Once again, we’re packaging some of the top news of the week in a quick-to-digest video format.  If you missed some of the big tech stories this week, TechCrunched gives you the highlights. Take a look, have a listen and let us know what you think. Also, be sure to visit the below links for additional insights.

Apple’s App Store Crosses 15B App Downloads, Adds 1B Downloads In Past Month

eBay Buys Zong For $240 Million In Cash To Boost PayPal’s Mobile Payments Technology

Do You Subscribe To NYT On Your Kindle? You Can Now Access NYTimes.com For Free

Facebook Launches Ad Hoc Group Chat, New Chat Design, And Video Chat With Skype

Zuck Confirms That Facebook Now Has 750 Million Active Users

Zuckerberg: Online Sharing Is Growing At An Exponential Rate (And Users Are Sharing 4 Billion Things A Day)

From Diapers To Pets, Amazon’s Quidsi Introduces Wag.com

comScore: One In Three US Mobile Phones Is A Smartphone

Remember When Twitter Was A Joke? No One Is Laughing Anymore.

With No IPO In Sight, Twitter Said To Be Raising More Money At $7 Billion Valuation

Correction: In the video, we say that the NYT is free on the Kindle. In fact, you have to pay for a Kindle subscription to the NYT, but then you get Web access for free.

Zong has been one of the pioneers in the mobile payments space, adding a compelling new way for consumers to pay for items online. Simply put, it lets you pay for things, particularly virtual goods online, via direct billing to your mobile phone. Consumers simply enter their mobile phone numbers in the payments process.

When a user wants to purchase an item, he can enters his cell phone number on a site, the site sends a text message to the phone, the user confirms the transaction with a short reply, and all the charges show up on his phone bill. Zong powers this entire transaction. The company has partnered with over 250 carriers worldwide to offer the technology to mobile phone users.

eBay says that Zong will add ‘complementary technology and talent’ to its PayPal division, giving consumers more ways to pay for virtual goods and products online. Scott Thompson, president of PayPal, said this in a release: “Commerce is changing. With mobile phones, we walk around with a mall in our pockets. PayPal helps to make money work better for customers in this new commerce reality – no matter how they want to pay or what device they’re using…We believe that Zong will strengthen this value by helping us reach the more than 4 billion people who have mobile phones, giving them more choice and security when they pay.”

Zong, which was founded in 2008 by entrepreneur David Marcus, has raised a total of $27.5 million in funding. Matrix Partners’ Dana Stalder, who was the former CTO of PayPal, is on Zong’s board of directors.

Stalder tells us that he’s spent a lot of time looking at financial services technology, and Zong was one of his first investments in the venture world. “It was clear to me at the time that we had space to build something big here,” he explains. In the digital goods category, carrier billed payments account for 50 percent of payment volume. It’s a frictionless payments mechanism, he says, and this makes it ideal for digital goods. For digital good providers, carrier billing provides the highest conversions and Zong helps PayPal shore up this category.

Last year, Zong was spun off from its European parent, Echovox, and Marcus moved to the U.S. to run the fast growing company, which landed a pretty big deal last year with Facebook to become a an early mobile payment provider for Facebook Credits. Other partners include IMVU, Sulake (makers of Habbo Hotel), Big Fish Games, Sony Online Entertainment, Zynga, Playdom (owned by Disney), and Bigpoint. The company also launched Zong+, an extension of the mobile payment startup which lets users bill microtransactions to credit, debit and prepaid cards (instead of their phones).

Marcus wrote in a post on the company’s site: I am so excited by the unique combination of PayPal’s 8 million merchants, brand power, risk management expertise, and financial stability, with Zong’s Carrier DNA, its largest direct carrier payments network, product innovation, and best-in-class carrier billing technology. This industry first is going to allow us to scale what we’ve built over the course of the past 3 years (and then some) in a massive way!

Zong faces competition from Boku, which was also rumored to be the target of an acquisition as well.

eBay and PayPal have been on a bit of an acquisition spree, so it’s not surprising that the e-commerce giant made another big buy. PayPal is facing competition from fast growing startups like Square and even Google, and the payments company needs to add compelling technologies to help draw merchants, consumers and local businesses. As we’ve seen in the past few months, PayPal acquired local payments and advertising company Where, and shelled out cash for mobile payments company Fig Card as well.

