Exclusive: Apple, Google Are Sniffing Around Mobile Payments Startup BOKU

Both Apple and Google are engaged in conversations with mobile payments startup BOKU about a potential acquisition or a wide-reaching partnership at the very least, we’ve heard from people familiar with the talks, which are ongoing.

BOKU President and CEO Mark Britto and co-founder Ron Hirson have held multiple meetings with executives at the helm of Apple’s iPhone business in the course of the past 3 weeks. Neither one would comment on the rumors.

Furthermore, BOKU has also engaged in high-level meetings with Google, namely with Director of Engineering Michael Morrissey, who oversees developments for Google Mobile Services for Android (which includes the Android Market app store). BOKU already can be used for in-app purchases for Android apps.

Our sources are unable to confirm whether Google is also exploring an outright acquisition of the mobile payments startup at this point, like its Cupertino-based rival is, but there’s clearly some serious sniffing going on here from both the Apple and Google camps.

Could these talks be a prelude to an AdMob-style bidding war between the pair?

It’s too early to tell. But like the AdMob purchase, a potential M&A deal would involve a transaction for a nine-digit sum according to one source. We are unable to pinpoint an exact price at this stage of the negotiations, but our source says Apple, for one, could end up spending at least $250 million (and up to $450 million) to acquire BOKU.

That would be pocket change for Apple (which has $50 billion in cash), but not for BOKU or its investors. Last January, BOKU raised a large round at a valuation well north of $100 million.

We should note that nothing has been signed yet, and that the discussions with Apple and Google are at an early stage, so there’s a chance for any deal to ultimately fall through. But at the very least these talks suggests that both companies are exploring how to become more serious about mobile payments.

BOKU competes with startups such as Zong and Fortumo in the burgeoning mobile payments space. Armed with $38 million in funding from a slew of big-name investors such as Benchmark Capital, Khosla Ventures, Index Ventures, DAG Ventures and Andreessen Horowitz, the company aims to allow tens of millions of people across the globe to pay for digital goods and social experiences across the Web using their mobile phones.

BOKU makes for an interesting acquisition target because of its global carrier relationships, which the startup claims gives it a reach of over 1.6 billion consumers around the world. Apple is probably more interested in its talent, technology and presence in growth markets—mobile payments, virtual goods and social app payments (and to keep them away from Google).

Just last week, BOKU (and other startups) struck a deal with AT&T that lets subscribers buy music, movies and other digital goods by typing in their phone number instead of using a bank card or PayPal account. It reached a similar agreement with Vodafone UK a few weeks ago.

Ron Hirson, one of the cofounders of the company, told us back in a July video interview (embedded below) that BOKU would expand beyond digital goods over time.

BOKU was formed through the acquisition of once-competitors Paymo and Mobillcash back in 2009 and, as mentioned above, is led by Mark Britto.

This wouldn’t be Britto’s first exit: he sold Accept.com to Amazon.com in 1999 and Ingenio, a pay-per-call and performance advertising company, to AT&T in 2007.

Update: Read more analysis here.