Boku Inc, a big online mobile payments company supported by venture capital firms including Andreessen Horowitz and Benchmark Capital, debuted a new service on Thursday that allows consumers to pay with any mobile phone anywhere credit cards are accepted.
Boku already provides carrier billing through about 230 wireless carriers, including AT&T Inc, Vodafone Group Plc and Verizon Communications Inc in more than 60 countries. This service lets people pay with their mobile number and get the transactions charged to their monthly phone bill.
Carrier billing is typically limited to smaller online purchases, either through personal computers or within mobile phone apps.
Boku’s new platform, called Boku Accounts, allows purchases in physical stores, a much bigger market. The service will be branded and offered by wireless carriers to customers, with Boku running the system in the background.
The move puts Boku in closer competition with PayPal, which is pushing its popular online payments service into physical stores. Google Inc is also trying to get its Google Wallet service into stores through a partnership with giants such as MasterCard Inc and Citigroup Inc.
PayPal’s in-store offering works with merchants’ existing point-of-sale terminals, but usually requires a software upgrade. Google Wallet works with phones that have Near-Field Communication, or NFC, chips in them and merchants need a terminal that supports this technology.
Boku’s service comes with a sticker that users can slap on the back of their mobile phones, turning any handset into an NFC-enabled device. It also comes with a payment card that can be swiped using existing retailer terminals, without a software upgrade, according to the company.
“We wanted this to be available in any store,” Ron Hirson, co-founder of Boku, said. “You don’t need a new phone or a new terminal.”
Extending its holiday cheer, Best Buy will feature free smartphones each day in December, subject to a new or upgrade activation and a two-year service agreement from one of the four major U.S. cellular carriers, the retailer announced today.
The offer is good at all Best Buy stores, Best Buy Mobile speciality stores and online starting today. Best Buy said it developed the campaign based on the success of its Free Phone Fridays promotion in October.
Online retailers including Amazon.com have offered a variety of smartphone models for free or nearly free for over a year, and the U.S. carriers have promoted various offers, including AT&T’s recent in-store pairing of one Windows Phone 7 (WP7) device for free with a purchase of another, subject to new service agreements.
Generally, analysts have noted that the free phone campaigns are designed to promote in-store and online traffic, and to help carriers sign up new customers for two-year service plans in an industry where customer turnover is commonplace. The cost of the phone hardware itself can be incidental compared to a carrier’s two-year service fee, analysts explained.
Carriers can charge $70 or more per month for voice, text and data plans for smartphones, although the most powerful smartphones require special monthly charges as well. Depending on the plan, with related fees and taxes, customers can spend $130 or more a month for smartphone service, which results in an annual bill of more than $1,500.
Best Buy said it will have a minimum of four free smartphones available each day, which could work out to one for each of the major carriers. As an example, Best Buy said it could have the Droid Incredible by HTC on Verizon, the Sony Ericsson Xperia X10 on AT&T, the LG Optimus S on Sprint Nextel and the LG Optimus T on T-Mobile USA. The minimum quantities available will vary by store.