Boku has expanded its carrier billing mobile payment service into three European markets via a new business model that involves handing control over to mobile network operators.
The result is Boku will bring direct carrier billing to Google Play (Google's version of Apple's App Store) for more than 75 million mobile subscribers in Germany, Belgium and the Netherlands.
San Francisco-based Boku has provided direct carrier billing for digital goods since 2009 under a business model in which merchants hire Boku to bring its services to their digital marketplace, thus attracting as many carriers as possible. Thus, Boku's main focus has always been on luring merchants to its service.
In a different twist on that model, Google Play traffic is now coming to Boku through requests from the mobile network operators.
Google created its own carrier billing platform and invited carriers to join, spawning a cottage industry of various technology companies offering to assist carriers to integrate into Google Play, said Adam Lee, chief product officer for Boku.
"Carriers on the Google platform began noticing that many merchants were using Boku for direct billing," Lee said. "Those carriers began determining that Boku could handle their Google Play transactions as well."
Boku developed new partnerships with four carriers through this process for Google Play in Europe, providing its service in which consumers making purchases of digital apps, books or music have transaction costs added to their phone bills. Lee said he was not able to reveal the names of the carriers at this time.
Boku's only previous connection with Google has been in Saudi Arabia. The Google Play announcement in Europe follows Boku's launch late last year in offering carrier billing on Microsoft Windows 10 through Sprint in the U.S. and Swisscom in Sweden.
The move into the European markets with the Google Play model means the carrier billing marketplace is "becoming more of a network than just a whole bunch of different carrier service providers using text message payments," Lee said.
Boku's view has always been that carrier billing is not about simple convenience or paying through text messaging and codes, Lee said.
"Carrier billing is about accessing the source of funds that are buried inside of every working handset in the world," he added. "They all have micro debit or credit accounts inside, and if you can tap into that digital currency, you could in fact create an alternative payment network."
To that end, Boku has been pushing Boku Direct, a system in which the consumer's telephone number becomes the payment mechanism.
"We were never interested in the short messaging service dance to begin with, so why not just store a number and let the merchant just charge the phone without the SMS billing events?" Lee said.
The goal is to get carrier billing operating like a credit card network without the cards, Lee said. A text message can still operate as an authenticator, but would not be needed for every transaction.
Boku's expansion into Google Play shows carrier billing continues to be stronger in Europe than it is in North America, said Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.
"Boku is obviously trying to open new distribution channels and this is an admirable announcement, but with embedded payments taking off for all other types of accounts, it makes you feel that carrier billing has maybe missed the train," Crone said.
As mobile payments become far easier with buy buttons and other advancements, it is not likely carrier billing can catch on in the future in a physical goods world and will remain mostly a convenience for games, Crone added.
"Platform providers have added carrier building to pick up additional sales that they might not otherwise pick up," Crone said. "But carriers don't want the challenge and the need for a robust infrastructure to deal with chargebacks and customer service regarding purchases of physical goods."
Apple made its initial move into carrier billing acceptance in Russia late last year, reportedly working with Boku to provide consumers with the payment option for iTunes purchases. But neither company confirmed that relationship.PayPal sought a foothold in carrier-billing services as far back as 2012.
New efforts are underway to bring carrier billing to the physical goods market in various partnerships, but none have gained widespread acceptance.
But a common platform like Google Play is "really important for the advancement of this industry," Lee said.