Boku Takes “Pay Any Way You Want” Approach With Mobile Payments
In case you missed the memo, mobile payments are heating up. Some companies believe the future of paying for something involves the usage of near field communication (NFC) technology, which enables payments through one tap of your credit card or smartphone. Some have created hardware that plugs into your smartphone to enable credit card swiping. Still others believe the geolocation services of your smartphone can tell a merchant when you’re in the vicinity and thus allow for payment.
Boku is a company that has been focused on partnering with wireless carriers for online buying and direct billing through wireless accounts — until now. Earlier today, the San Francisco-based company said it’s taking a more holistic approach to mobile payments, through its new Boku Accounts.
Boku’s new approach is three-pronged, Boku’s co-founder and vice president Ron Hirson said. To start, it’s a white-label mobile payment account for a Boku customer, issued by a mobile network operator (carrier), that allows the subscriber to see how much they’ve spent at certain venues, set up a budget, and most important, pay for things.
Secondly, Boku-friendly businesses can now offer discounts to customers with a Boku-equipped phone. The coupons and deals are meant to be a seamless experience — for example, a Boku Accounts customer may go to pay for something and the merchant’s discount should be automatically applied, without the customer having to fumble for coupons or show evidence of the deal on their phone.
Lastly, Boku Accounts includes a PayPass sticker from MasterCard, which works as both a magnetic stripe and an NFC strip, so users can stick it on the back of their phones and pay for something in-store with the sticker.
Online, Boku account holders can pay for things with their carrier-issued account; on mobile, Boku works on iPhone and Android phones, as well as on simpler feature phones.
In some ways, what Boku is doing to enable offline, in-store purchasing is similar to PayPal’s efforts to establish itself at point-of-sale systems in stores. Late last year, the eBay-owned online payments giant began testing new payment options at Home Depot that allowed PayPal employees to purchase things by entering in their PayPal account numbers at a special terminal or by using a PayPal credit card. In January, the company said it plans to roll out this service to more than 2,000 Home Depot stores across the U.S. by March.
In the case of PayPal, new offline payment options are posing a potential threat to traditional credit card companies, such as Visa and MasterCard, as PayPal has the ability to undercut the fees that merchants pay to accept the traditional networks’ cards. Visa’s global head of product recently criticized PayPal’s new in-store options, pointing out what he believed were data security threats.
But Boku is actually working with MasterCard, since it’s using a MasterCard magstripe. Many customers would probably still find it easier to tap their MasterCard-stickered smartphones against a credit card terminal than to enter a mobile phone number tied to a payments account. And Boku says the advantage of this system is that merchants don’t have to “re-terminalize” — install an entirely new payment terminal — in order to accept Boku payments.
Boku launched in June 2009, has a footprint in 66 counties, and works with more than 240 carriers worldwide to power payments through wireless phones. The company has raised more than $40 million in funding to date from investors at Andreessen Horowitz, Benchmark Capital, Khosla Ventures and others. It has been speculated that the company could be an acquisition target, but Boku declined to say whether it has been in talks with potential buyers. Another one of its competitors, Zong, was acquired by eBay last July for $240 million.