Yet another emerging payment scheme sees an opportunity to claw at the soft underbelly of legacy point-of-sale payment systems, following in the footsteps of PayPal Inc., which is testing its traditionally online payment service inside Home Depot and Office Depot stores.

Boku Inc., which specializes in enabling consumers to charge virtual goods to their cell phone bills, wants to break out of its niche by enabling wireless carriers to build their own merchant-funded mobile-payment networks.

The San Francisco-based company on Feb. 23 unveiled Boku Accounts, a broad payments platform it has designed that wireless carriers could offer directly to subscribers and would support online, mobile and in-store purchases at brick-and-mortar retailers that accept credit or debit cards.

The concept requires a bit of legwork for carriers, however.

To participate, wireless carriers would need to provide subscribers with a reloadable prepaid network debit card account for purchases. Consumers could then load funds to the account to make purchases online using a smartphone app Boku has created for Apple Inc. iPhones, handsets that use the Google Inc. Android operating system or at the point of sale using the carrier-issued prepaid cards or stickers Boku plans to supply equipped with contactless chips, the firm says.

“Given the tight relationships wireless carriers already have with consumers, it makes sense that they should work more directly with merchants to leverage mobile payments,” Ron Hirson, Boku president and founder, tells PaymentsSource.

Significantly, the platform’s success would hinge on creating a broad array of customized merchant discounts and deals to generate additional revenues for Boku and participating carriers.

Using Boku’s platform, wireless carriers would send their subscribers merchant offers via Boku’s mobile app, text messages or emails. Consumers that opt to receive the offers and participate in the scheme would be prompted to sign up for a carrier-branded prepaid debit card account.

Initially Boku is backing its accounts with a Boku Accounts MasterCard Prepaid card issued by IDT, a Gibraltar-based bank. Issuing banks will vary based on geographic region.

MasterCard is backing the effort as its initial partner.

Mung Ki Woo, MasterCard group executive, said in a Feb. 23 press release that Boku Accounts gives wireless carriers' customers "the power and convenience of MasterCard mobile prepaid with (contactless payment technology) to make purchases in stores or online at millions of merchants worldwide with their mobile phones or companion cards.”

Participating consumers could initiate transactions through any of the channels Boku supports and would receive notification via text or email confirming the transaction, Hirson says.

Merchants would pay a fee for each successful promoted purchase, and Boku and carriers would split that revenue, Hirson explains. Purchases that were not part of any promotion or discount would “work just like any prepaid reloadable transaction,” he says.

Carriers would determine prepaid card reload fees, if any, Hirson says.

“The system allows a lot of flexibility for carriers to design the program however they want it, and it gives merchants a chance to send targeted offers to consumers without making any changes at the point of sale in their hardware or software,” he says.

Wireless carriers’ eagerness to capture fresh revenues from mobile payments drove the scheme’s development, Hirson says.

Bill-to-carrier services typically generate revenues of 12% to 18% for carriers, industry experts say (see story).

While Boku has yet to announce any participating wireless carriers or merchants, the company is testing the platform with an undisclosed mobile carrier in the United Kingdom and expects “a lot of interest” from U.S. wireless carriers, Hirson says.

The firm plans to work with both carriers and merchant acquirers to develop merchant offers for consumers, Boku says.

“Merchant acquirers presently are not very differentiated from one another, so we expect our system will appeal to them as an add-on service,” Hirson says. But some carriers may want to devise their own merchant offers, he says.

Analysts point out many hurdles Boku must surmount to gain wide adoption of its new technology.

“One of the challenges with a broad-based merchant-funded payments network is getting merchants to engage,” Todd Ablowitz, president of Double Diamond Group in Centennial, Colo., tells PaymentsSource.

And several previous merchant-funded mobile-payment offerings have failed to take off, such at First Data Corp.’s NFC-equipped effort harnessing Go-Tag stickers for merchant discounts.

Bling Nation, a startup that made headlines a few years ago and attempted to build a mobile payments network via localized merchant discounts, shut down operations last year (see story).

At the least, Boku’s concept aims to combine all the hottest emerging mobile-payment concepts into one broad platform, Ablowitz notes.

“Mobile is growing like crazy, prepaid is also exploding with growth and everyone is chasing a mobile wallet concept that will reach across both consumers and merchants broadly,” he says. “Boku is aiming for something that would blend all of those goals.”

Boku, with 100 employees, $70 million in funding and the backing of leading Silicon Valley venture capitalists including Andreessen Horowitz, Benchmark Capital, DAG Ventures, Index Ventures and Khosla Ventures, aims to reach its goal gradually, Hirson says.

Since its 2009 launch, Boku has built a virtual-goods online payment system that reaches 3 billion consumers worldwide in 66 countries, with 243 different carrierS including Verizon Wireless and AT&T Inc. (see story).

“We have solid relationships with carriers, which have a big opportunity to reach consumers directly for merchant deals and with our platform there is no reason to wait for terminals to become NFC-ready in order to provide flexible mobile payments,” Hirson says.

PayPal, a unit of eBay Inc. of San Jose, is testing a method for accessing its online payment system at the point of sale with or without a plastic card. PayPal users who choose to forgo the card can enter a phone number and a PIN instead (see story).

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