Boku, which lets users make purchases with their mobile phones the same way they would with a credit card, just announced a partnership with the BilltoMobile payment service, which is directly connected to the Verizon Wireless billing system. Rival payment service Zong has established the same partnership.
This means that Verizon customers can purchase virtual goods, apps and other items and bill them directly to their cell phone bill. BilltoMobile, which has been pursuing an aggressive expansion plan in the US, is also integrated with AT&T’s billing platform.
Boku users type in their phone number and receive a text message to confirm the purchase. The cost of the transaction then goes on the user’s monthly cell phone bill. Boku’s mobile payments platform is live in 65 countries worldwide, with direct billing connections to carriers around the world including AT&T in the US and Vodafone in the UK. Zong is the mobile payment provider for Facebook credits and provides payment capabilities in close to 50 countries.
One problem with text-based mobile payments is that the carrier charges up to 50 percent of the transaction cost as a fee for a premium. BilltoMobile charges lower fees of 15 – 17 percent by integrating directly into the carrier’s billing system. It has been argued that this type of carrier-billed payment will not go mainstream until fees drop closer to the 5-7 percent charged in countries like South Korea. Boku declined to reveal the fees charged in the Verizon case.
Boku was founded in 2008, has around 50 employees and is based in San Francisco. It has raised more than $38 million to date from venture capital firms including Andreessen-Horowitz and Benchmark Capital. Zong is based in Menlo Park and is backed by Matrix Partners, Advent Venture Partners and Newbury Ventures.
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