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T-Mobile Expands Direct Carrier Billing

Wed, 08/03/2011 - 8:23am
Monica Alleven

T-Mobile USA yesterday announced it's expanding its direct carrier billing initiative to include more devices, and it's using several vendors to help it do so.

T-Mobile's Direct Carrier Billing initially will use billing services provided by BilltoMobile, Boku, OpenMarket, Payfone and Zong, but as the offering expands, it expects to add more strategic billing partners and content providers to the program.

In 2009, T-Mobile was the first U.S. carrier to offer direct carrier billing for the Android Market. The new program extends that to browser-based purchases from "virtually any online source" and across a variety of mobile devices, the carrier said.

Beginning later this month, more customers can buy digital content and services from web-enabled devices without having to enter a long credit card number. The purchases are added to their monthly phone bill. Subscriber spending limits are set at $25 per individual transaction and $200 for their total spend per month.

For BilltoMobile, the T-Mobile deal means it now has direct connections with all four of the largest U.S. carriers, which President and CEO Jim Greenwell expects will bode well for its ability to add even more merchants. In March 2010, BilltoMobile came out of quiet mode with its first big U.S. carrier deal with Verizon Wireless.

"We're seeing major activity," he says. "We're in a unique position. It's not only the connections we have ... Our system has been tried and tested over 11 years around the world. We've customized it here for the U.S.; it works great and merchants trust us." With more carriers on board, the move for merchant adoption is accelerating, and the next component is getting consumer adoption.

BilltoMobile wants to be part of the next phase for mobile payments, which involves using the phone for point of sale (POS) purchases, which is where NFC and Isis comes in. AT&T, T-Mobile and Verizon Wireless are part of the Isis endeavor, while Sprint is going its own course, which includes Google Wallet. Numerous other partnerships are shaping up at the same time.

Earlier this week, Verizon Wireless announced it was partnering with American Express to integrate the Serve digital payment and commerce platform on phones and tablets. Customers who establish Serve accounts will be able to make payments and redeem offers for goods and services directly from their devices. Payfone, which last month also announced a deal with Verizon, is providing features for the Serve service as well.

Rodger Desai, Payfone's co-founder and CEO, explains that what Payfone offers is the ability to grab the low-hanging fruit – like people who want to buy a train or concert ticket – and if they're trying to buy something that can't get billed to their phone bill because, for example, they've exceeded their limit, the system will look at other potential funding sources, like if they have a Chase credit card on file. If they choose, they can bill it there.

As it's a crowded space, he says it will come down to who can bring in the most merchants for carriers, and companies will either specialize or fail. Payfone is focusing on the kinds of things people want to do on their phones – time and location dependent.

As for security, a timely topic considering the Black Hat security conference going on in Las Vegas this week, Payfone says it offers some unique security features. It can determine if a transaction is from a lost or stolen mobile device or if the owner of the mobile account has changed. By using the SS7 network, it also detects location anomalies, such as transactions coming from two different locations within a time period that would not be physically achievable.

Earlier this year, Payfone closed a $19 million strategic funding round with investments from American Express, Verizon Investments, Rogers Communications and existing investors Opus Capital, BlackBerry Partners Fund and RRE Ventures.

To be sure, the mobile payments space is a complicated one with a lot of moving pieces. Greenwell says how the mobile payment space shapes up is still a question mark, but having the experience of parent Danal of South Korea is a plus for BilltoMobile. "The stars are aligning," he says.

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