Another move into the pay-by-mobile market for online goods.
The ability to pay for digital purchases using the mobile is attractive to merchants because it opens up the vast market of consumers who don't have, or don't wish to use, a credit card.
But it was traditionally hampered by onerous operator rev shares and clunky payment procedures.
A new wave of intermediaries – Zong, Boku, BilltoMobile, Payfone – have eased the process, while US operators are rumoured to be taking their rev shares down to around ten per cent.
This is an interesting deal, as Verizon already did a similar one with BilltoMobile in January.
However, Payfone has the backing of American Express, from which is raised $19 million, and also claims some technical advantages.
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It is integrated into the SS7 signaling layer that operators use to communicate between networks. Apparently, this leads to more security and fewer disputes with merchants.
"Our relationship with Payfone complements the part of the mobile payments equation we're already working on with our Isis joint venture," said Greg Haller, marketing vice president at Verizon Wireless.
"We approach the mobile payments arena from a customer's perspective. As we move forward, the most important goals will be security, privacy and simplicity. Through our relationship with Payfone, we will be able to quickly offer value to our customers by offering them greater choice and a simple, safe and secure purchasing experience when shopping online from their smartphones, tablets and PCs."
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