Global mobile payments network Paymo and social network hi5 have partnered to let members in 24 countries use their mobile phones to purchase hi5 Coins, hi5’s virtual currency. Countries where Paymo will be made available to hi5 users include the U.S., Canada, France, Hong Kong, Thailand, Russia and Colombia.
Paymo’s mobile payment system doesn’t require users to have a credit card or bank account. Users enter their cell phone number on the site, reply to a Paymo text message and then all virtual charges on hi5 are automatically charged to the user’s monthly cell phone bill. It’s pretty easy and similar to UK mobile payments service, Zong. Paymo says that over 75 percent of the online community worldwide does not have a credit card but 3 billion consumers own a mobile phone. With that in mind, the company is hoping their system, which avoids credit cards or bank accounts, will take off.
Unlike some of its competitors, such as Zong and Mobillcash, whose systems are limited to certain regional areas, Paymo can be accessed in 45 markets around the globe, enabling mobile payments in Europe, North and South America, the Middle East, Africa and Asia. Paymo recently expanded service in the U.S. after striking deals with mobile carriers AT&T, T-Mobile and Virgin Mobile to allow users to make online purchases using their phone.
Mobile payment systems are gaining traction from social networks, but the issue of costly fees charged by mobile carriers to the payment systems (which are then passed on to the consumer) remains a serious problem. Paymo says that it typically charges users a transaction fee of 10% of the purchase price. The company adds that different cell phone carriers charge varying fees but most are in a range of 20% to 40% of the purchase price, which is a pretty large amount in transaction fees. As we said in our earlier analysis, this could pose a significant roadblock to these types of services, which channel user payments through mobile carriers. It appears that it would be hard to sustain these fees in the long term when transaction charges could be drastically decreased if payment networks accepted credit card or bank account payments. Still, with such a vast coverage area of the world, Paymo appears to be ahead of some of the more regional services. Paymo says that Facebook, which has a widespread international following, would be the next partner it hopes to land in the social network space.
This concept does sound good, especially with countries where credit cards are still not popular with the main stream crowd.
I totally agree. I landed in trouble while using CC for online products. This sounds good.
Wait what? So you send them a text and they just charge you for stuff that doesn’t exist with their fake currency? Hustle of the century!
You buy virtual items with it. It exists as data somewhere but it doesn’t physically exist, if that’s what you mean.
The post mentions Thailand. However, Paymo doesn’t seem to support Thailand yet.
I’d love to know any specifics about when it may be supported in Thailand, if paymo folks are listening(have emailed support).
Leena – good post. Few precisions worth noting:
- Zong is not UK based, it’s Palo Alto based. Walk down Hamilton Ave, can’t miss the building
- You mention: “Unlike some of its competitors, such as Zong and Mobillcash, whose systems are limited to certain regional areas…” – this is not exact. While it is true that Paymo has more reach in developing world countries, Zong is the only player with 97% mobile subscriber reach in the US and 100% reach in Western Europe. More importantly, Zong is the only player with over 80% direct carrier connectivity, vs. going through messaging aggregators that take an additional share of an already expensive transaction and are financially fragile.
- Finally, two very important points worth nothing. If you’re ready to cope with high transaction costs generated by carrier based payments, you better demand and get super high conversion rates. No one comes close to Zong when it comes to user experience and removing friction points. The only other reason to cope with these fees, is lack of alternative payment methods from your target demographic group or geography. As far developing world countries coverage goes, Paymo has better coverage than Zong for now. Hands down. Which is a good reason for Hi5 to pick them as most of their users are located in Latam and India. But when it comes to converting a maximum of non-paying users into active buyers in high-GDP countries, no one comes close to Zong. Ask our customers…
I love the necessity to defend. Spoken like a true sales pitch.
It’s funny how you talk about “conversion rates”… it pretty much masks the fact that very few merchants beyond social gaming companies will use your service (Zong/Mobillcash) because what you are charging is highway robbery, and no really successful merchant will utilize it. What we need is a mobile payment option that doesn’t rip off merchants and talk about high “conversion rates” to try and sugar coat the problem. From what I’m hearing, there is a company or two out there that are about to solve this problem with a smart mobile payment solution. I’ll keep my fingers crossed, so that we don’t have to hear this nonsense about “conversion rates.”
Tony – The wireless carriers keep majority of the cut (as high as 50% of the transaction). Zong, Paymo and Mobillcash possibly get less than 5%. It’s good for high margin items, such as virtual goods. You wana fight with the carriers?
The points are obviously worth noting, not nothing
Good Notes by David as well. It would be nice if people from all the three companies mentioned in the article also share their thoughts etc ….. would be one healthy comment discussion for the reader’s.
This might be a great deal for websites trying to monetize but this is the kind of thing that will create lawsuits from ticked off parents with 500,000 mobile phone bills.
Great idea though. My mind is already spinning on ways I might want to use it.
a good way of trying to upgrade the services. hope it will benefit more people
http://www.heal...tedirectory.com
If this payment system build in my country,I think that will be good idea,with over 50 million user Nationwide to compare credit owner that only 8 million consumer I think that will be great idea
Great idea, but this is absurd how much of a surcharge the mobile companies charge. Crazy!
Don’t they realize they could make more if they lowered their fees and thus gave this type of payment a bigger chance of catching on?
A huge % of a small market is smaller than a smaller percentage of a huge market.
After reading a separate post elsewhere reminding me how much mobile companies charge for data & SMS plans, I’m starting to get kind of angry at them for abusive pricing. (Although, to be fair, I am happy with T-Mobile for recently cutting the price of their unlimited voice plan in half.)
Another mopbile payment provider is Allopass.com.
More than 40 countries covered, and the only provider to pay merchants on demand (they don’t need to wait 60 days or more, which is the case with providers mentionned in the article).
6 millions transactions per month, flexible commissin rates, and lots of reference clients. Learn more at contact@allopass.com
Hi, we are an independent software development company and have a readily plug and play solution for anyone whom wish to implement and accept Paymo sms payment on their Joomla / Virtuemart website now.
It is essentially a payment module for the awfully popular Joomla / Virtuemart. For more details, please visit pngmediagroup.com
Yes mobile payments charges are way too high but until somebody get to convince carriers that they should not keep 50% of the revenues we need to deal with it.
I’m the CEO of an alternative payment solution http://www.paymentpin.com, we offer mobile in 35 countries and also offer land line billing in Us and Canada. with land line billing we get away with much better rates : http://www.paym...ine_payment.php
Have a nice day everyone
hi5 is a desperate, also-ran social network with no future. Everyone across the globe is migrating over to Facebook, the hands-down winner in social media (along with Twitter).
hi5’s new strategy is to go the casual gaming route, but there’s nothing new there (already done very well by competition). They need to radically transform themselves and become a part of the Facebook/MySpace ecosystem if they even have a chance to survive.
Good luck.
Those 10% service charges make Paypal look terrific. If they can keep that sort of margin more power to them. However, before using a new payment system I always check This digital security site to verify their reputation.
In the UK the network operators run a scheme called PayForIt
http://www.payforituk.com/
soy alegre y bueno y bello