Singapore-based Coda Payments will partner with Axis Telekom Indonesia, which has 17 million customers, to provide a carrier-billing mobile pay service for e-commerce merchants, the companies announced Feb. 12.
Coda says the billing option allows consumers to turn their mobile phones into payment devices to purchase digital content as well as physical goods and services.
The company says it differs from others targeting the market, such as Bango, which announced last week it would expand into Asia with its carrier-billing service. Bango provides the billing option for digital content owners while targeting smartphone users who often purchase apps.
Monitise PLC also revealed plans this week to test person-to-person payments through a short-messaging service on BlackBerry Messenger devices in Indonesia.
A consumer purchasing digital content through Coda would make payments only through their mobile phone account, Paul Leishman, Coda’s chief operating officer, states in an e-mail.
Coda operates a system with some similarities to Safaricom’s M-Pesa, launched in 2007 in Kenya, where consumers make payments or access money from ATMs through accumulated minutes on their mobile phone accounts.
“In Indonesia, the vast majority of mobile customers, about 99%, have prepaid accounts, so the value of their purchases is deducted immediately from their prepaid balance,” Leishman says.
Axis phone customers make payments through their devices by choosing “Beli Pake Pulsa,” the company’s high-speed payment option on a merchant website, which then prompts them to provide their phone number, Axis says. Coda sends a text message with a confirmation code, which the consumer uses to confirm the purchase.
Many merchants in Indonesia who accept Coda payments through an application interface have already informed their customers they can make purchases using their “pulsa” balance, and many more merchants will be activated for the system in the coming weeks, Leishman says.
Launch partners include Indonesia’s largest eBook store, a digital comic book distributor and a games publisher, the companies say.
Coda hopes to increase revenue for those merchants by handling the payment messaging process rather than turning it over to a carrier. Consumers do not pay for the service because they need only to send a free text message to confirm a purchase.
Coda would not disclose details of its fee structure, in which it charges merchants a percentage for processing transactions and shares revenue with the mobile carrier.
Payments cannot be linked to a bank account or a PayPal account, but can be deducted from the prepaid balance or added to a customer’s postpaid bills, Leishman says.
“Bank account penetration in Indonesia is very low, so we view the ability to leverage the millions of mobile accounts that mobile operators have already issued to customers as strategic,” Leishman says.
Such a strategy illustrates the difference between mobile payment development in emerging markets compared to developed countries, even though the latest developments make it appear Indonesia has suddenly become a mobile pay hotbed, says Richard Oglesby, senior analyst and mobile pay expert with Boston-based Aite Group.
“It’s not really mobile payments taking off in developing countries, it’s more about growing financial services,” Oglesby says. “The mobile device is so ubiquitous in emerging markets, so it’s the natural vehicle to provide financial services.”
Indeed, Coda estimates that fewer than 1 million of Indonesia’s population of 240 million owns a payment card.
Even though developed countries still have unbanked consumers, the penetration levels are much lower, Oglesby says. “Mobile payment is a very different thing in developed countries because it’s more about digital commerce and shopping.”
In developed countries, the consumer may shop through a mobile device, but then separates from that device to pay, Oglesby says. “So it’s a matter of getting them to complete that transaction from the mobile device.”
In places like Indonesia, the mobile phone becomes the access tool to basic financial services, and making payments or transferring funds through the device is a natural part of that process, he adds.
Coda Payments has been in operation for just over a year, getting investment backing from Japan’s GMO Venture Partners, Singapore-based Goldengate Ventures and Digital Media Partners.