Micropayments on mobile - the next big thing
After several years of talks in the corner, whispering among mobile services vendors and old school payment facilitators, it seems like micropayments charged to the mobile phone finally will get some of the hype it deserves.
For more than a decade, publishers of digital content have been looking for a way to successfully monetize their only product - the services. While the big media houses have (almost) all been too afraid to take the first step, those small players who did try to make their users pay to consume their content online, have almost all failed miserably.
To make micropayments of digital content work, you need to convince the user, not only that she has to pay, but just as much that it is worth it for her to go through the hassle of entering his credit card details, signing up for an account with the website, etc. etc.
Using the mobile phone for the micropayment transaction, the content publisher can virtually eliminate the hassle of a traditional online payment cycle. By doing it the right way, the publisher (or her mobile micropayment vendor) can sign up the user for an account with the website, charge her for the content and present the content to her in one workflow, rather than a traditional, cumbersome signup/payment process. CNet has posted an article about two startups facilitating this service - Boku and Zong. Both companies have used social network apps as a way to enter the market. This seems to be a good way to quickly get some exposure.
However, my guess is that to really make it big on these services, you need to tie up with at least a few mass-media brands to obtain the vital critical mass. Volumes are everything in micropayments, and for that you need not only a lot of users, but also loyal users. It’s going to be very interesting to follow which old economy media or publishing house will be the first one to fully integrate mobile micropayments.
It sure looks like this has the potential of becoming a fierce battle between Boku, Zong and, probably, a handful of other players, about who will become the PayPal of mobile!
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Very interesting article.. There is no doubt that micropayments on mobile will be one of the leading factors in the e-commerce scene in the years to come. I don’t know about Boku’s business model though - it’s a bit difficult to figure out their exact business model and revenue shares etc.