UPDATE:(Airtel Issues a Clarification) BOKU Launches Mobile Payment Solution – Airtel is the Exclusive Carrier in India
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UPDATE:
Following our post, Airtel spokesperson issued the statement below:
“Bharti Airtel is not associated in any way with Boku”.
The Original Post is Below,we request the readers to kindly note the above update before reading the post further.
You are probably reading it here first – Airtel is the official carrier of Boku, the mobile payments service in India. Airtel users can now use the application to make payments online through their mobile phone.
All the popular blogs on the web are abuzz with Boku’s launch. The much hyped micro payment solutions is certainly living up to it with its forcasted reach. Boku will put 1.63 billion people across as many as 53 countries as potential customers on the web. It has basically done away with the need to own a credit card to make payments online, and fills a relatively large gap by doing so.
What is Boku?
BOKU is an online payments platform that makes it easy and safe to pay for virtual and digital goods with your mobile phone. Purchases on many of your favorite gaming, entertainment and social sites can be charged to your wireless phone bill using BOKU. No credit card or bank account is required. (source)
Online credit card fraud and the lack of a credit card in the first place is an international problem that a lot of commerce driven publishers on the web are facing. The number Boku and a lot of the coverage it has received have harped quite a bit is the fact that there are 4 billion mobile phone users while only 2 billion bank accounts in the world. The target market therefore suddenly is twice of what could have otherwise been ever achieved and that too in a far safer manner.
So How Exactly do we go about using Boku?
Internationally or at least what the Boku Demo says this:
You make a choice of payment, say adding money to Texas Hold’em Poker, you choose the amount you want to pay through Facebook, the app let’s you choose your country and carrier and asks for your phone number. Once this step is done, Boku sends you an approval message for which you need to reply as (Y) and then the payment goes ahead and you receive a confirmation message.
So I tried doing this
I chose Texas Hold’em Poker on Facebook and tried to buy chips (you need to click on the earn chips tab). But one wouldn’t see Boku there, instead you will find Mobillcash there as the first option, so choose that to go ahead with using Boku. This is because Boku recently acquired Mobillcash with its funding money. And then it automatically detects your country and gives you the option which in this case is only Airtel ( However, I do get a feeling that others providers might soon be brought into the system). Now I don’t have an Airtel account so couldn’t quite go through further and my tryst with Boku ended with this screenshot.
However, WATBlog reader Thejesh did go through with a payment (that’s what I gathered from your mail mate) and it does work. The system however is slightly different here, instead of a mobile confirmation through a reply, you get a code which you need to submit online for the payment to go through, somewhat like adding a payee to your banking transaction if I’m not wrong.
Boku’s target audience is those who are interested in small purchases and on digital goods, for instance Facebook applications. For a long time we have all been harping on the mobile subscriber numbers that India has, and how big social networking is becoming. Now we have a case on hand to judge – Airtel with the biggest subscriber base can’t have an excuse of not having enough people, so now we can judge if the numbers can convert to commerce. However, personally I doubt if enough people would be interested in digital goods enough to pay for it, there might be a few thousands but the bulk might not. Hopefully this Hunch goes wrong. Probably with more adoption this can drive a lot of ecommerce growth in the country.
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This is fantastic. If this is encouragingly adopted by more telecom providers, this will basically revolutionize the online payment systems in India as well as worldwide. I had written about one application of such system (to book local train tickets) on my blog last year http://sachinuppal.wordpress.com/2009/02/02/m-seva-sms-based-mobile-ticket-booking-system-for-local-trains/. This is super exciting news for many online businesses. However, what would be interesting to note is, how telecom providers cope with managing the POST Paid customers with bills and recoveries and charge-backs.
Anyways, this is Fantastic, I being in a online games company where we handle daily online payments… this will help us boost our conversions significantly.
Thanks for writing this entry.
Vodafone is also listed on their portal.Is it supported in india ?
Hi,
If the RBI guidelines for mobile banking are anything to go by, then the usage of pre-paid talktime as currency equivalent and paying for the digital/virtual content with subsequent reduction in users talk-time is strictly NOT ALLOWED. However for post-paid users, the BOKU charges the download amount as a bill item in the long list of itemized billing heads. This is conviniently paid later as a comprehensive post-paid bill amount.
So it is really a curious thing to know how airtel has launched it in india; maybe pre-paid subscribers will not be allowed to use the service.
@Chetan
Nope, Vodafone is partnering them in other countries, in India Airtel is the sole provider
@Sachin
Very much agree with you
@ranjit – I want some resource links to understand this “prepaid talktime into currency usage” thing better. If that’s the case, then it’s a big issue. As if I understand it correctly, then majority of Airtel subscriptions is prepaid, does anyone has data on this?
