Monday, June 22, 2009

Beaucoup Bucks Bet Browsers Buy with Boku

It's always been my contention that many pioneers in the mobile content space are refugees of the dotcom bust who recognized that mobile had an inherent benefit over established billing relationship with consumers that could facilitate microtransactions. The initial (and, for most, the continuing appeal) was the ability to sell consumers content on the device, for the device. However, subsequent regional innovations like Sonera's Mobile Pay, which let Helsinki teens buy a Coke from a vending machine via premium SMS way back in 2000 & Sony's FeliCa NFC technology, deployed by NTT DoCoMo in 2004, that gave busy Tokyo businessmen the ability to purchase a subway ticket with a wave of their mobiles, soon had pundits predicting the imminent demise of the leather wallet. In typical mobile fashion things didn't happen that fact they kinda stalled.

Well mobile payments are hot, hot, hot once again. According to a story in MocoNews last week (subsequently picked up by NYT) mobile payment startup Boku has raised $13mil in 2 rounds from Khosla Ventures, Index Ventures and Benchmark Capital to buy 2 existing companies, Paymo (est 2007) & UK-based Mobillcash, to get access to their combined networks of 1.6bil customers WW (really?) and become the standard for mobile payments. Boku hopes to become a ubiquitous payment option on websites alongside credit cards, PayPal, etc. -- click, mobile number, reply to the text and you're on the road to a $1k mobile bill. They believe that their "Pay By Mobile" option will appeal to the credit challenged (kids with mobile phones...yikes!) and could become the default option for impulse purchases (which tend to get canceled after 2nd thought during the credit card entry process). Boku makes money by taking a small fee per transaction...which of course will be in addition to the ( 50%) fee the carriers will take for use of their billing systems, the financial risk and managing customer service issues. So here's the catch...because of those carrier fees mobile payments aren't currently viable for purchasing anything other than virtual goods (think new kicks for your Second Life avatar). Clearly Boku (and it's investors) are banking that the carriers will see the benefit of lowering their fees to participate in a broader opportunity transacting real stuff. In the meantime I think they should focus on helping Facebook with their struggling business model...I think a shockingly large number of folks would be happy to ignore another $1.99 fee on their mobile bills for the ability to play Mafia Wars.

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