Today, the San Francisco company says that Sprint is coming on board to join the three other major U.S. carriers: Verizon Wireless, AT&T and T-Mobile.

While the partnership provides additional momentum for Boku, the company still has a way to go before consumers are charging all sorts of purchases to their carrier bills. Today, the majority of Boku-paid purchases are for digital goods, such as in-game currency like Facebook Credits, or virtual goods in social games from companies like Zynga.

In an interview, Boku president Ron Hirson explained that it will still be another year or so before it starts seeing physical goods like clothing or electronics being charged to a carrier bill. For that to happen, carriers will have to drop the rates even lower than what they are charging today in order to be on par with Visa or MasterCard.

Over the past two years, Hirson said, prices already have dropped from roughly 40 percent to somewhere in the “teens.”

“We are proving ourselves out, and showing to the carrier that with each incremental drop, we are growing the pie,” he said.

The next likely product category to adopt carrier billing, he said, is digital content, including music, books, or physical tickets for public transportation or concerts. Those items have a big enough profit margin to make paying slightly higher transaction fees affordable.

Other companies in the carrier billing space include Mopay, BilltoMobile and Zong, which eBay’s PayPal acquired last year. Boku strengthened its position earlier this year when it raised $35 million in fresh capital.

While carrier billing has been slow to take off, Hirson said the company believes it will be a huge opportunity because of the convenience factor. To purchase something, users enter their phone number, and then authenticate that payment via text message.

Boku said today that it also signed up a carrier-billing partnership with Deutsche Telekom in Germany, meaning that it is now processing transactions with every major carrier in France, Germany, the U.K. and the U.S.

The company also announced that it has added two executives to its team: Jon Prideaux, the former EVP at Visa, is joining as chief business officer; and Stuart Neal, the former managing director of international development for Barclaycard, is joining as SVP of Business Development.

Users enter their 401(k), IRA, brokerage and adviser account information on the site, which then pulls together all of the investments into a single dashboard. From there, it can identify high brokerage fees, bad investments, hidden fees or overly expensive advisers.

“Merrill Lynch, Morgan Stanley and other wire-house firms are a real rip-off,” said SigFig’s co-founder Parker Conrad. “Their product is poor and expensive … The wire-house firms are going to hate us. We are hoping to irretrievably break their business model. That’s our goal. If they are shutting down their wealth management programs, then we’ve succeeded.”

While those are lofty ambitions, today marks the first day of its invitation-only service. (AllThingsD readers can click here to gain access.)

Based on results from a closed beta, the company is hopeful it can make a big impact quickly.

It says it is finding that one in five people with an adviser had below-average performance and above-average fees, and that an average user on the site can save $5,000; up to $8,000 if they trade frequently.

“Literally, we have one user who could buy a new Ferrari every year just based on trades,” Conrad said.

SigFig originally started out as Wikinvest, which allowed users to track their financial portfolios. A little over a year ago, the company began to build SigFig, and has been operating in an alpha with 5,000 members. Over the next few weeks, it will let in another 500,000 users.

SigFig is part of a growing trend in Silicon Valley, where technology veterans are trying to make investing easier using the Internet.

Co-founder Mike Sha said that through its members, SigFig has access to $30 billion of assets from 65 financial institutions. The company uses that data — in aggregate — to identify what brokerages are selling and how much they are charging. In that way, the investment service uses a sort of crowdsourcing to find the best answers.

He said one of the most common ways to save money is to identify a mutual fund with a different brokerage that has lower fees.

“People are shockingly neglectful on how they manage their money,” Sha said.

SigFig is free to use, and makes money off of commissions, but oftentimes it isn’t paid at all, if the best recommendation doesn’t have a commission. The company, which has nearly 40 employees, has raised $8 million in capital from DCM and angels, including Jason Krikorian of Slingbox and Mark Britto of Boku.

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.

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.

The move is the carrier’s latest effort to enable network-specific features such as Internet telephony, text messaging and carrier billing, all tapping directly into Telefonica’s network. (This NewsByte has been updated, correcting an earlier mischaracterization of the service.)

To do so, subscribers enter their phone number and a PIN code at checkout, rather than entering a 16-digit credit card number. The service will work for shopping on any Internet-connected device, including a PC, phone or tablet.

Subscribers will also have to sign up for a Serve account through American Express, which is very similar to a PayPal account and can be funded by a bank account or a credit card.

While the system is designed to make checking out more simple, it could take awhile for consumers and merchants to adopt it. Not only will Verizon subscribers be required to have a Serve account, but online retailers will also have had to integrate Serve as a payment mechanism.

“Yes, they have to be Verizon and a Serve customer, but we are preloading a number of devices — smartphones or tablets — with the Serve app, and when you preload there’s a much greater uptake,” said Dan Schulman, group president, Enterprise Growth, American Express. “They’ll be able to simply or easily transact for any size good, whether it’s a virtual good or hard good.”

Schulman declined to say how many customers have signed up for Serve since it launched in April, but said that the deal with Verizon Wireless is not exclusive, meaning it could partner with other carriers in the future.

Despite these hurdles, this may be a logical intermediary before we see people using their phones to pay for items in the store using near field communication. A number of companies are scrambling to become a player in the digital wallet space, including Google, PayPal, Square and the credit card and payment providers, so this will be one of many options consumers will be able to choose from.

