Getting Direct About Mobile Payments

Jan 26, 2012

Mobile payments is a phrase carriers, merchants, and consumers alike are hearing more each day. From buzzy topics like NFC to daily news stories on the wallet-less future, it seems that everyone is preparing themselves for aGetting Direct About Mobile Payments future where a mobile phone will become a huge part of the consumer’s purchasing experience. Some types of mobile payments include:

• Apps, in-app, and mobile browser purchases
  • Using a mobile browser for e-commerce (using Safari browser on iPhone for purchases on Amazon)
  • Purchasing an app (downloading Angry Birds through the app store)
  • In-app purchases (purchasing the Mighty Eagle while playing Angry Birds)
• Physical world purchases
  • Using a mobile phone at point of sale using NFC tap
• Carrier billing using phone as funding source (Use BOKU to check-out using your phone-number, and charge against your pre- or post-paid mobile phone bill)
• Sending money to a friend using phone (e.g. – a company called M-Pesa in Kenya allows users to send money from family member to family member)

To focus the conversation for purposes of this article, we’ll be focusing on direct carrier billing, which is one of the mobile payments solutions we provide at BOKU.

Cash, debit, credit, or mobile phone number?

When looking at mobile payment transactions, there is a distinction that can be made between where the purchase is made and how. For most consumer goods, the “where” is either a physical brick and mortar store or a website. “How” the charge is made is usually against a credit card, a debit card, or cash / cash equivalent (e.g. – a general purpose reloadable (GPR) card).

With direct carrier billing, the funding source for the transaction does not change – it’s still cash, debit, or credit. “How” the charge is made, however, changes significantly. BOKU charges against a person’s mobile phone bill allowing the consumer’s mobile phone number to become a unique type of payment instrument. This helps to solve a big challenge in the payments space – enabling a population of underserved consumers lacking banking services and card-type payment instruments to participate in online purchases. In addition, BOKU reassures the safety-conscious consumer who prefers not to enter in sensitive billing information such as personal data and payment card details to purchase with peace of mind through a safer 2-step authorization process. And, the simple checkout experience makes charging to a carrier phone bill more convenient than other methods, appealing to many people as the best option for checking out quickly.

The future mobile consumer experience encompasses many mobile payment methods. Using a mobile number to transact and charging to a carrier bill is a profound shift in the purchasing experience and taps into a tremendous market opportunity that is unreachable through many of the current payment methods. Though there are limitations in “where” this type of mobile payments can take place today, in the near future, BOKU believes a direct carrier billing transaction will be able to take place anywhere, whether it’s online, peer-to-peer, or at brick and mortar stores.