Boku, a carrier billing platform used for online transactions, last month took the plunge into offline real-world payments with a new white label service with Mastercard that allows operators to offer in-store mobile payment services.
Now, the company is loading up on $35 million from New Enterprise Associates (NEA) and Telefónica Digital, the growth arm of the mobile operator Telefónica, to help it go after the opportunity. The new funding, which includes money from existing investors Andreessen Horowitz, Benchmark Capital, DAG Ventures, Index Ventures and Khosla Ventures, brings Boku’s total to $75 million since its launch in 2009.
The money is intended to help Boku pursue what founder and president Ron Hirson calls version 2 of the company. With Boku Accounts, its new white label service, it is now going after a chunk of the $9 trillion dollars used globally at the point of sale — much bigger than the $350 billion spent online. He said that will require more funding to build out Boku’s technology, enhance the experience and acquire merchants.
“The core of the business is growing nicely and now we want to expand to the global point of sale,” Hirson told me in an interview. “We have this airplane with one engine and we’ve just added a second engine.”
The funding by Telefónica is significant because it shows some of the big carrier support Boku is getting for Boku Accounts. The third largest operator in the world said it will partner with Boku to enhance its mobile wallet services, and will work to implement that across its own businesses and through Wanda, its joint venture in Latin America with MasterCard.
Hirson said that many more carrier partnerships — both big and small — are coming, with the first announcements due in the next month.
Boku Accounts offers consumers a Boku-stored value account through their carrier that will be linked to a MasterCard pre-paid card. Users also get an NFC sticker that can be tied to their account or, if their phone is NFC enabled, link that way. Users will be able to pay with their card anywhere that MasterCard is accepted, or they can pay with their phone at PayPass-enabled NFC terminals.
Hirson said while the service was intended for carriers, banks have also shown a lot of interest in Boku Accounts. He said some banks and financial services face the prospect of being dis-intermediated by payments services like PayPal: Boku Accounts provides them with the option to create their own mobile wallet service, something at least some American banks are looking at.
“Banks are expressing interesting because of the end-to-end nature of Boku Accounts. We issue the card and online offers. We’re building this for other people, so we don’t have the end goal of owning the customer. That appeals as much to banks as carriers,” Hirson said.
The deal with Telefónica grew out of a partnership started last summer, when the Spanish company chose Boku to power its payment API for BlueVia, its global developer program.
Boku is following PayPal in the march toward offline payments. It makes sense building off its existing work in carrier billing. Online payments will still go on, said Hirson, but clearly the bigger opportunity is bringing mobile payments into the real world — and with $35 million in new funding, Boku is poised to compete hard in that market.