Verizon Wireless has also formed a joint venture called ISIS with AT&T and T-Mobile USA that will launch a near field communication trial next year.

A number of companies have also pursued carrier billing as an option, but convincing carriers to allow large payments on the bill for physical goods has proven difficult. Companies that fall into this bucket include BOKU, BilltoMobile and Zong, which was just acquired by PayPal.

Up until now, the items most often charged to a carrier bill are ringtones, or virtual goods that are purchased inside online games.

Greg Haller, Verizon’s president of enterprise and government, said its partnership with American Express is not designed to compete with carrier billing or its ISIS joint venture. “We’ll still allow virtual goods to go on the bill, but the real opportunity now going forward is that a customer won’t have to go in a shopping cart and enter a 16-digit number. This really turns it into a one-click process. The benefit is the simplicity for the customer, who can now buy it on their phone, by entering their mobile number.”

Over time, additional services will be added, such as coupons and loyalty programs. One partner is vente-privee.com, a French-owned flash sales site that partnered with American Express to enter the U.S.

“We are pleased and we are deploying with more and more functionality all the time,” Schulman said. “We’ve announced a number of partnerships, all of which are being integrated, this being the largest and most strategic that we have. We’ll start to integrate and be in market [with Verizon Wireless] by the end of the year, and we have high hopes for it spurring mobile commerce.”

American Express and Verizon Wireless are also working with Payfone, a New York-based company that the two companies backed financially in the spring. Payfone is running all the authentication in the background to ensure that the phone number entered is valid and corresponds with the correct account.

That’s the question I asked some digital money experts, whose job it is to push the creative boundaries on payments.

So, having captive reps from some of the key companies — BOKU, BilltoMobile, Intuit and Tapjoy — involved in leading the charge to do away with cash and plastic, I wanted to know what they carried around daily.

And — given I was moderating a panel for the MobileBeat 2011 conference, titled “The Likely Winners In Mobile Payments: Carriers, PayPal?” — it seemed like an appropriate query.

You’d think they would be on the cutting edge, right?

Wrong!

In fact, two of the panelists were still carrying around checks; one had dozens of credit and debit card options from banks around the world; and two were even carrying business cards from their previous employers, because they believed they could get discounts at rental car agencies.

Only one had a digital wallet.

That was Steve Klebe, VP Business Development & Strategy, BilltoMobile, who actually had an NFC-enabled sticker on the back of his phone, which was connected to his Discover account. But he’d only used it once.

It was also Klebe who carried around a blank check, in case of an emergency. Ron Hirson, BOKU’s SVP Product & Marketing, also had the kind of money that folded — a $50 American Express travelers check.

Remember those?

Omar Green, Intuit’s director of strategic mobile initiatives, had the biggest wallet — bursting — with a giant pile of cards stuffed in it. Deng-Kai Chen, director of product management at Tapjoy, easily won for carrying the lightest wallet — he claimed it was bad for your back if you sat on anything bigger in your pocket.

Everyone also had a variety of loyalty cards, photos, receipts and transportation passes.

What about me?

As the solitary female representative at the table I was the only one with coins, including about $2 in pennies (because I’m too lazy to ever spend them). I also probably had the most cash — around $28, mostly in $1 bills.

So how close are we to a mobile wallet revolution?

Judging by what was in our wallets, you might want to wait a while.

Photo Credit: allie.

But in today’s world, where cellphones are outnumbering computers, that sounds increasingly archaic.

To bridge that gap, the eBay-owned payments company announced yesterday it was acquiring Zong, a mobile payments provider that allows charges to appear on a consumer’s carrier bill.

One could imagine a future in which PayPal could accept payments from anyone with a 10-digit number, switching its focus after all these years from email to phone numbers.

PayPal needed to buy Zong for $240 million in order to do this quickly — it did not have the time to go and build partnerships with 250 carriers in 45 countries around the world.

“The payments industry has never been more competitive than it is today,” said Dana Stalder, a former PayPal executive who is now a general partner at Matrix Partners, which invested in Zong. “PayPal has never had greater momentum in its business than it does today. It was a smart acquisition, and they pick up some unique capabilities that are good for digital payments.”

As part of the deal, PayPal will gain a team of 70 employees, at a time when hiring people with payments expertise is competitive.

In May, PayPal filed suit against Google and two of its former executives, claiming that the company and employees misappropriated trade secrets and violated contracts involving recruiting agreements.

The two executives named in the lawsuit are Osama Bedier and Stephanie Tilenius, who directly oversee Google’s new payments initiative.

Google is one of many companies treading in the broad digital payments space once dominated by PayPal.

Google launched a mobile payments initiative that allows people to use their phones to make payments at the register. Charges appear on a credit card associated with that account.

PayPal is preparing to test similar in-store technology later this year, but it has clashed with Google once before. In the lawsuit, PayPal details that it was close to signing an agreement with Google to handle payments on Android Market when it fell apart.

In the meantime, Google has worked hard to ink deals directly with the carriers. While it still has a long way to go, it is currently working with T-Mobile USA, AT&T, Sprint and Japan’s Softbank, KDDI and NTT DoCoMo.

It’s a painstaking process that PayPal clearly did not want to duplicate.

Other companies are also fiercely competing with Zong, so PayPal won’t be alone there. Others in the space include BilltoMobile, mopay, Boku, Billing Revolution and more.

