A new mobile payments company is launching, using venture capital to buy its way into a strong market position. Boku has raised $13 million in two rounds of funding in the last week or so. The first round totaled $3 million and came from Khosla Ventures and Index Ventures and $10 million round came from Benchmark Capital.
Ron Hirson, VP of product and marketing, told mocoNews that it will use the money to acquire both Paymo and MobillCash for undisclosed amounts. Boku says this gives it 1.6 billion customers on 193 carriers in 53 countries — Paymo is used on social network Hi5 and had raised $5 million in financing a year ago.
Hirson said Boku sees a huge opportunity to be the global standard for making mobile payments for online content, and Hirson said the two acquisitions will “leapfrog us to the front of the pack…The nearest competitor to us has less than half the coverage.” Boku aims to make it easy to use its service — publishers can cut-and-paste some HTML or work with Boku to customize the service…integration teams are available in offices in the US, UK, Asia and Latin America.
Pictured on right: Mobillcash’s CEO Mark Britto and VP of Product and Marketing Ron Hirson.
How It Works
Boku works the standard way you’d expect mobile payments to work — websites have a button or option to pay via Boku, the consumer enters their mobile phone number and receives a text message asking if they want to spend that money on that service. Once they agree the payment goes through, and they get a receipt. The platform takes care of financial conversion rates in all countries, and lets the publisher choose different prices for different countries. It also deals with the local carriers, a big challenge with selling online content via mobile payments. The publisher can also choose different prices for different carriers and — if they want — indicate how much of the payment is going to the carrier.
Boku raises money by taking a cut of every transaction, and of course the carriers also take a cut. “Unlike other companies with a high profile but no revenue, every transaction that goes through our business makes revenue so we don’t have the burn rate” of cash associated with startups, said Hirson.
Boku hopes to tap the unbanked and underbanked market, as well as those who have a credit card but find it easier to pay with their mobile. The company expects a strong growth in micro-transactions and virtual goods, things that have a negligible margin cost. That will also help “grow the pie”, according to Hirson, since typing in credit card details gives a chance for a second thought for what is usually an impulse buy. Many people are also more comfortable handing over their phone number rather than their credit card number. “There is a huge conversion rate difference between us and credit cards online,” said Hirson.
A third of Boku’s team comes from a payment background rather than a technology or mobile background, which gives it a boost in dealing with the money from a legal standpoint and from a risk standpoint according to Hirson.