called each other directly.
When the call completes, the callback service bills Jose’s account for the cost of the two calls plus their profit margin, which ends up being far cheaper than if Jose had called Rose directly.

Callback services are still around and will be as long as there are rate disparities to arbitrage. Now web or SMS messages are also used to setup calls.