Mobile payments provider Fortumo Ltd. landed a major European carrier-billing deal last week, less than a month after revealing a significant partnership with Microsoft for mobile payment development on Windows phones.
Fortumo signed agreements to provide app developers with direct carrier billing connectivity to network operators Telef-nica and Telenor through Telef-nicas BlueVia Payments application interface.
The technology allows consumers to buy digital content over the Web and from Android and Windows mobile devices and pay for those purchases as part of their phone bill.
The deal brings the option of direct carrier billing services to 460 million customers of those phone services worldwide, Fortumo stated in a press release.
The carrier and Microsoft deals are further indications that Fortumo, in only its fifth year of mobile payment service, intends to make a name for itself in direct carrier billing.
But it's still going to take some time to see just how big an opportunity Fortumo can pursue, says Gil Luria, analyst with Los Angeles-based Wedbush Securities.
"Fortumo is laying out the technology partnerships to make direct carrier billing happen, but there's still too few consumers using it," Luria says.
Carriers have the networks to provide an alternative payment method to plastic cards, but the technology is in its early stages, Luria says.
"It's hard to say how big of a category direct carrier billing can be," he adds. "It will take some time before this application's place in payments becomes more evident."
In the meantime, Fortumo views its deal with Telef-nica and Telenor as "a tremendous boost" to the company's direct-billing coverage in parts of the world where mobile payments enjoy fast-paced growth, Gerri Kodres, Fortumo's senior vice president of business development and carrier partnerships, states in the press release.
Fortumo is targeting regions where telephone use is more widespread than credit card use. Brazil, one of Telef-nica's key markets, has 260 million mobile users, but only 60 million credit cardholders, Kodres says.
"Developers usually don't want to do a different billing integration for each mobile operator or store," Kodres says. Fortumo's technology enables developers to gain billing access to the subscriber base of many mobile operators in 80 countries through one integration, Kodres adds.
Such an approach will remain Fortumo's calling card, says Rick Oglesby, senior analyst and mobile payments expert with Boston-based Aite Group.
"Fortumo is trying to make the process of carrier billing as simple as possible for app developers," Oglesby says.
Whether companies such as Fortumo can expand into other mobile payments technology remains uncertain. Some may try to use their technology to connect to a mobile wallet that contains payment cards, rather than to a phone bill, Oglesby says.
"There is some opportunity to become a more general-purpose player," Oglesby adds. "But for now, if carriers are funding the transactions, they are not interested in becoming a financial institution dealing with chargebacks and disputes."
As such, Fortumo would need a financial institution partner to delve into other mobile payment initiatives, Oglesby says.
Fortumo's in-app purchasing software developer kit is in use by Rovio, Popcap, Gameloft, Digital Chocolate, Vostu, Game Insight, Alawar and others, the company says.
The Telef-nica and Telenor agreement boosts Fortumo's payment platform to reaching potential users in more than 80 countries, the company says.
Earlier this year, Barnes & Noble's Nook Media unit announced that Fortumo would provide the technology to allow app developers to sell digital content in the Nook Store. Fortumo's "pay button" in the mobile app routes payments for digital content through its mobile carrier partners.
Fortumo's European office is located in Estonia, and its U.S. office is in San Francisco.
Fortumo did not respond to inquiries prior to deadline.
A few days before Fortumo's announcement, a competing direct carrier billing provider, Los Angeles-based Payvia, acquired Mogreet to establish mobile marketing as part of its payment services.