Can’t pay with a credit card online? Try charging the sale to an Internet service provider account, where the purchase will appear on the monthly broadband statement.
That’s what Germany-based Mopay Inc. hopes more consumers in far-flung regions will do when purchasing low-ticket, mostly digital goods such as online games and entertainment.
The Palo Alto, Calif.-based unit of MindMatics AG of Munich this month announced it is adding broadband providers to its list of alternative payment channels customers may choose to send the bills for online purchases.
Mopay has offered such alternative billing for a decade through telecommunication channels in more than 80 countries, targeting customers in regions with low credit card penetration (
Now the company sees further opportunity in enabling consumers to charge purchases to their Internet service provider.
“As we open up more alternative channels through telecom carriers and now broadband, a growing number of consumers are finding they favor this payment method, which is simpler and safer in many ways,” Kolja Reiss, Mopay managing director, tells PaymentsSource.
Mopay launched with a service enabling consumers to charge online purchases to 10 mobile telecom carriers around the world, including T-Mobile, Verizon and AT&T. A few years ago, the company added the ability to charge purchases to hard-wired telco landlines, and now it has the capability to enable broadband service providers to accept payments for online purchases.
Most consumers using Mopay are in Europe and South America, with a large concentration in Brazil, where credit card penetration is low, Reiss notes. Many of the 550 online merchants offering Mopay as a payment option are in the U.S., Asia and Europe, he says.
Use is growing steadily, Weiss says, although he declined to provide specific figures. He expects the addition of broadband to further expand Mopay’s audience.
Touted as a boon for online merchants seeking elusive audiences and a new source of revenue for telcos and broadband carriers, Mopay’s alternative payment service also is significantly more expensive for merchants than most card-based payment options.
Merchants pay Mopay approximately 5% to 20% of the purchase price, which compares with 3% to 6% for online credit card transactions, Reiss says. Carriers that route the bill to customers through monthly cell phone, telephone bill or broadband bill statements receive about 15% of the revenue.
But carriers’ share of the profit is declining as competition increases, Reiss says.
“Initially, carriers wanted 40% of the transaction fee, and it has come down substantially,” he says. Reiss says that “within a few years,” Mopay’s transaction fees to be significantly lower for merchants as well.
Merchants so far are content to pay the higher fees “because these are sales they wouldn’t get any other way,” Reiss notes.
Mopay also promotes its alternative payment service as being safer and more convenient than using credit cards, although there are a few steps to the process.
Fraud is “almost nil” because of the safeguards built into Mopay’s checkout process, Weiss says. What fraud occurs is typically “friendly fraud, such as when a child gets ahold of a parent’s account,” he says.
Consumers making an online purchase on a website that features Mopay may opt to pay using their mobile phone number. Mopay immediately sends a one-time-use code via text message to the consumer, who enters that into the online site to complete the purchase, which is routed to his monthly cell phone bill.
To route the bill for the purchase to a monthly land-line telephone statement, a consumer must initiate a call to a toll-free number from the number associated with the account to authenticate and complete the online purchase.
Those consumers opting to route online purchases to broadband accounts receive automatic authentication when using the service at the home or office that matches the address of the Internet service provider’s customer. When a consumer wants to bill a purchase to the broadband service provider from another location, such as a Wi-Fi hotspot, the consumer must provide his broadband account number and password to complete the purchase.
“It may require an extra step, but it doesn’t take as many steps as going to get the credit card out of your wallet, entering a 16-digit credit card number and additional three-digit code, and then worrying about fraud,” Reiss says.
Mopay in May unveiled a payment-processing platform that enables merchants to adapt it for any channel, including all smartphones, computers, in-car entertainment systems and kiosks (
Though 80% to 90% of purchases Mopay processes are for virtual or digital goods, Reiss believes more-traditional online merchants soon will begin tapping its services.
“We are in talks with Amazon and other online merchants that want to reach our customers,” Reiss says. “We think that as alternative billing channels catch on, more people will move away from using cards and spread their payments across other carriers.”
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