PayPal estimates the digital goods market to be worth $20 billion today, with dramatic growth prospects ahead. “Digital goods” may include music, movies, news, books and games. It’s important to make payment for these as easy as possible, because any additional required steps may lead to fewer purchases.

Zong’s emphasis is on allowing a consumer to pay for digital purchases on his or her mobile phone or computer using their phone number. Zong first verifies the number and then clears the payment on the mobile phone bill.

While this process is described as easy for the consumer, on the back end it is not.

Carriers are reluctant to allow miscellaneous charges to appear on the bill, fearing additional customer service costs when someone complains that they don’t remember what they bought.

Because of the potential for confusion, companies like Zong have had to share an incredibly high cut of the revenue — between 10 and 40 percent — with the carrier. High rates make it impractical to charge anything of value, like physical goods.

That won’t change overnight for PayPal, which will have to reopen talks with wireless carriers to get things to change.

If it can’t get them to budge, spending $240 million on Zong could be a waste.

However, there are a couple of fairly interesting scenarios that may get the wireless carriers to reconsider.

PayPal could potentially rely on its Bill Me Later division to instantly approve a consumer’s request to borrow money on credit when they submit a payment over the phone. In that situation, the carrier could help to identify users and their credit histories, but would only get a small cut, since it was taking on much less risk.

If that were to happen, the market could grow much faster.

In a blog post, PayPal president Scott Thompson wrote, “When we started meeting with the folks over at Zong, it became immediately clear to us that they share our vision for commerce and payments. We’re all about helping retailers of all sizes compete globally, and helping consumers shop for whatever they want…anytime, anywhere, on any device.”

Zong enables consumers to post payments to their mobile phone bills, mostly to pay for virtual goods inside of games.

EBay said Zong will strengthen PayPal’s payment platform, which in the past has focused on microtransactions and digital goods, but did not enable payments to be posted to the mobile phone bill.

Ebay has been on a spending spree, most recently acquiring GSI Commerce for more than $3 billion, and other companies including Where, Fig Card and Milo.

Founded in 2008, Menlo Park, Calif.-based Zong was spun off from Echovox, and had raised about $30 million from investors including Matrix Partners, Advent Venture Partners and Newbury Ventures.

PayPal CFO Patrick Dupuis said it became obvious, during discussions over the past few months, that the two companies shared the same vision for the market. “We’ve been growing by leaps and bounds ourselves, so it was nice to find someone who shares so closely how we can transform commerce.”

Zong has access to 3.2 billion mobile users through about 250 carrier connections around the world, and perhaps is best known for working closely with Facebook to sell the social network’s virtual currency over the phone.

It competes heavily against such other payment alternatives as Boku, Billing Revolution, BilltoMobile and mopay.

In a letter on Zong’s Web site, CEO David Marcus wrote: “Most of e-commerce will shortly become m-commerce, and I genuinely believe that PayPal, hand-in-hand with wireless carriers around the world will win in a big way.”

In an interview, Marcus elaborated that he’s excited to be able to accelerate what Zong has been doing for the past few years. “PayPal has nine million merchants, so accelerating what we are doing on the merchant piece is key, and branching out into other things … It will make us a clear leader.”

PayPal recently revised its estimates to say that it will process $3 billion in mobile device payments this year, up from the company’s previous projection of $2 billion.

A lot of companies believe the industry is worth duking it out for, but there are so many alternatives being explored, it’s not clear which payment solutions consumers will end up adopting.

Carrier billing is just one of them.

Google has its own Wallet solution; Square is trying to replace registers with iPads; and the wireless carriers have their own initiatives as well.

As the industry evolves, it’s becoming increasingly clear that carriers do not want a lot of extra charges appearing on the wireless phone bill, and don’t want to take on the risk of consumers paying for it at the end of the month.

So far, with small purchases, such as virtual goods, it has not been an issue.

PayPal is exploring a number of mobile payment initiatives, including in-store mobile payments, and microtransactions in applications and on the mobile Web. Earlier this year, it launched PayPal for Digital Goods, a new product that lets buyers pay in two clicks without leaving their gaming experience or content site.

“Exciting” doesn’t even begin to describe how much activity is going on in the space right now, Dupuis said. “Everyone is talking a lot about this, and we’ve been a wallet in the cloud forever. We want customers to have choice, and this adds one choice. In the end, we want people to pay anytime, anywhere, with a whole suite of options. This is centered on the customer — the less friction the better.”

EBay said it does not expect the acquisition of Zong to have a material impact on its financial guidance issued in its first quarter earnings release. The deal is expected to close in the third quarter, pending regulatory review.

Payfone has raised $19 million in a third round of funding. In addition to American Express, Verizon Investments and Rogers Communications is also participating, along with existing investors Opus Capital, BlackBerry Partners Fund and RRE Ventures.

As part of the investment, American Express will integrate Payfone’s mobile payments service into Serve.

Serve is American Express’s new digital payments initiative, which lets consumers make purchases, take cash withdrawals from ATMs and make person-to-person payments from their computer or their phone. Serve is currently like PayPal, but aspires to be something much broader that integrates mobile payments, loyalty programs and other social and connected services.

Right now, most the services revolve around plastic cards and mobile applications.

But together, the companies said Serve will be able to offer consumers the ability to make purchases online using their mobile phone number at checkout. To do so, a consumer would link their mobile numbers to a variety of payment methods, including their wireless bill or their Serve account.

