Boku acquires mopay

Boku acquires mopay

Boku's acquisition comes less than a week after it signed agreements with the U.K.'s three major mobile network operators to let those customers charge physical items such as bus tickets and magazines to their phone bill. Before that, Boku's services were limited to digital content.

Terms of the mopay deal were not disclosed.

"By coming together we've created a company that can realize the vision of charging purchases to your phone bill as a truly global payment method at scale," said Jon Prideaux, CEO of Boku. "Together, Boku and mopay serve some of the largest digital merchants in the world and we have a tremendous pipeline in the works."

Boku now bills itself as the largest standalone provider of direct carrier billing worldwide. Mopay's notable partners include a who's who in the gaming world in gameloft, Wargaming and the venerable Valve. Those companies join Boku's existing heavyweight partners such as Electronic Arts, Facebook, Sony and Spotify. Boku now reaches 80 countries and gives some five billion mobile subscribers the ability to bill purchases to their monthly statements.

Boku said in a press release that both companies over time will merge operations and fly under its brand. The company did not make an executive available for comment before Mobile Payment Today's deadline.

While NFC grabs most of the headlines when it comes to mobile payments, direct carrier billing is the most used method worldwide. Financially underserved consumers in both emerging and developed markets continue to rely on it to buy digital content. Consumers who live in remote locations in Africa and India use direct carrier billing to buy physical goods at grocers and other vendors. 

"This is big news for carrier billing, a segment of mobile payments that often flies well underneath the radar," Jordan McKee, a senior analyst with the 451 Research Mobility Team, told Mobile Payments Today. "The combination of Boku and mopay will create a dominant force in the space with impressive reach across an expansive network of operators and digital content providers."

McKee believes Boku's acquisition could be the start of a bigger movement within the direct carrier billing market given the relatively slim profit margins in this segment.

"Sustainable revenues are only realized at scale," he said. "To expedite the process, inorganic growth tends to be a promising option. It's not inconceivable to think competitors such as Bango and Fortumo will be closely evaluating potential acquisition targets moving forward in an effort to position themselves more competitively."

Bango and Fortumo each have separate partnerships with some of Boku's current partners.

Bango focused its attention recently on partnerships with the app stores for Blackberry, Firefox, Google, Microsoft and Mozilla. Fortumo has an exclusive partnership with Barnes & Noble for the NOOK family of e-readers.

All three companies should benefit from future growth in app stores: 451 Research projects the percentage of total global app store revenue billed by carriers to grow from 19.7 percent at the end of 2013 to 30.9 percent by the close of 2018.

Richard Leyland, Bango's vice president of marketing, said the acquisition was somewhat unanticipated.

"It's a little surprising that Boku has acquired mopay, as much of their business is in premium SMS, some of which was already being supplied as a service to Boku," he told Mobile Payments Today. "We read this as market consolidation in a seriously decaying market. Premium SMS is being regulated out of existence. Players like Boku will have suffered from the U.S. carrier shutdown of PSMS at the start of this year, forcing them to move away from the U.S. market and to consolidate. PSMS billing providers are now under huge price pressure in this highly commoditized market. 

"Bango is focused on providing the safest, most reliable, frictionless payment experience – which in practice means rejecting all PSMS in favor of direct carrier billing."