A Telecom Processor Rolls out Gateway with Online Phone Billing

A San Antonio, Texas company that specializes in clearing and settling consumer charges for telecommunications companies has signed up seven sellers of digital content for a new online payments gateway that lets users charge downloads to their phone bills. The seven undisclosed merchants are the first clients for what BSG Clearing Solutions North America says should be a popular payment option as more merchants seek out ways to sell online content for what are called micropayments?transactions of $5 or less. “It's a significant opportunity,” says Greg Carter, president for fixed lines and payment services at the company. “We've gotten aggressive to go after merchants.” BSG is starting with Web sites that sell digital content like songs and games, and the phone-billing feature is limited to landline service. But officials leave the door open to adding online sellers of hard goods later on. “We'll be branching out a little bit,” says Lance Devin, vice president of product management, citing the example of billing a movie to a phone bill and then having it delivered. BSG, which works with some 1,400 so-called local-exchange carriers to clear and settle charges for about 400 telecom clients, says it has access to between 65% and 70% of landline phone accounts, or more than 140 million household bills. Through two years of meetings and negotiations with the LECs, it has signed agreements with them to allow digital content charges on their bills, Carter says. “The digital content space is exploding,” he says. “We've articulated that demand to the LECs, and they see this as well.” The Advanced Payment Gateway, which also includes credit card acquiring and risk-management functions, markets the phone-billing feature as Bill2Phone, for which it has designed a mark that merchants can feature on the checkout pages of their Web sites. Aside from the content sellers signed so far, BSG's first client for the service is ClickandBuy LLC, a European online payments service that two weeks ago announced it would offer a phone-billing feature in the U.S. BSG will not disclose merchant fees specifically, but says it is charging merchants a discount fee, which Devin describes as comparable to that which American Express Co. charges, for the phone-billing service. He says the fee may or may not include a fixed component, depending on circumstances. Devin and Carter say the fee is worthwhile because with the service content sellers can reach customers who may have no other way to pay. “It's a demographic that can't be reached in any other way,” says Devin. The company also sees advantages in bundling payments and risk-management features in the gateway, much as established e-commerce gateways like CyberSource Corp. and Retail Decisions USA Inc. do. “Why wouldn't you come to a single provider for all that?” asks Devin. But, unlike those other gateways, BSG is concentrating on sellers of content that can delivered electronically, eliminating such issues as returns and disputes over merchandise arriving not as described. “Digital keeps it simple for the time being,” Devin says. BSG is not the first to offer the option of phone billing for online transactions. PaymentOne Corp, San Jose, Calif., for example has been in the business for seven years. But BSG figures its long years of back-office settlement processing for long-distance companies and other service providers, along with its ties to LECs, may give it an edge in the digital-content market. “We're just ready to set this [market] on fire,” says Devin.