Zong provides a seamless payments product that could help improve conversions for online merchants and digital goods (PayPal processed $3.4 billion in transactions for digital goods in 2010), and in the end, frictionless online payments is PayPal’s bread and butter. In fact, PayPal just upped estimates of the amount of mobile payments transactions using the technology this year; doubling the estimate to $3 billion in mobile total payments volume (TPV) in 2011.

PayPal’s CFO Patrick Dupuis tells us the acquisition is an expansion of vision fo enabling commerce anytime anywhere, adding another payments source for PayPal’s 9 million merchants. Marcus tells us that PayPal’s ability to scale and accelerate with Zong’s built made it an appealing new home.

Another draw for PayPal—Zong has pretty massive international reach, offering mobile payments in in 21 languages and 45 countries. The service’s technology is especially appealing in countries where mobile phone usage is high (as opposed to internet connectivity). Zong should also help PayPal expand its footprint in developing countries.

In terms of integration, PayPal and Zong arent’s saying much as to how Zong will be branded in the future. Marcus says he will be staying on at PayPal.

Unsurprisingly, Dupuis says that Marcus and his team will have a critical role in PayPal’s future transformation in the payments business. Stalder echoes this sentiment, explaining that PayPal, with Zong in hand, is in a better position to create the digital wallet of the future.

Zong has been one of the pioneers in the mobile payments space, adding a compelling new way for consumers to pay for items online. Simply put, it lets you pay for things, particularly virtual goods online, via direct billing to your mobile phone. The company has steadily grown its offering through new products, major funding, deals with Facebook, and more. Today, Zong is expanding its mobile payments platform beyond the web to televisions, tablets, game consoles and more.

In case you aren’t familiar Zong works, here’s a quick tutorial. When a user wants to purchase a virtual item, he can enters his cell phone number on a site, the site sends a text message to the phone, the user confirms the transaction with a short reply, and all the charges show up on his phone bill. This entire transaction is powered by Zong. Previously, Zong was only available for the web and on Android phones, but today is expanding its platform to work in a number of environments, including Flash, Unity, Interactive TV, gaming consoles, and the mobile web.

Zong’s CEO and founder David Marcus tells us that Zong’s payments system is optimal on a variety of platforms, but specifically is receiving interest from developers looking to integrate Zong in TVs and game consoles. For example, Zong could be used to power payments within a game on a game console.

Instead of having to enter credit card and billing information via a remote (which can be a tedious process); Zong’s payment system would only require users to enter their phone number. Zong would then send a message to the cell phone number, the user would text back to verify security, and the payment will be included on the user’s mobile phone bill. Clearly this scenario could also work with movie rentals, and more.

Zong is also announcing that in-app payment system on Android has been expanded for use on Android 3.0 Honeycomb tablets. Marcus says that the seamless payment system (one-click) is suited for tablets that lack a physical keyboard.

Zong isn’t the only payments company eying the connected TV market. PayPal has also expanded its payments platform to be used with televisions as well.

The company, which faces competition from well-backed Boku, is currently in late-stage talks with a number of high-profile brands to incorporate its mobile payments system into other interactive platforms. “We made a tremendous amount of progress on the web, including Facebook,” says Marcus, “But now we are ready to expand into new customer types and other platforms.”

So why is this important? Historically, mobile payments companies face the challenge of lofty carrier rates. Wireless carriers have charged roughly 30% to 40% to process transactions made via mobile phone accounts, making it very difficult for mobile payment companies like Boku to scale beyond virtual goods. These transactions costs are passed down to developers using Boku and Zong, which are then passed to the consumer. To avoid these costs, Boku and Zong have been negotiating direct relationships with carriers as a way of possibly avoiding these costs.

While these mobile payments companies have had direct relationships with international carriers for some time, deals with U.S. carriers have taken more time in terms of negotiations. Last fall, Zong and Boku both announced direct relationships with AT&T.

BillToMobile has had a relationship with Verizon since May 2010 and Boku and Zong are both accessing lower fees with Verizon by partnering with BillToMobile. Ron Hirson, Boku’s co-founder, says that in end, the consumer wins with these negotiations. We hear that fees for these mobile payments have been brought down to credit card fee levels. Zong tells us: “Verizon fees are in line with our AT&T fees, and we’re optimistic about increased acceleration of carriers worldwide dropping their fees to enable Zong to address more markets.”

