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Will Verizon’s Move Give Momentum to Mobile Transactions?

Mar 25, 2010
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Verizon is taking steps to make online transactions easier and pushing a bigger embrace into mobile money movement in the process.

Verizon’s new partnership announcement with BilltoMobile, a South Korean company which specializes in small mobile payment, may pave the way for mobile money transactions in the US.

What makes the move a potential breakthrough is what BilltoMobile brings to the table as an Asian company used to the popularity of mobile transactions. The difference between the U.S. and Asian adoption of this technology is based on the fees charged by mobile providers.

If you want to pay for something online and have it show up on your mobile bill in the U.S., you will be hit by high fees of as much as 50 percent of your payment. In Asia, provider fees are much smaller and they make it up in volume. BilltoMobile’s model currently charges fees of less than 20 percent of a transaction. It is not simply by undercutting costs, providers can offer such low fees by bypassing the “short code” system that structurally has high middleman costs built in, and instead, connect directly with mobile carrier’s internal billing systems.

If Verizon’s foray into mobile transactions proves successful, then lower fees may become the norm in the U.S.  The service will begin with a $25 monthly spending limit on purchases as well as content and parental controls. As Mashable points out, this can get Verizon hooked into the lucrative market of real money purchases for virtual goods in games like Farmville, whose parent company Zynga  is pushing $1 billion in valuation.

BuzzCity, a mobile transaction company, found in a study there is potential for growth in markets worldwide. Many people have access to a mobile phone but as BuzzCity CEO KF Lai points out:

“There are clear opportunities for mobile transactions to grow as users…although there have been some developments in transforming the mobile into a banking and payment device, with 29% of the global mobile population still without access to a bank account and 56% without a credit or debit card, banking and mobile transaction providers are overlooking a much wider audience… mobile consumers have money to spend but they must be provided with the opportunity to do so.”

Verizon’s move comes on the heels of Paypal’s  revamped iPhone app, which allows users to not only track their account online and send it, but also creates a partnership with the Bump application to allow phone-to-phone money transfers.

About Mike Koehler

Mike Koehler is the New Media Director for Schnake Turnbo Frank | PR, the largest and oldest public relations firm in Oklahoma. Mike consults with clients about the best use of tools on the Internet, Web strategy and social media policy. Mike blogs regularly at www.smirknewmedia.com and is working on his first book to be published in 2010. Mike lives in Oklahoma City with his wife and three kids.

You can find Mike on Twitter: @mkokc.

Filed under: Mobile - Commerce, Apps, Ads, Security
  • http://stomperned.com/ Stomperned

    Yes, Verizon would really give momentum to mobile transactions. They’re a known company as Internet Provider so being part of that, it would also be another way of marketing their company. They are not only trying to monopolize the web network but also the phone network.