Mobile payments company BilltoMobile now has direct carrier relationships with all four of the major carriers in the U.S., including Verizon Wireless, AT&T, Sprint and T-Mobile (the deal with T-Mobile is the newest relationship to be announced). This makes BillToMobile the first and only mobile payments platform to have direct carrier connections with all of the top four major U.S. mobile carriers.
Similar to Zong and Boku, BilltoMobile provides a payments platform that allows users to use their mobile phone as their payment option when they check-out online. They input their mobile phone number and in some cases their mobile phone billing zip code. A six-digit number is sent to their cell phones via text as a one time password. They enter this authentication code online to complete the purchase and the charges will be put on their wireless bill.
So why are direct carrier relationships important? Historically, mobile payments companies like BillToMobile, Boku and Zong 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 these companies to scale beyond virtual goods. These transactions costs are passed down to developers using the technology, which are then passed to the consumer. To avoid these costs, BillToMobile has been negotiating a number of direct relationships with carriers as a way of possibly avoiding these costs.
While BillToMobile declined to reveal exact carrier rates, the company did say that total carrier inclusive of merchant/developer fees are in the low-mid teen range. The company also serves as a gateway for companies like Zong and Boku to access these lower rates.
With these direct billing relationships, over 275 million, or about 90% of U.S. mobile subscribers, now have the ability to charge online purchases of digital goods and services from online merchants. More than 12,000 merchants process with BilltoMobile globally with roughly 175 digital goods and services merchants currently processing their mobile payment transactions through the BilltoMobile platform in the US. BilltoMobile’s average Direct Merchant ticket size is $14, with an average carrier spend per subscriber as high as $40 per month. And about 60% of BilltoMobile’s monthly payment users are repeat customers.
Carriers seem to be responding to mobile payments as a viable option for consumer transactions. Two of the top four carriers have already increased the spending caps for subscribers, so that consumers can charge anywhere from $100-$200 per subscriber per month.
And there’s more validation in the technology from other technology companies. eBay also made a big bet on the mobile payments space with their $240 million purchase of Zong earlier this year, and a number of tech giants have reportedly been eying Boku as an acquisition target as well.
BilltoMobile has raised $9.5 million from Morgenthaler Group and Danal (Danal is actually a majority shareholder). For now BillToMobile has been able to lead the way with direct carrier relationships, so it should help solidify the company’s position in the mobile payments space.