In case you aren’t familiar how services like Zong and Boku work, here’s a quick tutorial. When a user wants to purchase a virtual item, he can enters his cell phone number on a site, the site sends a text message to the phone, the user confirms the transaction with a short reply, and all the charges show up on his phone bill. This entire transaction is powered by Zong or Boku.

It’s good news for mobile payments startups that U.S. carriers are starting to jump on the badnwagon and lower fees. Boku is reportedly a possible acquisition target for both Google and Apple, and direct carrier relationships reinforce the fact that there is consumer demand for this method of mobile payments.

Editor’s note: The following guest post is by David Marcus, founder and CEO of Zong, a mobile payment provider for Facebook Credits, AT&T and hundreds of leading destination websites and mobile applications

There’s been much hype, crazy valuations, and overall market excitement about businesses that promise to unleash the power of the social graph, location, recommendations and group buying. Facebook’s latest valuation according to SecondMarket is now about $30 billion, Foursquare raised $20 million at a post-money valuation of $115 million while still at a pre-revenue stage, Yelp, short of selling for $550 million to Google, raised over $25 million at an undisclosed but very high valuation, and finally Groupon raised $135 million at a whopping $1.35 billion valuation. So besides their huge success with the investment community, and their users, what do these companies have in common, and what does all this have to do with disrupting Local Commerce?

In an August TechCrunch guest post, Alex Rampell, describes how Online2Offline commerce is a potential trillion dollar opportunity. The gist of it is that we spend most of our disposable income offline, in local stores, restaurants, and shopping malls. But companies like Groupon, Gilt, and other group buying and private sale startups are changing the money flow. People buy online, and redeem offline. But this is just the beginning of a perfect storm brewing that will change the way we discover, shop, and pay for things. Let’s focus on the main function each of these different startups provide to understand how bringing them together will ultimately disrupt multiple trillion dollar industries:

• Facebook: provides the Social Graph, which is fast becoming a utility. Through its open platform, and APIs, we share more about our lives and our interactions online and on mobile every day.
• Foursquare and Gowalla: provide location services and check-ins, along with game mechanics that motivate users to unlock badges, earn mayorships, and get discounts at local stores in the process.
• Yelp: provides crowdsourced reviews of local businesses. Now also provides check-ins, and offers.
• Groupon: provides discounted offers against a promise to increase sales and bring in brand new customers to local businesses.

The interesting thing here is that there’s a lot of overlap between the features offered by these companies. Recently, Facebook launched Places, a mobile geo-location service that mimics Foursquare local check-ins. Yelp also added check-ins, and recently rolled out Yelp Deals, a Groupon clone.

Considering that Local Commerce will be mostly mobile, one of these companies still must bring all of these features together, along with one-click payments (IMHO), to truly tap into the potential of all these disruptive technologies. In my mind, the ultimate product combines all these features in a mobile app. A user would launch the app, see what special deals are in her area (location + group buying), whom of her friends already bought the coupon/item (social graph), local reviews from friends (social graph + reviews), and then she could buy the desired coupon in one click on her handset. She could walk into the local business with a discount code, barcode, or maybe at some point in the future, an enabled RFID tag, and redeem what she just bought.

All of these companies, with the exception of Yelp, are at an early stage of their product development in this space. Facebook Places is lacking the gaming mechanics of Foursquare, the reviews of Yelp, and the local deals of Groupon. Foursquare is missing scale in its discounted offers. Yelp is missing the reach of the social graph, and the embedded payments. Groupon is lacking core social graph features that would give it better relevance through social shopping.

So which one of these companies will succeed in unleashing the power of Local Commerce by combining the right set of features with the appropriate on-the-ground salesforce? My bet is on Facebook to be first. They have a large advertising sales organization that could reach out to local businesses, already are supposedly testing offers on Places, they have de-facto more distribution and social graph access than any of the other companies, and finally they are building a true payments platform.

