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San Francisco-based Boku Inc. has bought mopay Inc., bolstering its position among carrier billers, Boku announced Tuesday.
Germany-based mopay, with a U.S. office in Palo Alto, Calif., says it processes more than 5 million monthly transactions and works with more than 400 mobile operators. Boku has built connections to more than 250 mobile operators serving almost 4 billion consumers in 67 countries. With the acquisition, Boku now will reach nearly 5 billion users in more than 80 countries, a Boku spokesman says.
Boku would not release terms of the deal.
“Both companies shared a vision to build carrier billing-based mobile payments into a truly global payment method and we have largely complementary organizations,” the Boku spokesman says. “Payments is a business of scale and the advantages of this merger are not only the great teams and technologies coming together to create even better products and experiences. The acquisition will also allow Boku to operate at greater scale, provide better service to our merchant partners, and to partner with even more carriers around the world.”
In the United States, Boku works with most of the major carriers except T-Mobile USA.
Merchants include Sony, Facebook, Electronic Arts, Valve and Wargaming. Purchase limits vary by market and typically are set by the wireless carriers, with an average of approximately $50.
Consumers can use Boku in a couple of ways. One is 1-Tap, which enables users to make mobile purchases for billing to their wireless carrier bills without having to enter any information. The other is by entering a mobile number on a checkout page and confirming the purchase via texts.
Boku’s acquisition of mopay will provide the company with needed scale, says Rick Oglesby, senior analyst at Double Diamond Research Consulting Group, Centennial, Colo. “Digital goods are obviously a growing market so the companies do have good growth prospects,” Oglesby says. “At the same time they face increasing competition so increasing scale and consolidating costs just makes sense.”
Carrier-based billing can make it easier for consumers to engage in mobile commerce, says “Everyone who has a subscription-based phone already has a mobile phone bill from which they can fund payments,” Oglesby says.
While carrier-based billing may have convenience on its side, there are disadvantages. Because mobile carriers are not banks, they aren’t good at lending and tend to be conservative about when they allow carrier-billing purchases, Oglesby says. “And they only do it when they can make a lot of money.” Carriers usually charge merchants in excess of 10%, and often more than 15%, for this service, he says. “Carrier billing is therefore for primarily low-dollar purchases of digital goods.”
Carrier-billing also may be at a disadvantage among consumers who use smart phones. Consumers tend to enroll in the app stores from Apple Inc., Google Inc. and Amazon.com Inc., and get used to the convenience of using their payment credentials within these systems, Oglesby says. And the app-store owners direct app developers to funnel payments through them. “The app-store owners largely lock the app developers into using the app-store payment services for in-app payments, leaving carrier billing as a mechanism for out-of-app purchases, which is a relatively small market segment. We can expect Apple Pay to step up competition with carrier billing providers even further moving forward.”
Expected to be released in October, Apple Pay will enable consumers to make contactless payments in stores with compatible iPhones, and make in-app purchases with participating merchants.
