As various mobile payments companies jockey for position in the growing carrier billing market, Payvia, which was established two months ago, stresses that it has a strong history.

In launching its first mobile payments service for carrier billing with the support of T-Mobile USA Inc. and Sprint USA, Payvia says it will benefit from eight years of experience as a piece of the carrier billing network provider m-Qube Inc.

M-Qube focused on ringtones and other phone-based entertainment. It created Payvia as a separate line of business to focus on a broader array of digital goods, such as ebooks.

M-Qube paid out more than $2 billion to merchants since 2004, and its success sets the stage for Los Angeles-based Payvia to establish itself as a payment processor working "purely through a carrier billing network," says Darcy Wedd, co-founder of Payvia.

The market for making and accepting payments for digital goods and services from mobile devices, with billing going directly to the consumer's mobile phone carrier, has increased significantly in the past two years, Wedd says.

"We're obviously not the first company to do it, but until recently the market was in a trial mode, with limited support," Wedd says. "More digital goods and services can now be supported by carrier billing, and consumers are engaging more with online products."

Consumers now expect to have to pay for digital products and services, such as newspaper or magazine subscriptions, that previously may have been free, Wedd says.

However, the market hasn't changed enough to have mobile carriers thinking about supporting the billing of physical goods purchased by consumers, Wedd says.

"The major obstacle for carriers is the costs of physical goods," he says. "Digital goods cost maybe $30, but physical goods could be $100 or more, and it becomes a different business model when you add the shipping of goods."

Carrier billing is a huge opportunity for some mobile payment companies, but carriers will be reluctant to dip their toes into general purpose payments, says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group, LLC.

"Consumers spend a certain amount on their phone bills and when it tips over that amount, they blame the carrier," he says.

Payvia will target application developers and online merchants with the carrier-billing service, pitching it as an easy way for merchants to accept mobile payments and streamline their checkout process. This should reduce consumers' abandonment of purchases because of too many checkout steps, Wedd explains.

After Payvia establishes access to the carrier networks, digital merchants will find the carrier rates to be lower than those at an App store, he says. Carrier rates have declined significantly since initially hovering around a 50% interchange rate, but Wedd did not disclose the current rates, nor what Payvia charges merchants for its service.

Consumers can use Payvia online with a desktop computer, laptop or tablet, or through a mobile phone, Wedd says.

When choosing a "pay by mobile" button at checkout with an online merchant offering Payvia, the consumer is asked to confirm the mobile phone number prior to authorizing the transaction and having the bill sent to a carrier.

If using a computer, the consumer enters a mobile phone number and receives a four-digit PIN Payvia sends to that handset. The consumer uses the PIN to authorize the transaction.

In convincing online merchants to incorporate Payvia, Wedd says his company will concentrate on understanding how the merchant's checkout system flows, and the general price point of the digital products. "It is important for us to know their mix of free uses and actual paying customers, and what their tracking shows about at what point a checkout is usually abandoned," Wedd says.

Merchants do not need to purchase or download special software, he adds.

The carrier billing market has become a crowded field, with players such as Boku Inc., which also recently secured carrier-billing deals with Sprint USA and Deutsche Telekom in Germany.

In the past, m-Qube defended its ground in carrier billing, initiating a lawsuit last summer against Zong Inc., now owned by e-Bay Inc. In the lawsuit, m-Qube claimed Zong infringed on its patent for connecting merchants to mobile carrier billing systems.

Currently, Payvia offers carrier billing only through T-Mobile or Sprint, but plans to add more carriers in the future, Wedd says. In addition, the company will soon announce new merchant clients as well as the acquisition of a company that will give Payvia "more global reach" in the future, he adds. He would not name the company.

Last summer, T-Mobile pushed the concept of carrier billing for digital goods when it announced deals with several mobile billing companies.

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