Groupon and Yelp also have a decent shot at it, but it will be tough to compete with Facebook’s distribution capabilities and ubiquity. In order to remain relevant, they will have to innovate and come up with original features. Foursquare’s future is probably going to be more challenging with more players entering their space, but it it could end up being bought (once again for founder Dennis Crowley) by Google, which is preparing to aggressively go after the local commerce opportunity.

The Boku Payments SDK allows developers to monetize any Android app with in-app purchases via carrier billing. Boku, which just launched last year, doesn’t require users to have a credit card or bank account to make a micropayment. Users enter their cell phone number, reply to a text message and then all virtual charges are automatically charged to the user’s monthly cell phone bill.

Boku’s SDK allows for a one-tap purchase process in more than 60 countries over 200 carriers worldwide without a user login or password needed for purchase. Boku authenticates the transaction and deals with the carrier billing as well. It’s incredibly easy for consumers because they don’t have to deal with the hassle of entering credit card information on their phone.

While the iPhone has supported the idea of In-App purchase for a bit over a year now, Android hasn’t adopted this yet. But as the Android platform becomes more heavily used by consumers, payment companies like Boku stand to profit from in-app purchases. PayPal just launched its Mobile Payments Library for Android, which allows consumers to make transactions without ever leaving the app.

Of course, the potential obstacle to the adoption of Boku are the high fees that mobile carriers charge to the payment systems (which are then passed on to the publisher or developer). Boku told us last June that different cell phone carriers charge varying fees that range between 10% to 50% of the purchase price, which is a hefty amount in transaction fees. But Boku is steadfast in its commitment to remedy this issue. Ron Hirson, Boku’s marketing chief, says the company is ramping up negotiations with carriers to lower these fees.

As I stated above, the barrier for Boku’s system will be the high carrier fees that will be passed on to developers. But if this can be negotiated, the sky’s the limit for mobile payments as an attractive payments platform. Coincidentally, competitor Zong also announced the availability of its payment service for developers this morning. It looks like the two will duke it out for Android developers who want to start monetizing off of their apps. That is, until Google rolls out In-App purchase support for the Android platform

Boku, which just raised $25 million and rebranded its platform in January, doesn’t require users to have a credit card or bank account to make a micropayment. Users enter their cell phone number on the site, reply to a text message and then all virtual charges are automatically charged to the user’s monthly cell phone bill. As we’ve said in the past, it’s ridiculously easy. The company also acquired Paymo and Mobillcash over the past year, systems that had significant international reach, Boku gained a strong base of users around the world. Currently Boku is available in more than 60 countries and on over 200 carriers worldwide.

The company has also made a few key hires on the product side. David Yoo, former SVP and Chief Product Officer at AT&T Interactive; and Kevin Grant, former VP of Sales for MobiTV, are joining the executive team as SVP of Strategy and SVP of Sales, respectively. Both will be working to create new partnerships and reduce carrier fees in the mobile payments space.

While mobile payments are set to gain considerable traction on social network, one potential obstacle to adoption are the high fees that mobile carriers charge to the payment systems (which are then passed on to the publisher). Boku told us last June that different cell phone carriers charge varying fees that range between 10% to 50% of the purchase price, which is a hefty amount in transaction fees. But Boku is steadfast in its commitment to remedy this issue. Ron Hirson, Boku’s marketing chief, says the company is ramping up negotiations with carriers to lower these fees. He says that carriers will eventually see the benefit in lowering fees as they will gain a critical mass of users. “We want to do what PayPal did for email to the mobile phone,” says Hirson.

Of course, Boku faces another obstacle besides just carriers. The company faces competition from fellow mobile payments giant Zong, which just raised $15 million in funding and is the mobile payment provider for Facebook Credits. Zong also recently launched an alternative payments system, called Zong+, which lets users bill microtransactions to credit, debit and prepaid cards.

But Hirson says that Boku also has a presence on Facebook and is steadily growing its availability on the world’s largest social network. The startup powers mobile micropayments for a number of popular game developers, including Playdom and Playfish, which was acquired by Electronic Arts last year.

See our post Mobile Payments Getting Traction On Social Networks, But Fees Are Sky High from last year for a deeper dive on their business.

Early this year the company was spun off from its European parent, Echovox, and Echovox founder David Marcus moved to the U.S. to run the fast growing Zong. The company has now closed a new round of financing, its first as an independent company. Matrix Partners led the $15 million round, and partner Dana Stadler joined Zong’s board of directors.

