A deal involving online payments company Vindicia Inc. and mobile phone payments-platform company Boku Inc. may help bring online payment capabilities to more unbanked and underbanked consumers.
The companies announced their partnership Feb. 29 (see story).
Vindicia’s cloud-based CashBox software supports payment options for its online merchant clients to offer consumers. With Boku’s relationships with 250 mobile carriers in 67 countries, Vindicia now can sell its service to clients with specific target demographics. WorldPay US Inc., Live Gamer Inc. and Visa Inc.’s PlaySpan are among the online-payments companies that integrate with Boku’s platform.
Anyone who is unbanked or underbanked may find mobile carrier billing ideal, as might individuals who do not want to share financial information online–a sensitivity prevalent in Eastern Europe, Kurt Davis, Boku vice president of marketing and sales, tells PaymentsSource.
With Boku’s service, a consumer visits a site and selects a product or service for sale and at checkout chooses the option to pay by phone. In a white-label role, the CashBox billing software asks for the consumer’s mobile phone number.
Boku, whose application programming interface is integrated with Cashbox, identifies the carrier and sends an authorization text message to the consumer’s mobile number. The consumer confirms the transaction by touching an affirmative button on the text message, and Boku sends the purchase amount to the consumer’s mobile carrier bill through integration with the carrier’s application programming interface.
For the funds transfer, the consumer pays his phone bill, and the carrier sends the funds to Boku, which deposits them into the merchant account via Vindicia, Davis says. Boku pays all merchants within 90 days because carriers’ payments cycles vary globally from 60 to 120 days, he says, noting that for an extra fee to the merchant Boku can pay in 30 or 60 days.
Buyer attrition decreases because of the carrier-billing option, which helps to drive more sales for online merchants, Davis contends.
Boku generally can increase a U.S. online merchant’s revenue by 8% to 10%, he says, citing company information. Consumers in Western Europe–Germany, France and United Kingdom–are more familiar with billing purchases to their carrier account. They also use prepaid phones more, so the online merchants could see their revenue increase 20% to 30% from consumers from that region, Davis claims.
And with relatively little credit card use in Asia and Latin America, online merchants there could see their revenue rise at least 50% through carrier billing, he contends.
Sanjay Sarathy, Vindicia senior vice president of marketing, tells PaymentsSource the partnership will help CashBox clients appeal to merchants whose customer base is the right demographic for certain products and services, for instance younger consumers who have no bank accounts or credit options.
“Social applications and the gaming industry have been on the leading edge using mobile as a means for consumers to pay,” he says. “From a competitive perspective, CashBox is in a very good position because we think we have the broadest spectrum of payment methods to offer. We are payment-method agnostic.”
Vindicia’s revenue comes from a percentage of successful transactions between CashBox and the digital merchant, Davis says. Boku takes a standard fee from each transaction, Sarathy says.
Depending on the region, carriers will take 10% to 50% of the purchase amount from the merchant, Davis says. Carriers in developed regions take less, while those in undeveloped areas take more, he says.
“The general trend is all the major carriers and operators are moving towards the 10% amount,” says Davis.
PayPal Inc. has launched a payment exchange, and it is hoping participating telecommunication companies lower their carrier-billing fees so more online merchants can benefit (see story).
As carriers lower the fees they charge merchants, mobile-account billing will become a more viable payment option for merchants that sell higher-priced goods and services, Davis says. He predicts Boku will expand into sites that sell digital content, like music, downloadable software and video.
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