Many other venture-based companies are meddling in mobile payments, but it has been slow to take off since the fees carriers charge can be prohibitively high for merchants. Instead of taking a couple of percentage points, like Visa or MasterCard, carriers can charge up to 40 percent of each transaction.

Other startups in the space include Zong, Boku, BilltoMobile and mopay.

So far, high fees have mostly limited payments to high margin items, such as virtual goods. While we’ve reported that’s changing, and digital and physical goods are becoming more of a reality, Payfone believes it has a faster way to market.

The explanation is a bit complex and the details are caught up in the deep recesses of the network. But at a very high level, Payfone is trying to build a system that relies on the same standards used by carriers that give permission for a subscriber to roam from one network to another.

When a subscriber roams today, it requires two carriers to communicate to ensure that a subscriber is in good standing and will be able to pay the roaming fees–and to do that as fast as it takes to make a phone call.

In the same way, Payfone says it can determine if a consumer has the funds or the credit worthiness to make a purchase. By checking with the carrier upfront, it also claims to dramatically reduce fraud charge-backs and identity theft–which makes it feasible to reduce the fees in the system.

Payfone said it will use the fresh round of capital to continue expanding across North America, Europe, Latin America and Asia.

While American Express’s participation in Payfone signals the company’s interest in the category, it pales in comparison to the $300 million acquisition of Revolution Money, which makes up the basis for the Serve platform today.

The service, called Serve, will let consumers make purchases, take cash withdrawals from ATMs and make person-to-person payments from their computer or their phone.

The card will be funded by a user’s bank account or credit or debit card–even from one of the company’s major competitors, like Visa or MasterCard.

In the beginning, Serve will be fairly traditional and be accepted anywhere that American Express is accepted, but eventually it could give way to a mobile payments solution on the phone, using such technologies as near-field communication (NFC).

“What we are trying to do is put into place a platform–not a card, or an e-wallet–that enables digital payments and commerce that allows consumers and merchants to seamlessly move between online and offline,” said Dan Schulman, Group President, Enterprise Growth at American Express.

What Schulman said he wasn’t interested in experimenting with yet was NFC, which allows users to waive their phone at the register to pay. The technology is still in its infancy.

“That’s incredibly uninteresting…That’s a form factor shift, not a value proposition change,” he said. “The distinction between online and offline is going to blur and become moot as you go out three to five years from now.”

Schulman has been thinking about these problems since joining American Express in August 2010.

Previously, he was the president of Sprint’s prepaid division, having joined the third-largest carrier when Sprint acquired prepaid provider Virgin Mobile USA, where he served as CEO.

The Serve platform evolved from American Express’s $300 million acquisition of an Internet-based payments network that was part of America Online Inc. called Revolution Money, co-founder Steve Case’s investment firm.

To be sure, the launch provides new ways for the $54 billion company to diversify its user base.

“This will enable us to break into a younger demographic for sure, or under-served demographics, and people who’ve used debit, checking or cash. It enhances our ability to address different demographics in the U.S., but also the rest of the world,” he said.

On day one, Serve will be accessible online and from applications on both Apple and Android devices, with support for BlackBerry coming soon. Initially it will be in the U.S., but will shortly expand internationally. It will also downplay its associations with the large card company.

“We are really excited about the launch, it’s really different than what people might think about American Express. It’s not AmEx-branded, it’s cross-platform and completely open,” Schulman said.

He expects the platform to be very flexible and adapt to the market in future iterations.

To help promote the platform, the company is creating a number of partnerships that are all over the map.

One is with Ticketmaster, which will let users buy tickets to an event and then get reimbursed by their friends via Serve. Others include Concur and Flipswap. The service will also be available through a Facebook widget. To promote the widget, Serve will be letting users donate to certain causes. Serve will match contributions up to $100,000 for each charity.

While these are new areas that American Express does not currently serve, Schulman believes its experience makes the company a potential leader in digital payments.

He said it helps that they have 90 million card members and have partnerships with thousands of merchants worldwide. Also, he said, there are three crucial pieces of the puzzle that a company entering the space must have: trust, security and good customer service.

Of course, eBay-owned PayPal, Visa, MasterCard and a variety of other startups–including Boku, Zong, BilltoMobile and Square–are all vying for a position in the emerging digital and physical payments market.

Schulman admits there’s a lot of overlap with what it is doing and PayPal. “Yes, there are obviously things that are similar to PayPal. In fact, there are quite a number of people thinking about this as we are making a transition from a physical plastic world to a digitally-oriented payments world.”

For instance, PayPal will be conducting several pilot programs over the next year to test how consumers will use their PayPal accounts at the register.

Visa recently purchased PlaySpan for about $190 million to enter the digital payments world. Google also is planning its next move.

With all this talk about payments, American Express indeed expects to get paid as well.

To start, most consumer fees will be waived for at least the first six months, including fees for adding money to the account and transferring funds between Serve users. The first ATM withdrawal each month is free, but after that consumers will be charged $2. After the introductory period, consumers will be charged 2.9 percent plus 30 cents each time they load money (that drops to 0 percent for cash, debit and ACH).

Merchants will also pay, but will be charged a discounted rate for transactions made in stores and online since Serve is considered a prepaid card. Typically, prepaid discount rates are less expensive than credit rates, according to a spokeswoman.