Stadler is a big win for Zong. He’s the former Chief Technology Officer of PayPal and will, says Marcus, be extremely helpful as the company scales the volume of payments. Last year Zong also started expanding beyond mobile payments by allowing users to bill goods to credit, debit and prepaid cards. As that expansion progresses, the company will need resources to do that intelligently. Stadler, who initiated projects at PayPal including PayPal Mobile and the PayPal Developer Platform, will certainly guide them in the right direction.

Mobile payments for micro-transactions on the web are steadily gaining traction. This morning, the space received more validation as several prominent venture capital firms made a significant a investment in recently launched mobile payments startup, Boku. Boku has raised $25 million in Series C funding led by DAG Ventures with previous investors Benchmark Capital, Index Ventures, and Khosla Ventures participating in the round. This brings Boku’s total funding to $38 million since the startup’s launch in June. Boku’s marketing chief Ron Hirson tells me that the startup is also rebranding its consumer platform as Paymo, but will retain the name Boku on the merchant and publisher side.

Boku, which acquired competitors Paymo and Mobillcash in June, doesn’t require users to have a credit card or bank account to make a micropayment. Users enter their cell phone number on the site, reply to a text message and then all virtual charges are automatically charged to the user’s monthly cell phone bill. As we’ve said in the past, it’s ridiculously easy. Because of its acquisition of Paymo and Mobillcash, systems that had significant international reach, Boku gained a strong base of users around the world.

Today, Boku’s reach extends to 58 countries and 190 carriers, with two more countries (Latvia and Lithuania) being added by the end of the week. Carriers in Brazil and Argentina will also be added shortly and is expected to bring a large amount of users because of the high mobile phone usage stats in South America. Hirson says the new cash will be used to further the companies international growth and expand product offerings.

The startup is also seeing success on the publisher side, announcing 12 new partnerships with online game developers in the past month. In fact, since June, the company has developed mobile payment relationships with over 1,000 game and app developers to help power payments for virtual goods and currencies on many of the top social networks, including Facebook and MySpace. The startup currently powers mobile micropayments for both Playdom and Playfish, which was acquired by Electronic Arts.

One potential obstacle to mobile payments platforms is the high fees that mobile carriers charge to the payment systems (which are then passed on to the publisher). Boku told us last June that different cell phone carriers charge varying fees that range between 10% to 50% of the purchase price, which is a hefty amount in transaction fees. But it looks like Boku is on its way to remedying this problem. Hirson indicated to me that the company is in negotiations with carriers to bring fees. He said that carrier fees in parts of Europe will come down first and hopefully roll out to the Americas and remaining parts of the world.

Of course, its worth mentioning Boku’s main rival in the mobile payments space, Zong, which struck a large deal last year with Facebook to pay for the social network’s virtual currency. Zong also recently launched an alternative payments system, called Zong+, which lets users bill microtransactions to credit, debit and prepaid cards.

With $25 million in the bank, its hard not to imagine that Boku could snap up a few smaller players in the mobile payments and microtransaction space. When asked about the possibility of further buyouts down the line, Hirson said that while acquisitions aren’t currently part of Boku’s immediate strategy, he couldn’t rule out the possibility in the future.

Zong has seen tremendous growth over the past year from when the company debuted its mobile payments service from the TechCrunch50 demo pit. Zong’s model of billing micropayments to your cell phone bill caught our eye and sure enough, less than one year later, the startup is picking up serious traction, including a partnership with Facebook to power the purchase of the social network’s new currency. And in 2009 alone, Zong has processed mobile payments for over 10 million unique users worldwide. Today, Zong is launching a new feature that not only expands its payment services, but could make a lasting impact on the micropayments field.

Zong is launching Zong+, a extension of the mobile payment startup which lets users bill microtransactions to credit, debit and prepaid cards. We have an exclusive demo of Zong+ by the startup’s founder and CEO, David Marcus, below. So in addition to making online purchases through their cell phone bill, Zong customers will also be able to link any type of payment card to their Zong account through a one-time entry process and continue to purchase goods by simply entering their mobile number and confirming the security transaction code sent to their phone.

