Use Boku and AT&T for Your Mobile Commerce Site

Not to be outdone, days after Sprint announced its partnership with CardinalCommerce, AT&T announced that it would team up with startup company Boku to provide mobile payments.

The difference is that rather than charging transactions to a credit card or bank account, Boku utilizes the user’s cellphone account to pay for the transaction. That is, rather than getting a bill from Visa at the end of the month, the charge shows up on your phone bill.

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Although most users in developed countries are probably not in favor of anything that actually makes their cellphone bill bigger, the advantage of Boku is that it has massive worldwide coverage, via partnerships with carriers in more than 60 countries.

Boku even allow users with prepaid phone cards and accounts (pretty much the standard in Third World countries) to pay for goods and services via mobile transfers. If you’re marketing around the world, Boku is a strong competitor.

Boku is moving aggressively to line up deals with carriers in the United States; it signed an agreement with Verizon, using the BilltoMobile service, to add carrier billing (although it’s also working on direct integration with the giant mobile phone company).

However, the disadvantage to Boku is similarly large. Although credit card companies take between 2 and 6 percent of the transaction as their fee, Boku and the carriers carve out 35 percent. They claim that because the conversion rate for transactions with Boku is 60 percent compared with 7 percent for credit-card transactions, vendors will actually come out ahead. This figure is hotly disputed by credit card companies.

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