We talk to Boku's MD of EMEA about rev shares, payments for physical goods and more.
What's the basic idea of Boku?
We provide a payments system that lets consumers buy digital goods using their mobile bill. They enter their number, get a text back, and confirm it to process the payment. It's attractive because it instantly extends a retailer's reach to the millions who don't have a credit card or PayPal account. Only two billion people have credit cards, but five billion have mobile phones. We like to say we're 'electronifying' cash and taking digital payment into physical locations it's never been before.
The basic concept behind Boku is hardly new or revolutionary. It could easily have been developed by all the 'traditional' mobile billing companies. So why do you think there's so much momentum behind what you’re doing now?
I think we came at the idea from a payments perspective rather than a mobile one. It would have been easy to approach the concept by focusing first on the SMS element of it, but we didn't. We built a credible payments network that existing web merchants would recognise, because it's like PayPal or whatever. It wasn't easy. Aggregating a huge number of operators and providing a consistent user experience – that's hard.
So you started out targeting a large merchant base?
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Exactly. The mobile market was well-covered anyway. We wanted to target under-served sectors like web-based virtual and digital goods. And we looked global, rather than local, right from the start, which meant scaling up fast. In fact, we're now in 65 countries and more than 230 different carriers.
What's changed to make your model of mobile payments suddenly so compelling?
A lot of it is to do with the operators. Three years ago they were focused on their own portals and didn't have too much time for third party business. Now, they're actively pursuing it. In fact, for many, the taking of market share from credit cards is at the core of their strategy.
So, which merchants are you working with?
Over 1,000 which includes Facebook, eBay Classified, EA, PlayFish, Zynga and Jagex. We have been very successful in the online virtual goods market, which will be a $10bn market this year. And we're hopeful that web apps could provide another fast-growing area for us too.
Surely the bonanza is in physical goods. Is it realistic to target the 'real' world?
You're right. It certainly is a possibility. But it's much more challenging than virtual goods. First off, it's a two stage process of capturing product information and then processing the payment, and then there's the rev shares demanded by the operators. They're more of an issue with physical goods when there is extra pressure on margins.
I understand some operators are lowering their rev shares on mobile payments now – especially in virtual goods...
Yes, the situation is definitely improving. But the rev share rates vary a lot internationally. The same is true of maximum amounts. Mostly it's around $10, but in Germany for example it's 30 euros. It's a complex space as you can see, but we're well placed to manage it.
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