So if I wanted to buy credits on Facebook via Zong’s payment service, I would now have the option to enroll and pay via Zong+. Once I create and account with all of my credit card info, Zong will automatically bill my card. But each time I want to make a purchase via Zong+, I will only need to enter my mobile number. Zong will then send me a transaction code via SMS, and I will need to enter that code to complete the transaction.

Zong is also incentivizing the use of Zong+ by offering users merchant credits (a cost which Zong swallows) if they purchase a certain amount. In fact, Zong will double whatever amount of credits your buy, if you sign up for Zong+. And there are benefits to using Zong+ (besides the incentives). Zong allows you to make larger transactions, in the range of $9.99 or higher, via Zong+.

Zong’s other method of payments, via your mobile phone carrier account, works in a similar fashion. You enter your mobile phone number to pay for a virtual good and then you get a text message on your phone with a pin number. Once you enter that pin number, the charge will be reflected in your cell phone bill.

But this cell phone carrier model has proven to have some complications, which may be why Zong is looking to expand its offerings to different models. Zong and other mobile payments platforms, such as rival Boku, face high fees that mobile carriers charge to the payment systems (which are inadvertently passed on to the consumer via the merchant), creating a potential obstacle in the business model.

Zong recently launched a subscription feature to mitigate this issue and potentially produce lower fees for the end users. Marcus told me in September 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.

But this new system will undoubtedly open new channels for Zong and perhaps even attract additional merchants to adopt its payment systems. Merchants who may have previously been frustrated with the high fees from carrier rates, will now find themselves able to enjoy greater transaction completion at the typical card rates. And as Zong+ is able to increase the amount of the tendered transaction, the startup could even give PayPal a run for its money.

One of the first merchants that will be utilizing Zong+ is social network hi5. The social network’s director of business development, Rajat Kongovi, says that because of Zong+’s flexibility and frictionless model, hi5 will be able to offer a wider variety of virtual goods at more varied price points and give users more freedom of choice. Of course, it’s important to point out that the mobile payments method via cell phone carrier has gained serious traction internationally, where many virtual goods buyers don’t have a credit or debit card but do have a cell phone. So Zong+ may not be take off in some regions, but the service will undoubtedly offer users a more varied and dead, simple way of using your credit card for purchases.

So when will Zong and Zong+ hit Facebook more extensively? Marcus told us that while Zong is currently being used on a limited number of apps to buy currency at the moment, the mobile payments system will be rolled out to a greater user base “soon.” I think that Zong+ only enhances the service and definitely gives it a leg up over competitors on the mobile payments space as well as competitors in the micropayments space such as PlaySpan and Live Gamer. Zong has become a powerful hybrd with the launch of Zong+. Watch your back, PayPal.

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.

Mobile payments for micro-transactions on the web are catching wind and there are several players in the space vying for the top spot in the field. Today, Boku, a recently launched mobile payments conglomorate of sorts, is announcing a slew of new customer acquisitions as well as details of its international expansion.

Boku, which acquired competitors Paymo and Mobillcash and raised $13 million in Series A funding back in June, doesn’t require users to have a credit card or bank account to make a micropayment. Users enter their cell phone number on the site, reply to a text message and then all virtual charges are automatically charged to the user’s monthly cell phone bill. As we’ve said in the past, it’s ridiculously easy.

Because of its acquisition of Paymo and Mobillcash, systems that had significant international reach, BOKU gained a strong base of users around the world. Today’s announcement adds availability of the payment service in Finland, Indonesia, Slovenia and Taiwan, bringing the company’s global reach to 56 countries. Boku’s marketing chief Ron Hirson tell us that they are seeing a strong foothold in Southeast Asia and will be expanding to the Phillipines within a few weeks.

Boku has also added a number of online gaming sites, social network applications and the social networks themselves over the past few months, including Playfish, HitGrab and Gambit. Boku says that currently they have over 1000 customers that use its mobile payments platform. So far, Boku has powered 6.5 million online mobile transactions.

