Over the past year, we’ve written frequently about mobile payments startups and the potential future of this technology. Rivals Zong and Boku both offer essentially the same service—the ability to make a payment for a micro-transactions via your mobile phone. And both companies have been growing steadily, with Boku making acquisitions and expanding internationally and Zong picking up traction via a partnership with Facebook.
Today, Zong is upping the ante by offering a subscription service, which lets Zong customers to extend a recurring bill-to-mobile option of up to $9.99 a month. Basically, Zong users can now charge a flat-rate for multiple purchases instead of the existing pay-as-you go model.
Zong says that the subscription feature is initially launching in photo and video sharing site Photobucket and OMGPOP, a real-time social gaming platform. The advantage for Zong’s users is that each time they want to make a mobile payment for a transaction, they won’t have to re-enter their info. The monthly membership fee will appear as a line item on the user’s monthly mobile phone bill. Currently, the feature is only available for U.S.-based mobile users but will soon expand its subscription service to customers in Europe, Canada and Australia.
As we’ve written in the past, Boku, Zong and other mobile payments platforms face high fees that mobile carriers charge to the payment systems (which are then passed on to the consumer), creating a potential obstacle in the business model. The subscription option is an interesting alternative that could lower fees for the end users. Plus, David Marcus, CEO of Zong, told me earlier this month that many U.S. and European carriers that Zong works with are contemplating reducing these fees by building large-scale models to process payments that would in turn lessen the pressure on the mobile payments startups as well as the applications and social networks using the systems.
No more credit card huh.. looks like it’s becoming the real alternative for paying online :p
Nice feature! I was really waiting for something like that for my startup.
Bye,
http://twitter....om/alexnautilus
Why did you wait? This service was implemented in a range of countries at smscoin.net a long time ago actually. But as soon as I see such services are real novelties for US market.
After November 3, 2009 this is going to be a tough competitive space with PayPal’s Adaptive API.
I do wish Zong the best.
Having used Zong in the past I have to say they take a ridiculous amount of commission and should be avoid at all costs. Up to 50% in some cases.
Hill from ZONG here.
@D, you are correct in saying that mobile payments are relatively expensive when compared to other forms of payment. As others on this thread have pointed out, the lion’s share of this fee is set by the mobile operators.
Still, there’s a very good reason that social networks and online gaming companies are working with us: ZONG gets publishers more paying customers. If you have a large audience of mostly free users (like most “freemium” models), the focus is not to lower the cost of payment for the 1% of users who are premium. Rather, the focus is to get the _other 99%_ to pay you! ZONG is the most frictionless payment service on the web, allowing consumers to pay you without sharing financial information (or even having any!) So while the actual transaction costs are higher than, say, credit cards, the effective revenue yield of the total audience is greater. Hope this helps.
The mobile phone operators need to be brought inline. They are using/abusing their monopoly/oligopoly/cartel position to overcharge for what should be a near commodity service. Regulators and consumer groups need to step up.
Here here.
Well, that´s life. I don´t think Telecoms are going to be just a middle part over the transactions, they are going to play a significant role themselves over this business.
The problem for Telcos is that the regulatory doesn´t allow them to operate as financial institutions in many countries over the world. Once this gap is bridged (e.g. buying a financial company) they are going to be in, deeply and with full power. They have the expertise in connectivity and handsets and more importante, huge cutomers databases.
Partnership will be a plus to reduce transaction costs over software development, mainly.
The market is shaking up. Let´s see what is going to happen.
“The advantage for Zong’s users is that each time they want to make a mobile payment for a transaction, they won;t have to re-enter their financial info.” I thought the major advantage of Zong was that, apart from your mobile phone number, you don’t have to enter anything else. So, what financial info are we talking about here?
@Ketharaman, you’re correct. A big part of the appeal of mobile payment is that you don’t have to provide financial information. We’ve submitted this correction to Leena. Hoping she corrects it
What all of these services take as a starting point is your phone – which is one approach. But Monitise – http://www.monitise.com – which VISA has recently invested in along with PCCW, Standard Chartered, and Flemings – starts with your bank account – arguably a more natural starting point for mobile banking and mobile payments. That’s where your money is! So if you can pay anyone from your current account via your mobile phone via any carrier over any handset, that’s a powerful franchise. Monitise is a global player, more than 75% of the UK banks have adopted their platform. The beauty of what they have is that for banks – they leverage their ATM infrastructure as they treat mobile banking like any other ATM transaction. The genius of Monitise is to align the economics for the ecosystem – for the bank, for the carrier, and for the user. Top that!
mobile payments are headed in the wrong direction – carriers are getting more strict about how this works.
payment terms are obscenely slow and the unpredictability of the amount you will receive does not help either.
also to note is that the message flow (as zong put together for facebook) is not compliant with carrier standards. an accident waiting to happen.