But its not just the fees that American Express wants to collect. It also wants to collect consumer data to be able to offer well-targeted offers.

“We’ll probably make the equivalent once we are at scale, depending on funding and merchant mix through payments alone. We think that’s a great business. We also think that the data we can collect with consumers, assuming they give permission, will add a number of value-added services in connection with partners.”

So far, Zong’s payments have been used primarily for paying for virtual goods or items within games on Facebook and Android phones.

Today, the Menlo Park, CA, company says it is extending carrier billing to other environments, such as Adobe’s Flash, Interactive TV, gaming consoles, the mobile web, and Unity, a gaming development tool that works across various platforms. It will also be supporting Android’s new operating system for tablets, called Honeycomb.

Zong said to collect payments, it will ask the user for his or her mobile phone number. Zong will then verify the number with a text message that is sent to the handset, which will complete the transaction. The charge will appear on the consumer’s mobile phone bill or prepaid mobile account.

Collecting payments is frequently a challenge, no matter what the platform. Often, children or young adults don’t have access to credit cards. Users across the age spectrum might prefer the convenience of charging small transactions to their carrier bills rather than having to input a credit card number.

Mobile phone billing has been around for years, but has been used primarily for buying ringtones and other mobile content. It’s only been in the past few months that it has become viable for other expenses, as carriers have lowered the rates they charge.

Zong, along with other startups in the space, like Boku and BilltoMobile, have been negotiating with carriers to lower those rates to make it more feasible to use the carrier bill as a viable payment method.

Zong’s CEO David Marcus told us recently that a lot of progress has been made in recent months with carriers dramatically lowering rates, so they are more in line with credit cards (although still more expensive).

In the not so distant future, he believes carriers will lower the rates enough to enable charging for even some lower margin physical goods. Potentially, it won’t be low enough for everyday items such as groceries or gas.

But next up is for things such as vouchers from Groupon and LivingSocial.

While paying by mobile phone has been around for years–with consumers charging ringtones and other mobile content to their bill–it’s been only in the past few months that it has become viable for other expenses.

In fact, over the past couple of weeks, a substantial milestone was reached and went almost completely unnoticed, said David Marcus, the CEO of Zong, a mobile payments provider.

He said Facebook stopped adding a surcharge when customers buy Facebook Credits via the mobile phone. And it’s not just Facebook–other companies have been following suit when it comes to digital and virtual goods.

What’s more, there’s an even bigger change coming very shortly.

Carriers will lower the amount it charges even more for physical goods.

It won’t be enough for everyday items that have extremely low margins, like groceries or gas, but it will open up mobile payments to e-commerce. Most notably, Marcus said, consumers of high-margin items, like group-buying vouchers from Groupon and LivingSocial, will be able to participate.

The process makes sense. Users should be able to be notified about offers via the phone, purchase the deals on the phone and then walk into a restaurant or bar to redeem them using their mobile phone–instead of logging on to a Web site from a computer and printing out paper vouchers.

“Our sales force is actively working on it right now, and by the end of the second quarter, we’ll be processing physical payments,” he said.

Zong is not the only one in this red-hot space.

In fact, it’s chock-full of competitors, including PayPal, Boku, mopay and BilltoMobile. They all want to make paying for virtual and digital goods on the phone as seamless as possible.

Additionally, another class of company is going about it in a whole other way: Using your phone to charge payments to your credit card at the grocery store, gas station or other location. Usually this entails waving the phone in front of a point-of-sales device using RFID or near-field communications.

The mobile-payment providers are not in that space, but several incumbents are, including Visa, MasterCard, PayPal and even the carriers, through a joint venture called ISIS. Another company, Square, is coming up with a way to replace the point of sales machine with a cellphone.

But Marcus said the really exciting stuff is right around the corner.

And, right now, most of the momentum is from the carriers dropping the revenue splits to closer to 10 percent, from 40 percent more than a year ago. “The carriers won’t go below 10 percent for digital or virtual goods, but they will lower their rates for physical,” he said.

Removing these sky-high surcharges has sent payment volumes skyrocketing.

In fact, after Facebook and others were able to lower the rates, Zong got a nice lift.

Marcus said across their its network, its daily payments volume jumped by more than 50 percent in the first week of January, compared with the same week last December.

Marcus keeps track of the company’s payments volume from a flat screen on the wall of the company’s Menlo Park, Calif., offices. When countries turn red, it’s a good sign.

He expects more good signs in the future as it prepares for another bump from physical goods coming in the next few weeks.

Hughes, the former Verizon Wireless VP of business development and partnerships, joined the organization only four days ago, we have learned.

Isis is a joint venture between AT&T, Verizon Wireless and T-Mobile that will try to get a piece of the huge payments market. When the JV launched in November, it had announced only the appointment of Mike Abbott as CEO.

Abbott’s background includes working in credit card services and for GE Capital, so Hughes will bring his expertise from the wireless industry.

The Isis initiative will be going up against a host of other players–some of which are direct competitors, while others, taking a slightly different approach, could act as partners.

For example, Square is trying to turn the cellphone into a point-of-sale machine for small businesses, Boku and Zong have been primarily focused on selling digital goods that get charged to your carrier bill, and others–ranging from PayPal to Visa and MasterCard–have strategies, as well.

Isis’s initial focus will be on using near-field communication–or NFC–chips to enable customers to make purchases in a store by waving a phone over a compatible reader.

