In a move to build mobile commerce, Verizon Wireless on Monday announced a deal with Danal's BilltoMobile payment service. Beginning later this spring, Verizon customers can do more than shop on the mobile web -- they can make purchases.
The BilltoMobile service will let customers pay for digital goods downloaded and consumed on personal computers. Here's the catch: It only works with Danal's network of e-commerce merchants and there's a $25-a-month spending limit. Parents can set lower limits for kids.
"The fact that you can only buy from network sites is a bit of a gating factor, but that's sort of the point," said Michael Gartenberg, a partner at Altimeter Group. "The company wants to give the value-add to their network customers and a reason for them to be on the network."
Mobile Media Transitions
Consumers with text-messaging phones can shop for Verizon-approved content at online stores, game sites, social networks, and virtual worlds. Consumers can also purchase subscriptions to popular online games.
Here's how it works: Consumers click on the BilltoMobile button during checkout and then input their mobile number and billing zip code for subscriber authentication. Consumers will then receive a text message with a one-time pass code. After consumers input this pass code into the online checkout window, the transaction is completed.
Although it may sound cumbersome, the companies insist the process only takes about 15 seconds, and no pre-registration or links to credit cards or bank accounts are required.
"This service is definitely on the cutting edge. What's important is that it underscores the fact that the phone has become a media consumption device," Gartenberg said. "The carriers are recognizing that and want a big part of that action."
Modeling Korean Mobile
Jim Greenwell, CEO of Danal, expects the deal to change the industry's approach to online mobile payments to something that "involves ease of use and strong security for subscribers' mobile payments, as well as robust user controls that will help individual subscribers and families manage their digital purchases and digital lives."
If Korea is any example, Greenwell could be right. Danal is the dominant mobile-payments provider in Korea, where credit-card penetration rates are even higher than in the U.S. According to Danal, 80 percent of all mobile subscribers have chosen to use direct mobile billing, and up to 60 percent of all online digital-content purchases in Korea are now billed directly to mobile accounts.
Of course, BilltoMobile isn't the only provider in the market. PayPal has mobile-payment functions, and smaller players include Obopay, Zong and Boku. Danal hasn't announced its U.S. commerce partners yet, but popular social networks and gaming sites are among the possible candidates.