Is there big money in mobile payments — systems that let people buy stuff using their phone, and charge the purchase to their wireless bill? Not yet, perhaps. But investors are betting there will be.
Latest example: Boku, a mobile payment startup that raised $13 million last June, has added another $25 million via a C round led by DAG Ventures. Benchmark Capital, Index Ventures and Khosla Ventures are all re-upping.
Boku and competitors like Zong are focused, for now, on letting people use their phones to buy “virtual goods”, primarily on social games run by the likes of Zynga, Playdom and Electronic Arts’s (ERTS) Playfish.
But even if you believe that business isn’t going the way of the Pet Rock, it’s going to be somewhat limited — the most obvious user for this stuff would be kids who don’t have their own credits cards — and competition will ratchet up if Facebook decides to finally offer its own payment platform, which seems very likely.
But the amount of money the startups are raising indicates that they have much bigger ambitions. They want to turn your phone into a payment system for “real” stuff. Easy enough to see how you could extend this to other digital purchases, like music, video, etc., but there’s no reason you couldn’t buy physical goods this way.
Could happen, too. Though we’ve been hearing about that scenario for more than a decade, and it hasn’t taken off yet.
One near-term obstacle, at least in the US, are carrier fees — AT&T (T), Sprint (S) et al generally take up to 50 percent of each transaction that happens on their network. If the business is going to go up, those numbers need to come down.
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