@Maneesh @ranjeet – If postpaid users are going to be charged in their bills then recovery and fraud management will become an issue.
Broadly there are some more important issues to think of:
1) Customer’s Perspective: In the bill amount the user has to pay ~10% service charge. Which means that if they spent Rs. 100 they actually have spent Rs. 110 which they will realize in their 1st bill.
Merchant’s Perspective
1) Airtel + BOKU is charging some ridiculous amount of 25% – 45% fee to allow such transactions. If we go by industry standards, online payment gateways accepting credit card/debit card/Paymate(mobile), ITZ Cash cards etc… all these guys charge not more than 10%. Which means in the case of BOKU, the merchants will have to compensate nearly 25% to 45% of the cost of payment made by users. Which is ridiculous.
2) Merchant’s Perspective: If BOKU says that these numbers add up and it’s volume game and more conversions will help in driving revenues and break-evens then it means that by adding BOKU your conversions need to go up by atleast 10%(this number varies for various industries) till you break even.
3) After careful consideration and number crunching it looks like your existing customers who are already using credit or debit cards to make online payments should actually NOT move to this Mobile payment option as in the earlier case the merchant is compensating for 10% of the fee, however, with BOKU the compensation increases steeply.
BOKU Vs Merchant VS Telecom Provider
1) Credit period and liquidity – Telecom providers are asking for a credit period of 90 days before they release payments. Which means the merchant’s liquidity will get hit. They are willing to reduce it over a period of time to 30 days or 60 days. However, this is ridiculously high as compared to almost 24 hours time frame provided by Online payment gateways.
2) Money recovery from customers – Recovering money from post paid users for wrong charges on their bills might become an issue as they will have to handle fraud complaints and resolutions.
What BOKU can be helpful in is… converting new users. Making payments for the 1st time when the user is not sure about using their credit cards.
Unless Telecom carrier’s and BOKU’s combined cost doesn’t come down to something similar to other online payment gateways, this looks like a flashy new system to me which will take it’s own sweet n slow route to become what they want to become.
THe digital/virtual goods are really niche category. A regular ITZ card or a mChek or a paymate account does not identify these virtual goods vendors as their acceptable merchants.
So going by this belief Airtel, Oi-Brazil and few others in emerging telecom market have got this BOKU connection going.
So obviously you and me cannot pay for a FACEBOOK app and other game content using ITZ cash, we will need BOKU to pay or else reveal credit card details.
The entire telecom VAS industry somehow believes that Social networking on phone is the next big thing….I don’t know which was the last big thing… either
Another interesting perspective to think about is… Will sharing your mobile number on sites will become a TABOO? If revealing credit cards no is presently perceived as a threat then wouldn’t sharing mobile number will also become a threat?
Any resources to find out numbers on this buying of just “pure virtual gifts”?
That is very good analysis Sachin. The cost conscious customer would not pay anything extra to use this service
@sachin @ranjit
That’s some good points both of you got there.. almost a blog post in itself actually..
When I was trying out the service I saw an option that said Prepaid users click here.. considering I don’t have an Airtel connection I didn’t care to go ahead with the process (it wouldn’t have made sense)..so perhaps they have different way to go for prepaid users
On the high rates, fraud and adoption – I guess Boku would still seem a better option compared to providing CC..again what Boku is clearly addressing is that a lot of people don’t have a CC.. it’s about the convenience of paying from your mobile..and there is certainly a big amount of convenience and trust here.. again all systems will have its pet pitfalls and we shouldn’t expect Boku to not have its own like higher charges, etc.
BOKU.com is ridiculous in India. They charge 80% as transaction fees. They are LIVE on only 1 carrier and the maximum amount per transaction is just Rs. 99.
Don’t have to say anything more.
@Maneesh – Not sure what will be the spending power of people who dont have a debit/credit/internet banking/ITZ cash card/mChek access… the lifetime revenue from such a user will not justify such an conversion/acquisition cost.
Sachin I think teens can fall under that category of who have the spending power but don’t use plastic, but one can argue that they can have add on cards but that gets to be a debatable point.. and as surprising as it is I know a bunch of 23 – 26 years olds who earn quite a bit but don’t own their own cc yet so..
But anyway leaving all that aside, those chargers are ridiculous!
@everyone
I just received an email from Airtel’s PR (if am not wrong saying they are not associated with Boku) I’m waiting for a confirmation to a few questions before I update the post officially.