Boku Inc., which specializes in enabling consumers to charge virtual goods to their cell phone bills, wants to break out of its niche by enabling wireless carriers to build their own merchant-funded mobile-payment networks.
The San Francisco company on Thursday unveiled Boku Accounts, a broad payments platform it has designed that wireless carriers could offer directly to subscribers and would support online, mobile and in-store purchases.
The concept requires a bit of legwork for carriers, however.
To participate, wireless carriers would need to provide subscribers with a reloadable prepaid network debit card account for purchases. Consumers could then load funds to the account to make purchases online using a smartphone app Boku has created for Apple Inc. iPhones, handsets that use the Google Inc. Android operating system or at the point of sale using the carrier-issued prepaid cards or stickers Boku plans to supply equipped with contactless chips, the firm says.
"Given the tight relationships wireless carriers already have with consumers, it makes sense that they should work more directly with merchants to leverage mobile payments," says Ron Hirson, Boku's president and founder.
Significantly, the platform's success would hinge on creating a broad array of customized merchant discounts and deals to generate additional revenue for Boku and participating carriers.
Using Boku's platform, wireless carriers would send their subscribers merchant offers via Boku's mobile app, text messages or emails. Consumers that opt to receive the offers and participate in the scheme would be prompted to sign up for a carrier-branded prepaid debit card account.
Initially Boku is backing its accounts with a Boku Accounts MasterCard Prepaid card issued by IDT, a Gibraltar-based bank. Issuing banks will vary based on geographic region. MasterCard is backing the effort as its initial partner.
Though a bank would be involved behind the scenes, carriers would determine account features such as prepaid card reload fees, Hirson says.
"The system allows a lot of flexibility for carriers to design the program however they want it, and it gives merchants a chance to send targeted offers to consumers without making any changes at the point of sale in their hardware or software," he says.
Boku Accounts gives wireless carriers' customers "the power and convenience of MasterCard mobile prepaid with (contactless payment technology) to make purchases in stores or online at millions of merchants worldwide with their mobile phones or companion cards," said Mung Ki Woo, MasterCard group executive, in a press release.
Participating consumers could initiate transactions through any of the channels Boku supports and would receive notification via text or email confirming the transaction, Hirson says.
Merchants would pay a fee for each successful promoted purchase, and Boku and carriers would split that revenue, Hirson says. Purchases that were not part of any promotion or discount would "work just like any prepaid reloadable transaction," he says.
Wireless carriers' eagerness to capture fresh revenue from mobile payments drove the scheme's development, Hirson says.
Bill-to-carrier services typically generate revenue of 12% to 18% for carriers, industry experts say.
While Boku has yet to announce any participating wireless carriers or merchants, the company is testing the platform with an undisclosed mobile carrier in the United Kingdom and expects "a lot of interest" from U.S. wireless carriers, Hirson says.
