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.