Hughes’s appointment is part of the organization’s initial ramp-up. Once the management team is in place, it will be officially based in New York, with offices in Atlanta, Dallas and Seattle to be close to its carrier partners.

Hughes will feel right at home at Isis, having been part of the original team at Verizon Wireless that helped hatch the joint venture behind closed doors over the past two years.

In order for it to be a success, Isis will need the participation of the carriers, handset makers, merchants and banks.

Hughes said they are open to working with everyone and is optimistic about all of the suppliers working together–even the fiercely competitive carriers. ”It’s going to happen faster than any of the pundits think it will happen, for near-field, in particular,” he said.

Over the next 18 months, the organization has the goal of introducing its service in a few key markets.

Abbott added that meeting its goals will have a lot to do with relying on standards and technology that already exist. NFC has been around for years, and already the likes of Google is integrating it into its next version of Android.

The longer-term vision is that it won’t be just about payments, but about the whole wallet–by combining coupons, location check-ins, loyalty points and cards in one place.

Abbott declined to provide specifics on how the organization is funded, other than that it’s supported by a substantial investment from the carriers involved.

For now, Sprint is the only one missing from the list of major U.S. carriers.

Hughes admits that the initiative will likely need as many carriers on board to get enough scale.

Back when he was representing Verizon Wireless, he thought it was impressive enough to say that he covered 90 million consumers when talking to banks or merchants. “But we were told frequently, and more often than not, ‘That’s a lot, but I don’t want to do this three or four times [for each carrier].’”

Two of Index Ventures’ high-profile partners–Danny Rimer and Mike Volpi–are opening a new Silicon Valley office for the Europe-based venture firm in September.

The move is actually more of a return home for both men, now located in London, who had lived and worked at tech epicenter for much of their careers.

Among other things, before their stints at Index, Rimer was an Internet analyst at Hambrecht & Quist and also at the now-defunct Barksdale Group, while Volpi was an exec at Cisco.

BoomTown had been hearing about the possibility of the move for months, but Rimer and Volpi finally confirmed it in an interview yesterday.

“We thought we would be better positioned to support our entrepreneurs by being in Silicon Valley,” said Volpi (pictured here), who left the area when he became CEO of the then-hyped Joost premium online video service. “Having two solid investors from Index on the West Coast was important, as opposed to a chipshot.”

Volpi noted that of Index’s $1.3 billion in investments in 173 companies, $400 million was in 58 U.S.-based start-ups. In addition, the firm had helped another 35 move here.

There are currently nine investing partners at Index, which is actually headquartered in Geneva, Switzerland.

Rimer noted that initially it will just be him and Volpi here, as well as some support staff. But it was likely they would expand their office, which will be located in either San Francisco or around Palo Alto, Calif.

“It has been a challenge to be a European firm and also be present in the Valley and be considered an insider here,” said Rimer (pictured here), who often traveled to California. “There is a lot to have an immediate ability to be face-to-face with our companies.”

Recent investments by Index in California include Flipboard, Swipely, Boku and Factual.

Rimer and Volpi said the move did not mean deals were only to be found in Silicon Valley, as Index is not focused on geographical investing.

In addition, the pair will continue their focus on cloud computing, infrastructure and social, wherever the investments were to be found.

“We’re not coming to the U.S. to do only U.S. deals,” said Volpi. “But there is a lot to be said for being part of the daily mix in Silicon Valley.”

In other words: Party at Mary Meeker’s house!

(The well-known Morgan Stanley analyst has also recently moved to the West Coast from New York to join Kleiner Perkins.)

In a survey among mobile executives, the most likely category to break-out this year is mobile payments. In second is the closely related field of mobile commerce. (Mobile advertising and mobile coupons is third and fourth, respectively.)

What’s more, this group of insiders believes that the big winners within the category will be the financial guys: Visa and MasterCard, which garnered more than 30 percent of the votes.

After the large credit card companies, respondents voted for wireless operators, which are working together to build a mobile payments platform called Isis.

Further down the list is Google, PayPal and the handset makers. In sixth, execs placed the well-funded start-ups, such as Boku and Zong, which allow users to make purchases via their mobile phone bill, and Facebook ranked last with less than 5 percent of the votes.

The two companies noticeably missing were Apple, which has a healthy payments platform via iTunes, and Amazon, which also offers developers a mobile payments platform.

So far, the mobile payments industry in the U.S. mostly consists of buying-and-selling digital goods, such as music, or virtual goods in Facebook games. The industry has failed to break into physical goods because of the significant revenue splits demanded by all the parties involved. The cuts make it financially impossible to sell something that doesn’t have ridiculously high profit margins.

But that’s also expected to change, according to more than 30 percent of the respondents, who expect “selling of non-digital goods on mobile” to gain traction in 2011.

The survey was conducted by Chetan Sharma Consulting, which received responses from 225 executives. Thirty-three percent of participants were C-level executives, and 55 percent were from North America.

Another figure that points to mobile’s increasing influence on the retail industry was in response to the question: “Which enterprise segment will mobile impact the most?” The top answer–by far, with nearly half of the votes–was retail. Other answers included: Sales (less than 20 percent) and health (less than 20 percent).

