Boku’s UK subsidiary Boku Account Services UK has recently launched a regulated payment product that consists of a carrier billing system. This can be used for the purchase of all types of goods and services across any e-commerce sector, while still offering protection to both consumers and merchants.
Its agreement with the mobile network operators (MNOs) mean they will be able to use Boku’s service to enable their customers to make online purchases of physical items or offline services valued at up to £30 using a mobile phone, and have the amount added to their bill.
Up to now, the European Union’s (EU's) Payment Services Directive (PSD) has only allowed the purchase of digital content via a mobile phone.
In the context of the PSD, digital content means after-market add-ons for mobile phones, such as background wallpapers, special characters or emojis, and ringtones.
According to Boku CEO Jon Prideaux, this regulatory framework – which remains unchanged – was holding back both MNOs and merchants.
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“In the past, telcos looked at the PSD and said there was so much EU telecoms regulation, the last thing they needed was to take on that as well, so up to now they took advantage of the exemption for digital content,” he said.
By acting as a regulated middleman, Boku’s service – in essence – allows MNOs to take advantage of its status as an authorised issuer of e-money to legally skirt the EU’s PSD.
“Merchants who allow their customers to charge things to their phone bill sell more. MNOs can offer an improved experience to their subscribers, with Boku bearing responsibility for the entire compliance envelope,” said Prideaux.
Launch customers of the service include Corethree, a specialist in mobile ticketing, which works with a number of UK bus companies such as Brighton & Hove, Go-Ahead, Lothian Buses, Metrobus and Transdev, as well as IPC Media – the publisher of magazines including Marie Claire and NME.
Prideaux said he was in discussion with other e-commerce retailers in the UK, and MNOs in France and Germany.
“The advantage for consumers is mainly convenience – rather than enter your credit card number, security code and address, you can just enter your phone number – but also security,” said Prideaux. “To make a charge the buyer must be holding their phone in their hand or send a text message to confirm.”
The scheme could therefore help protect consumers guard against card-not-present (CNP) fraud, a perennial concern among e-commerce merchants, Prideaux suggested.
A recent major report produced by Capgemini and RBS suggested the growth in alternative payment methods was beginning to cause IT headaches around back-end processing and data management, with legacy financial software installations unable to keep pace with the rate of innovation.
The World Payments Report 2014 predicted mobile payments would grow by more than 60% year on year in 2015, while online payments would grow by nearly 16%.