Boku Rings Up $35 Million in Funding From NEA, Telefonica
Mobile payments start-up Boku has just secured $35 million to fund its expansion, after announcing a new white-label mobile payments service.
The capital comes from new investors New Enterprise Associates and Telefonica, one of the world’s largest mobile operators, as well as existing investors Andreessen Horowitz, Benchmark Capital, DAG Ventures, Khosla Ventures and others. So far, Boku, which works with wireless carriers for online buying and direct billing through wireless accounts, has raised a total of $75 million since its launch in 2009.
Boku will use the funding to expand the recently announced Boku Accounts service, the company said in a statement. The funds will also help with the continued expansion of the company’s global infrastructure. The San Francisco-based start-up currently operates in 67 countries around the globe, and works with 260 mobile-network operators.
As my AllThingsD colleague Tricia Duryee puts it, a lot of companies believe that the mobile payments industry is set to take off over the next few years, with Boku being just one of them. But with so many approaches being explored, it’s not clear which solutions consumers will end up adopting.
Some — like Google, which has introduced Google Wallet, or Isis, a joint venture between wireless companies — believe near field communication technology is the future of people paying with their mobile phones. This is unlike what start-up Square is doing — allowing contractors and small businesses to take payments via their iPhones or iPads using a small, square dongle.
Some credit card companies, including Visa, are developing their own form of the digital wallet; while online payments giant PayPal has recently said that the digital wallet for consumers is something that lives in the cloud and should be device-agnostic, not tied to any one type of smartphone.
Last year, PayPal joined forces with Zong, a Boku competitor, through a $240 million acquisition.
PayPal is also getting into direct payments at point-of-sale systems in stores. So far, it’s offering customers the ability to pay by punching in a PayPal account number or by swiping a PayPal card at 2,000 Home Depot stores across the U.S. This is 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.
With Boku Accounts, Boku is actually working with a credit card company — MasterCard — by giving clients the ability to use a MasterCard magstripe to pay. Customers can also pay at NFC-enabled terminals with an NFC sticker on their phones, or they can pay with their wireless phone number at participating merchants.
Boku has said 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.