Mopay Managing Director Kolja Reiss told eMoney that 2010 was an instrumental year for mobile payments as it became a major focus for wireless operators. Mopay, a mobile payments provider, recently expanded to the U.S. from Europe after opening an office in Palo Alto, Calif., this year. “I think what has changed is that all the [U.S.] carriers now have mobile payment specialists in house. A couple of years ago, they didn’t know how to treat it or how to maneuver their way around. They have dedicated people and there’s tons of initiatives that are based on those people.”

At the minimum, this year should see heated competition, with many players launching alternative products in the space. “We aren’t alone,” Reiss said, “which makes it even more interesting. There’s a race going on right now on who has the best product.”

Amdocs-owned OpenMarket, which has been handling payments for ringtones and other mobile content for years, is also forecasting that this year mobile devices will increasingly become an alternative to credit cards, especially for purchases under $25. Jay Emmet, general manager of OpenMarket: “Operators appetite for non-traditional services is increasing. They have competitive advantages, that a Google doesn’t have. They have a billing relationship with you.”

Now, the Menlo Park, Calif.-based company is trying to become a powerhouse among Android developers.

In June it launched a beta program that allowed Android developers to integrate Zong’s payment platform into their applications. Once included, it was like adding carrier billing to the Android Market, where users only had to click a couple of times to charge something to their monthly bill.

That’s attractive to developers because consumers are infinitely more likely to buy something if it doesn’t require a lot of steps, like entering a credit card number, or a Google Checkout account–which they may not own.

In particular, Android has been slow to form partnerships with carriers directly to enable similar one-click billing, so this could offer some alternatives to models that are only ad supported.

Today, Zong’s Android payments platform is officially live. So, how easy is it? It claims that developers only have to install the code in their application, and once that’s done their customers can start charging to their bill without registering or logging in to anything.

Zong’s magic is on the back end, where it verifies the mobile user and clears the charge through the carrier.

During the private beta, Papaya Mobile claimed that the trial was really successful, with more than 50 percent of its game-playing customers picking Zong.

Zong joins other payment alternatives on Android, such as PlaySpan, PayPal and Boku. The mobile payments space is considered hot, and worth duking it out for.

Below, video of Kara Swisher’s October interview with Zong CEO David Marcus.

]]> http://allthingsd.com/20101208/zong-opens-up-mobile-payment-platform-to-all-android-developers/feed/ 6 http://allthingsd.com/20101109/exclusive-boku-to-be-added-as-option-to-facebook-credits-setting-up-face-off-with-rival-zong/ http://allthingsd.com/20101109/exclusive-boku-to-be-added-as-option-to-facebook-credits-setting-up-face-off-with-rival-zong/#comments Tue, 09 Nov 2010 22:32:17 +0000 Kara Swisher http://kara.allthingsd.com/?p=37063

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.”

Performance and distribution will be much on the minds of potential acquirers, in much the same way Apple and Google snapped up mobile advertising companies Quattro Wireless and AdMob, respectively.

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.

To get up to speed, here is a video interview I did with Boku’s top execs–CEO Mark Britto and Ron Hirson, SVP of product and marketing–in July, followed by a more recent one I did with Zong’s Marcus:

]]> http://allthingsd.com/20101109/exclusive-boku-to-be-added-as-option-to-facebook-credits-setting-up-face-off-with-rival-zong/feed/ 2 http://allthingsd.com/20101021/zongs-david-marcus-talks-about-the-next-big-thing-in-mobile-payments/ http://allthingsd.com/20101021/zongs-david-marcus-talks-about-the-next-big-thing-in-mobile-payments/#comments Thu, 21 Oct 2010 13:00:40 +0000 Kara Swisher http://kara.allthingsd.com/?p=35971

There’s no question that mobile is the way an increasing number of payments are made for a variety of virtual goods.

Recently, BoomTown visited San Francisco-based Boku, one of the players in the race to win in this competitive space.

And, earlier this week, I motored on down to Menlo Park, Calif., to visit Zong.

While I would like to know why these services require such odd names, it’s clear Zong is good enough for Facebook to make it the mobile payment option for its Facebook Credits.

Zong is a spin-off from a company called Echovox, based in Switzerland. Zong garnered $15 million in funding from Matrix Partners earlier this year.

That investment was made by Dana Stalder, who was the former exec of PayPal, the pioneering online payment company that was bought by eBay.

Still, even with help, Zong has a complex business to run, which requires maintaining relationships with wireless companies around the world.

Sort of like herding cats, I would imagine.

Here’s my video interview with CEO David Marcus, who talks about where the business is headed:

]]> http://allthingsd.com/20101021/zongs-david-marcus-talks-about-the-next-big-thing-in-mobile-payments/feed/ 0 http://allthingsd.com/20100802/carriers-charging-into-mobile-payment-race/ http://allthingsd.com/20100802/carriers-charging-into-mobile-payment-race/#comments Mon, 02 Aug 2010 17:54:48 +0000 Voices http://voices.allthingsd.com/?p=27823 Sooner or later, a significant chunk of mainstream consumers are going to be making point-of-sale transactions using their mobile phones. The question is who will seize the lucrative middleman spot by offering a system secure and frictionless enough for customers and transaction fees appealing enough to get a critical mass of retailers aboard. Naturally, the current gorillas, Visa and MasterCard, have designs on retaining their hegemony, but the potential in mobile payments is drawing competitors large and small. Two fresh examples ripped from today’s headlines: Bloomberg reports that AT&T, Verizon and T-Mobile are working with Discover Financial Services and Barclays Plc to test a system that would let a consumer pay with the contactless wave of a smartphone, and a start-up called Payfone, backed by Apple vet Bob Borchers, has emerged to join fellow mobile-payment aspirants like Zong, Boku and Venmo.

