It’s one of those truisms in mobile that if you want something to be done easily and on a large scale, it’s best to get the operators to do it. And that certainly seems to be the case for a new mobile payments service that Verizon is rolling out. The service is incredibly easy to use, and will be available for free to all Verizon customers from later this quarter. Now, it has started out pretty small with a $25 a month limit, but I reckon this limit will increase as time goes by.
How does it work?
Verizon has teamed up with a Silicon Valley based mobile payments company called Danal. The actual payment service here is incredibly simple – which is important for user take up. It works quickly and simply, and it only does one thing: it allows you to pay for digital goods over your phone. So if you want to download some digital content onto your computer, you can use Danal’s BilltoMobile to do it.
The way it works is this – you are browsing the web on your computer, and you see some content you want to buy (music, video, anything). If that content provider is a partner merchant of Danal, then a BilltoMobile button will appear at checkout. You click that button, and provide your mobile number. Shortly after, you’ll get an SMS (within 15 seconds, claims Danal) that contains a one-use passcode. Then you just enter that passcode onto the content checkout window and hey presto! you’ve bought some content.
One of the big things about a service like this is that it completely bypasses credit cards – the cost of purchases is added to your mobile bill at the end of the month. For small digital goods purchases, a transaction charge can increase the overall price of a purchase by 25 to 50%. Now, I assume that Verizon has imposed that $25 limit in order to avoid massive service charges to begin with. But if the service proves to be popular, I see no reason why they wouldn’t push that upwards as the months pass.
What we think?
There are two things that Danal needs for a service like this to really take off. It needs operator partners, and it needs merchant partners. This announcement is a great move towards the “operator partner” side of things. You have to wonder how much effort it cost Danal to get Verizon to roll out BilltoMobile – and you have to assume it was all worth it. After all, there are now over 90 million Verizon subscribers who can use the Danal service.
As for merchants…. Danal has embarked upon an aggressive merchant partnership program in the US. And with a provider like Verizon footing the bill, I can’t imagine it will have too much trouble getting people signed on. It’s not like this is Danals first time to the rodeo, either. It’s already a massive force in Korea, one of the most saturated mobile markets in the world. Danal claims that credit card use is even more prevalent in Korea than it is in the US, and the service has caught on in a big way there.