Magazine article American Banker

Mobile Vendors Use Phone Numbers for Online Shopping

Magazine article American Banker

Mobile Vendors Use Phone Numbers for Online Shopping

Article excerpt

Byline: Steve Bills

Two mobile payments companies have linked phone numbers to cards, moves that could enable issuers to lengthen their reach in the social media and online gaming markets.

Obopay Inc. and Zong, which already offer payments services linked to phones, said that extending these capabilities could encourage consumers to use cards to purchase low-cost digital content, an area where eBay Inc.'s PayPal Inc. unit is well established.

David Schwartz, Obopay's head of product and corporate marketing, said in an interview last week that banks are eager to gain a foothold in some of the busiest parts of the Internet. Issuers are "looking at how they can target that market and get involved in the social networking space, so transactions remain in the banking system," he said.

Obopay, of Redwood City, Calif., has made its mark with a mobile phone person-to-person transfer service.

The company announced last week that users can charge purchases to enrolled credit and debit cards by entering their phone numbers and a PIN at participating gaming and social networking sites.

The move also gives Obopay an entree into a larger market beyond the split-the-dinner-check crowd. Though there are other uses for its online payments service, gaming and social media is "a segment where we see a lot of potential," Schwartz said. "It's very synergistic with the market that we're in," the "mobile youth" group -students and young professionals 18 to 35, who use their phones heavily.

Spending on games and social media is growing rapidly. According to DFC Intelligence, aSan Diego firm that focuses on the interactive entertainment markets, the worldwide market for online games will double in size by 2014, to $17 billion, presenting a significant opportunity for issuers.

"This type of purchasing of games digitally has been huge in places like Korea but is just starting to take off in a big way in the U.S. and Europe," David Cole, DFC's principal, said in an e-mail message. "It is a rapidly growing market attracting many entrants, and actually the growth is just starting."

In South Korea, for example, where the online game market is more developed, about 30% of game transactions are conducted with prepaidpoint cards, 25% are billed to phone accounts, 5% use credit cards and the remaining 40% are split among numerous other options, including gift certificates and subscriptions, he said.

"There are thousands of content creators. There's a clear issue on monetization," he said. …

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