But competition is stiff in this field and one competitor in particular, Zong, has also witnessed strong growth over the past few months. Most recently, Zong was chosen to test a pilot program for mobile payments for Facebook’s virtual currency, Credits. While Zong may not have had the organic international base that Boku has (Zong is available in 19 countries), this partnership is sure to help Zong’s global reach thanks to Facebook’s ever growing presence and popularity around the world. Zong also reached a big milestone a few weeks after processing mobile payments for 10 million unique users in 2009.

However, the potential obstacle to Boku, Zong and other mobile payments platforms are the high fees that mobile carriers charge to the payment systems (which are then passed on to the consumer). Boku told us on June that different cell phone carriers charge varying fees that range between 10% to 50% of the purchase price, which is a hefty amount in transaction fees.

But if mobile carriers lower their fees, mobile payments have the potential to be the go-to way to pay for microtransactions. David Marcus, CEO of Zong, says 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 startups like Zong and Boku as well as the applications and social networks using the systems. Marcus feels confident that if this does happen, the sky is the limit with mobile payments.

Regardless, as shown by growth witnessed by both Boku and Zong, mobile payments are catching on and attracting the attention of some of technology’s giants, like Facebook. And of course the rivalry and ensuing competition between the two companies could continue to spur further innovation and growth. It will certainly be fascinating to see which startup comes out ahead.

While advertising revenues have been disappointingly low for most applications on Facebook and other social networks, another option app developers are increasingly turning towards is micropayments for virtual goods or premium features. Both Facebook and MySpace have admitted that they are working on their own payment systems, and Apple could play a role as well since it already has a payment system in place for iPhone apps (although even Apple is running into some bumps).

While the bigger players are fiddling with their payment system plans, nimbler startups are moving in to fill the gap. One of these is Spare Change Payments, which is trying to become the Paypal of micropayments. A year after launch, more than 700 apps across Facebook, MySpace, and Bebo use Spare Change for micropayments. Spare Change is processing $2.5 million a month in micropayments, which is a $30 million annual run-rate. The apps that are having the most success with micropayments are games and ones that sell virtual goods.

Over a million people have already signed up for Spare Change. Hundreds of thousands of those use it actively on a monthly basis. And it is not all nickels and dimes. Last year, 250 people spent more than $1,000 apiece on digital goods through Spare Change.

Now, the company is making it easier for consumers to pay through Spare Change with a new payment widget that pops up in each app instead of sending people off to a separate payments page. You can choose between several payment methods including a credit card, Paypal, Spare Change credits, or through your mobile phone bill. Once you buy a minimum of $2 worth of Spare Change credits, you can use them as currency for apps that charge as little as $0.10 at a time. It is also introducing a PIN ID for users who choose to tie their accounts to a credit card so that they can use the same PIN across any app that uses Spare Change. The experience is designed to be familiar to anyone who has ever downloaded an app from the iTunes store. You enter your PIN, and then go back to the app. The company accepts payments from 190 different countries.

The first app to launch with the new widget is Mind Games on Facebook. It requires developers to add only three lines of code. Spare Change will roll it out to MySpace and Bebo soon. Spare Change is designed specifically for social networks. Customer support is done via the direct messaging systems inside each network, and the company analyzes the social graph to sniff out fraud. For instance, it looks at how many friends someone has and other factors to assign risk scores to individual consumers. Spare Change has been bootsrapped with only about $500,000 in seed funding, and two of the co-founders (Mark Rose and Simon Ru) previously worked at Paypal.

For micropyaments, Spare Change is much cheaper than Paypal, which offers its own micropayment option. Paypal charges 5 percent plus $0.05 for transactions less than $12, but only for premium accounts that qualify (otherwise, for most small accounts, it is the normal rate of 2.9 percent plus $0.30) . In contrast, Spare Change takes a processing fee of 8 percent for each transaction. CEO Lex Bayer points out that while Paypal has a micropayments offering, it does not seem to be a huge priority. “PayPal is not well designed for micropayments or digital goods,” he says. The logic driving Paypal is to encourage larger transactions because that is where Paypal makes more money.

A bigger concern for him should be if Facebook, MySpace, or Apple ever decide to jump into the micropayments game. Meanwhile, he has an opportunity to stake out a piece of the micropayments market and fight it out with the other startups eying the same prize. For instance, Zuora recently launched subscription billing for Facebook apps, Zong and Mobilecash are trying to tap into mobile payments (although the fees are still too high). Whoever figures it out first will be collecting more than just nickels and dimes.

