Boku brings direct carrier billing into the physical world thanks to license

In the last few years, companies who provide direct carrier billing services moved beyond digital content and into the physical world as consumers used the payment method for goods and services such as event tickets or time at a parking meter. Boku, a San Francisco-based direct carrier billing company, wants to take a bigger leap into the physical world and today announced it signed agreements with the U.K.'s three major mobile network operators to let those customers charge items such as bust tickets and magazines to their phone bill. The company also wants to expand its merchant reach with businesses that sell food items and become a staple at vending machines.

"The areas we're focusing on are areas where the consumer is out and about and they are looking for convenience with impulse purchases," James Patmore, managing director of EMEA for Boku, told Mobile Payments Today in an interview. "Our mind is quite open to where we're going to go [in the physical world], but we're focused on making this a success in some initial launch areas."

Boku's ability to offer direct carrier billing for physical goods stems from an e-money license it obtained in 2012 from the Financial Conduct Authority, which is a regulatory body in the U.K. that regulates firms providing financial services to consumers. The company's license also applies to each country in the European Union as well countries in the European Economic Area. Patmore said the e-money license enables Boku to extend carrier billing to physical goods, which in turn gives merchant peace of mind when dealing with the company.

Potential

While direct carrier billing is not the first thing that comes to mind when people think mobile payments, it has the potential to generate revenue for both third-party vendors enabling the payment and mobile operators. Juniper Research believes in Europe alone the value of digital content billed via direct carrier billing will reach more than 5.2 billion euros (US$7.1 billion) in 2017. The introduction of physical goods into direct carrier billing should boost those estimates. Will Hahn, principal analyst for communication service provider strategies at Gartner, believes direct carrier billing for physical goods can help MNOs (and the third-party vendors) become competitors to the established companies in the e-commerce and mobile commerce markets such as Amazon, PayPal and the card networks. An MNO could capture just 2 percent of those markets and it would "really represent a step forward" for them, he said.

Perhaps then that is the reason why O2, EE and Vodafone UK partnered with Boku. The trio also forms the joint venture Weve, which just last month announced it would indefinitely delay a plan to deploy a mobile wallet that uses NFC-enabled mobile payments at the point of sale. Apple Pay is a big reason why Weve slammed the brakes on its plans. Industry pundits suggested to Mobile Payments Today last month that Weve could use direct carrier billing as a way to stay relevant as a joint venture promoting mobile payments. But direct carrier billing will only make a difference for the MNOs if their heart is into it, Hahn suggested. "[Direct carrier billing] is something that seems to depend on the vigor by which the [MNO] chooses to pursue it," he said. "In most developed markets, we really don't see that vigor."

The U.K. is a developed market, which would suggest the MNOs there might not give direct carrier billing its full attention, at least according to Hahn's view. But Patmore believes the MNOs really do not have to do much to promote the service thanks its initial reach with consumers. "That fact that these MNOs are involved in this means you have [millions] of consumers who have the ability to use direct carrier billing right away," he said. "They also have other marketing services and benefits such as text messaging and cooperative marketing so they're keen to market this service." Meantime, Boku plans to extend this particular service to other MNOs worldwide.

Source: Mobile payments today