CTIA: Crowded House – Verizon Enters Mobile Payments Space

Yesterday at CTIA, Verizon announced a new partnership with BilltoMobile, the US arm of Korean mobile payments platform Danal.With the new service, consumers will be able to purchase digital goods online and the charges will be placed on the subscriber's mobile bill.Virtual goods have become something of an overnight phenomenon, thanks to the growth of social games like Farmville, offered via Facebook.In our recently published report Mobile Commerce,ABI Research forecasts that the virtual goods market will grow from $8.1 billion worldwide in 2009 to $26.2 billion by year's end 2015.Mobile payments for virtual goods will make up a substantial portion of consumers' payment options over that time period in many parts of the world.

What is interesting about Verizon’s move is that Verizon subscribers can already purchase virtual goods and pay through their mobile bill. Two established payment platforms – Zong and Boku – enable these payments today.Most of the online game providers do not work exclusively with payment platforms, meaning a consumer can choose, in the case of Farmville for example, to pay by mobile through Zong or Boku (Paymo), and that payment ultimately ends up on their carrier bill.So Verizon has opened up a third payment option to itself.In opening this direct option and bypassing Zong or Boku, Verizon avoids paying the percentage those platforms would take in revenue share.However, the main question becomes: what are the compelling factors for a consumer to choose a particular mobile payment option.How are they different? Today it’s just kind of confusing.