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.

The problem is that legacy transactions – specifically scams that give users a “free” ring tone with the fine print mentioning a monthly charge as high as $20 – have brought in so much cash to the carriers that they’ve gotten used to taking 50% or more of the total payment in fees. For the market to grow to encompass legitimate transactions, those fees have to drop dramatically. For that to happen, the social networks need to get involved directly in carrier negotiations.

Two companies, both headquartered in Europe, are already targeting mobile payments for apps – Mobillcash (UK) and Zong (Switzerland).

When you buy a virtual shotgun on Mobwars, for example (and they are selling a lot of them, up to $1 million per month) you have to pay real cash. You can choose to pay via a number of services (Facebook doesn’t offer a direct payment solution yet), including either Mobillcash or Zong.

If you choose Zong, you enter your phone number on the site, get a text message with a four digit code, enter the code on the site and you’re done. It’s by far the easiest way to charge a transaction online outside of Amazon one-click.

Zong’s fees aren’t transparent, but Mobillcash’s are. Mobillcash has a clunkier interface (you have to choose your carrier and go through extra steps), but they show what their fees are because to get, say, $1 into the Facebook app you have to pay $1.50 on most carriers. That implies a 33% transaction cost, almost all of which goes to the carrier. Many of Mobillcash’s payments are way beyond 33%. Zong says they pay an average of a 40% transaction fee to U.S. carriers.

Those transaction fees are severely limiting the size of the market. Lots of merchants and application developers would love to take mobile payments, but paying 40% or more of the transaction to the carriers is a non-starter.

Zong argues that the fees are actually much lower than they seem because conversion rates (when chance that money will change hands once a payment button is pressed) are more than 50%. If that seems low, compare it to PayPal conversion rates that are reported to be a fraction of that.

Regardless, though, any merchant selling an item with actual marginal cost (virtual items are by definition free to produce, so higher payment fees can be tolerated) aren’t going to allow mobile payments via SMS. If the carriers were to lower those fees (or if they were forced to by market forces or the government), a very rich ecosystem could blossom, and the carriers would get the majority of the value created.

What Happens If Carriers Ignore the Opportunity

Chances are the carriers won’t lower their exorbitant payment fees anytime soon. What I’m guessing will happen is that services like Zong and MobillCash, as they add valuable users who like to pay via SMS, will simply offer to move those users to credit card payments. Users still pay by just entering in their phone number and then typing in a 4 digit code they receive via SMS, but the charge would go to their credit card instead of their phone. The difference in fees is so large that customers can be offered a very large incentive to simply store their credit card and use that instead of having the charge go to their phone bill. And checking out is still much, much simpler than typing in your name, address and credit card details.

The way it works is that you enter your mobile phone number to pay for something on the Web, maybe a virtual cowboy hat for 5 cents. Then you get a test message on your phone with a pin number. If you enter that pin number in a widget on the Web, the charge will be reflected in your cell phone bill.

Using mobile phones to bypas the issues that micro-payments still have on the Web is a smart move. Nobody wants to use a credit card for small purchases of a few penies or dimes, because the finance charges are too high. Whether anyone wants to pay even a few pennies for a Facebook app is a whole different matter.

In the videos, a naked puppet interviews people (or other puppets) to talk about “social media,” making fun of Israel’s interview style. The puppet is naked as a spoof on Israel’s book, Naked Conversations, about the importance of blogging for companies.

The new sponsor, Zong, a Switzerland-based mobile platform company, is providing “significant funding” to sponsor the parody Shel Israel show created by Feldman.

This will be a serious ego blow to Israel, who has been mocked by Feldman and bloggers around the quality of the show and has publicly attacked Feldman over the parody.

The fact that the parody, but not the official show, is now receiving financial support from third parties is a reflection of the entertainment value of the two shows. Not only do some people find the parody very funny, Feldman has also landed fairly well known entrepreneurs in his interviews. Now that Feldman is making money from the show, it’s probably here to stay, much to the real Israel’s chagrin.

As I’ve disclosed before, Feldman and Israel are both friends of mine. I hosted the launch party for Shel’s book, Naked Conversations at my house in February 2006, and Feldman is staying at my house this week.