A Seattle start-up has developed a mobile phone shopping service that uses standard browsers and text messaging to deliver orders and payment card information.
Billing Revolution Inc., which started offering its service last week, says this approach helps merchants reach consumers without paying a fee to wireless carriers. Users enter the purchase information on a mobile Web site and then receive a text message asking for confirmation.
Though the service can work with any phone with a browser, it was not designed to appeal to everyone with a cell phone, according to Michael Dulong, a co-founder of Billing Revolution and its senior vice president of business development.
"Early movement in this commerce space will be primarily smart phone users — professionals that are, say, 18 to 35 and that have north of $75,000 a year income," Mr. Dulong said in an interview Monday. "They tend to be more tech-savvy and have a higher degree of comfort level around the security."
The service will probably have limited appeal outside that demographic range, he said. "Folks that have very low-end phones probably don't even have a Web plan to access this stuff."
According to Mr. Dulong, Billing Revolution's service is best suited for recurring subscription fees for digital goods, as well as for purchases of physical goods that need to be shipped.
Billing Revolution charges merchants 3.5% of the transaction plus a 50-cent fee. Mr. Dulong said the rate is better than what carriers charge to allow purchases to appear on phone bills, though he conceded the pricing structure is not well suited for microtransactions, such as ring tones.
Other payment systems have tried to break into mobile e-commerce, with mixed results.
PayPal Inc. launched a mobile purchasing system in 2006 that operated through text messages. Scott Thompson, the eBay Inc. subsidiary's president, said in March that the U.S. market was not quire ready for such a service, largely because the phones here are not sufficiently advanced to enable consumers to shop conveniently.
Mr. Dulong said that Billing Revolution has tried to develop a system that closes the gap between what cell phones can actually do and what consumers want them to do.
"There's reasons why this hasn't happened yet, and it's not just carrier reticence to commerce on their networks," he said. "It is the lack of the technology being in place."
People who wish to make a purchase at a Billing Revolution merchant enter credit card information for the first purchase, along with an address when buying goods that need to be shipped, he said. For subsequent purchases at the same merchant, the system will recognize the phone and prepopulate the data on the merchant's order form. Each purchase must be authorized by clicking a link sent by text message to the user's phone. In most cases, Billing Revolution would be the merchant of record.
Jennifer Roth, a research director with the global payments practice at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said the technology sounds like it could work, but she said its appeal would not be limited to the type of people Mr. Dulong described as likely customers.
"I think they're targeted a little bit narrow," Ms. Roth said, since a lot of online purchases are made by people over 35.
However, the technology sounds appropriate to the market, she said, so the biggest barrier may be how consumers perceive it. "It will work; it's just a matter of whether consumers are going to feel secure enough with this."