]]> http://allthingsd.com/20100802/carriers-charging-into-mobile-payment-race/feed/ 0 http://allthingsd.com/20100726/the-boku-founders-talk-about-mobile-payments-competitors-and-more/ http://allthingsd.com/20100726/the-boku-founders-talk-about-mobile-payments-competitors-and-more/#comments Mon, 26 Jul 2010 13:30:40 +0000 Kara Swisher http://kara.allthingsd.com/?p=31200 While hot start-ups like gaming giant Zynga suck up all the oxygen in the Web 2.0 room, it’s always good to look at those who grease the wheels with the background transactions that make it all possible.

Case in point: Mobile payments start-up Boku, a heavily funded (Boku is trying to be PayPal for the mobile phone, which is something, well, the eBay (EBAY) unit and many other competitors, such as Zong, want to do too.

Here is the video of an interview I did at Boku’s San Francisco HQ last week with CEO Mark Britto and Ron Hirson, SVP of product and marketing, both longtime digital execs, about all this and more:

]]> http://allthingsd.com/20100726/the-boku-founders-talk-about-mobile-payments-competitors-and-more/feed/ 4 http://allthingsd.com/20100712/after-some-flashy-investing-is-andreessen-horowitzs-next-move-a-big-new-fund/ http://allthingsd.com/20100712/after-some-flashy-investing-is-andreessen-horowitzs-next-move-a-big-new-fund/#comments Mon, 12 Jul 2010 14:25:21 +0000 Kara Swisher http://kara.allthingsd.com/?p=30404

Since it launched almost exactly a year ago with a $300 million fund, the venture firm of Andreessen Horowitz has cut a rather high-profile path through the Silicon Valley investing community.

And it’s clear the firm has been aiming to make a big splash in the sector–from its involvement in the fractious fight over the spin-off of Skype to its funding of a series of high-profile start-ups (Zynga, Asana, Kno and Rockmelt) to its most recent aggressive moves to finally win the top spot in investing in hot social location site Foursquare.

Now, according to sources and after spending about half its kitty, Andreessen Horowitz is poised to begin another round of fundraising to further bolster its clout.

While it is unclear how much the VC firm will raise, sources expect it to be much more than its first fund.

In its last go-round, the firm had a quick completion of the fund raising, in the midst of a national econalypse. So many assume the next try will be a lot easier, especially given its knack for grabbing hot deals.

A spokeswoman for Andreessen Horowitz declined to comment on future fundraising plans.

The firm is going to need the money as it expands its partners and ambitions to change the venture landscape, as iconic entrepreneur Marc Andreessen noted when he founded the firm with his longtime business partner Ben Horowitz in July of 2009.

Andreessen said then that he was essentially professionalizing the active angel investing that he and Horowitz had been doing.

Over the last several years, either together or apart, the pair have invested in a large variety of innovative start-ups, such as Twitter, Aliph, Digg, LinkedIn and many more.

Andreessen is on the board of Facebook and an adviser to Twitter too.

In an interview with me last year, Andreessen said that unlike many VC firms, Andreessen Horowitz will invest in companies at any stage of life–from early stage to late–and of any size and in any kind of digital sector and will focus on companies led by tech-savvy founders.

He also expressed a disdain for the way the venture business was run.

“For the first time in my life, I am crossing over into the dark side,” said Andreessen at the time, in a joke about VCs being like Darth Vader.

At the time, he also noted that money talked. “It’s important to have more capital,” he said. “Sometimes having a huge checkbook is a great thing.”

Well, we’ll see if Andreessen Horowitz can make that checkbook even larger.

Until then, here is a tally of investments that Andreessen Horowitz has made so far, sourced from the firm, split up into categories and size of investment round the firm participated in with other investors. The firm declined to provide the exact amount of their participation in each investment.

It should be noted that Andreessen’s and Horowitz’s previous individual investments in some of these companies are not identified here:

Board

Kno: tablet device for students; $7.5 million
Nicira: cloud infrastructure software; $13 million
Okta: cloud app management; $750,000
Proferi: analytic applications; $2 million
Rockmelt; desktop browser for Facebook; unknown funding
Skype: Web telephony; $50 million

Passive

Apptio: IT cost transparency solutions; $14 million
Asana: enterprise collaboration; $9 million
Boku: mobile online payments; unknown funding
Digg: social media and content; unknown funding
Foursquare: social location; $20 million
Fusion I/O: enterprise I/O solutions; $45 million
Tiny Speck: social gaming; $5 million
Zynga: social gaming; $180 million

Seed

Burbn; social location; $500,000
Canvas Networks: image boards; $625,000
Factual: structured data; $1 million
GoodData: cloud-based collaborative analytics; $2.5 million
Quantifind; enterprise; unknown funding
RethinkDB: database storage; $1.2 million
Mixed Media Labs: photo sharing; $370,000
SnapLogic: open-source enterprise data integration; $2.3 million
TopProspect: social recruiting; unknown funding
Vikkii: user-generated subtitling; unknown funding
Ze Frank Games: online gaming; unknown funding

And here are video interviews BoomTown has done with both Andreessen and Horowitz in the last year on their investing theories:

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