Boku signs up Sprint, sets sights on physical good sales

Boku, one of the leaders in carrier billing, has finally signed a direct billing deal with Sprint, giving it direct integration with all four major U.S. wireless operators. Sprint users will now be able to pay for goods online at merchants such as Electronic Arts, Riot Games, Gaia Online and others using Boku’s two-step authentication system.

The deal helps complete Boku’s U.S. coverage after similar agreements with Verizon, AT&T and T-Mobile. Boku also announced that it has integrated with Deutsche Telekom in Germany, so it’s now handling direct billing with every major carrier in Germany, France and the UK. Users can place transactions on their cell phone bill with Boku by entering in their cell phone number and authorizing a purchase through a text message.

This broad coverage will allow Boku to offer a consistent experience to merchants, who can be more confident that almost all of their customers will be able to use Boku. Ron Hirson, Boku’s president, said the company’s expansion can also help merchants start to think beyond just digital good sales. He said 2012 will be the year more merchants start using Boku to sell things like tickets or news subscriptions.

Carrier billing is still hampered by fees set by the operators that can be in the teens, way more than a 2-3 percent credit card fee. Hirson doesn’t expect those rates to rival credit card fees soon, but he said they will come down even more and should precipitate a lot more sales via carrier billing. He said the U.S. market will start looking more like South Korea, where 20 percent of commerce happens via carrier billing.

While Boku is still known primarily as a carrier billing provider, the company has also moved into the world of in-store payments. In February, the company showed off Boku Accounts, which will allow operators to set up payment accounts for mobile users that will work in physical stores using MasterCardcards, NFC stickers and NFC-enabled phones. Hirson said merchants will ultimately be able to offer payments through both direct carrier billing and Boku Accounts with the underlying accounts tied together. Users would likely get a better deal if they tap a stored value Boku Account.

“The two enginees will work together,” Hirson said. “You will have different payment tools but you can use the same account to pay.”

Boku is growing fast, having just raised $ 35 million from NEA and Telefonica. The momentum has helped it attract some key hires including Jon Prideaux, former EVP for Visa Europe, and Stuart Neal, managing director of international development for Barclaycard. All of this will be necessary as it competes against PayPal, which bought Boku’s chief rival Zong, and a host of other rivals in the larger mobile payment arena.

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