Exclusive: Boku to Be Added as Option to Facebook Credits, Setting Up Face-Off With Rival Zong
For the past 18 months, mobile payments start-up Zong has had the enviable prime spot on Facebook Credits as its sole option for users wanting to use their cell phone number to buy virtual goods for social gaming and other services.
But, according to multiple sources, that’s about to change later this week, when the social networking giant starts A/B testing its rival, Boku, as an alternate payment method to Zong.
The face-off on Facebook to allow consumers to charge virtual purchases to their wireless bills is just another point of conflict, among many, between the two top Silicon Valley mobile payments companies.
Both have received large amounts of venture funding from prominent investors–$38 million for San Francisco’s Boku and $15 million for Menlo Park, Calif.-based Zong.
And there has been acquisition attention as well from big companies–such as Apple, Google and more–who are mightily interested in the fast-growing space of late.
Sources close to Facebook said the move to include both on its king-making platform is a natural one for the company, giving its users a range of options in the mobile payments area.
One person noted that Facebook execs told both Zong and Boku that it was important to enable people to buy Facebook Credits via whatever means they choose.
The plan is to use both for a while, said another source, gauging how users like them, although it was not considered “a horse race between them” by Facebook.
Nonetheless, that’s just what both Zong and Boku think it will turn into on Facebook.
“It is all about performance,” said one person with knowledge of Boku’s strategy. “Facebook is testing the landscape, especially outside the U.S.”
Indeed, mobile payments are currently much more important internationally than in the U.S. market, although that is changing fast, especially as smartphone usage booms.
Zong CEO David Marcus, in an interview with BoomTown today at the Open Mobile Summit in San Francisco, said that competition was inevitable.
“Every single large-scale mobile process needs to have a backup, especially as mobile payments reach the scale everyone expects it to,” he said. “But we are confident that we have the best product for the Facebook platform.”
Most expect both Zong and Boku to eventually be bought, although both companies have said they intend to remain independent.
Selling out might also have its downside–if, for example, Boku were bought by Google for its Android mobile operating system, it would quickly become less attractive for the search giant’s growing archrival Facebook to feature it.
The same goes for Apple, since it also has its own agenda with the iPhone.
But there are other possible buyers, such as Amazon, eBay’s PayPal and a spate of credit card companies.
Whatever happens, the new battle on Facebook will surely be an interesting one to watch.