BOKU.com – Not so Rosy for MOBILE Payments

The rosy picture painted in my previous post about BOKU.com doesn’t seem to be that rosy. Based on reading fine print on BOKU.com’s website and some number crunching and deeper analysis, it might become more expensive to acquire new customers and retain customers if you use BOKU.com unless you get a phenomenal increase in conversions.

Airtel + BOKU can reach a huge user base of mobile customers in India. However, it seems like talktime currency can not be used to make payments. So the overall user reach (especially in smaller regions) reduces tremendously.

Postpaid customers – If postpaid users are going to be charged in their bills then service charge, 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.

BOKU.com – NO Plastic – Mobile based online payment system!

BOKU.com, mobile payments made easy, NO Plastic Needed.

Today morning I was munching my breakfast after a solid gym routine and while scanning through my feeds, chanced upon an article on Watblog by Maneesh about mobile payments system by a company called BOKU.com where you DON’T need any credit card, debit card, bank account etc to make a payment.

I just jumped in the air and got glued to this post and quickly pounced to check out this site BOKU.com. And YES, they are offering direct payments through mobile phones without any card plastic / bank account.

If BOKU.com continues to expand their partnerships with more and more service providers like, there is nothing which stops BOKU to become the World’s most trusted and easiest online payment system.

BOKU.com is funded by Benchmark Capital, Index Ventures, Khosla Ventures. VC’s investments includes high-profile start-ups like Infinera, MySQL, OpenTable, PureDigital, Second Life, Tellme, Twitter, Yelp, and Zillow, and franchise companies such as eBay, Juniper Networks and Red Hat.

BOKU.com’s strong management team comes from web, payment and mobile companies like Amazon, AT&T, Apple, Bank of America, GE, Google, mBlox and Paypal.

They claim to have a strong fraud management systems from their strong experience in managing risk in top notch companies like Amazon, PayPal, Google, Bank of America, and FirstUSA and they claim that Mobile phone is a different story as its used by only you… lets hope that’s the case.

This is how the payments work in BOKU.com, citing an example via @watblog a payment test they did in Facebook on Texas Holdem Poker application.

This can be the NEXT big thing to fuel online business growth with over couple of billion handsets across the world. The 3 step easy process just makes it so lucrative for customers to go ahead and make a quick payment.

As a publisher we are up-beat about this service and I personally am very optimiztic that this system will completely revolutionize the online payments in the coming time.

If this is increasingly 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 through mobile) on my blog last year. 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. I think all online publishers will welcome this as a booster for their sales.

Looking forward to a close collaboration with BOKU.com.

The TITANs come together (A little late) – AMEX, Kingfisher, Airtel

The TITANs come together (A little late) – AMEX, Kingfisher, Airtel

So what’s this thing about owning an American Express card? Whenever you flash your AMEX card, there are few heads which surely turn. I was one of the people who used to frantically gaze at the AMEX cards being swiped and I wonder why only the crème-de-la-crème have these cards, just to later realize that AMEX charges you annual fee (INR 5K) for owning a AMEX card when everyone else gives it to you free.

Why am I writing about Credit cards anyway when we get so many annoying calls for the same during the week? So the reason is because I recently got an AMEX card. Now why would I want to do that? Well, its not very difficult to explain. AMEX has maintained its class by not going the “Free, Free” way. They have a class and they stick to it. You are a privileged person if you possess an AMEX card. (or this is what they make you believe). And it ties with your lifestyle. Oh by the way we Indians want things free, so we would not take a credit card until you give us something. So Kingfisher and Airtel joined the bandwagon. On getting this AMEX-Kingfisher First Card you get 1 Kingfisher return ticket in any Indian sector free (off course you have to pay the taxes to govt), and you get the convenience of paying your Airtel bills automatically from this special card. Also, you get a free upgrade voucher for Kingfisher First flight. (Though this is not the first tie-up Kingfisher has tied up with other credit cards too {I think ICICI} for similar offerings.)

So, let me get the Maths correctly: If I buy a kingfisher return ticket, I generally pay INR 8K. 4K Tax + 4K fare. Now AMEX is saying we waive the fare for you; you only pay the Tax, and we give you upgrade vouchers to travel in Kingfisher First. Effectively if you like to travel by Kingfisher and you get this ticket without fare with an upgrade too, you are able to reimburse your 5K annual charge. Well seems like this deal was pushed more from Mallya's team than AMEX. But sounds a win-win situation both for AMEX and Kingfisher. (What’s Bharti Airtel riding on? – I guess their bill payment will get regularized, though, the target audience would anyway be paying on time. And the perfect target audience for their MobileVAS services promotion)

I would want to personally congratulate the AMEX marketing team (though they are late in doing this) for the well thought out and brilliantly executed marketing strategy. This marketing strategy can only be a brainchild of a veteran. Though I would want to find out who devised it, but having said that, let me explain what could have gone behind it.

There was a time when AMEX was under pressure to expand the credit cards subscriber base and simultaneously there was this rat race among all other banks to offer free credit cards. There would have been a meeting where people who thought for years in advance and suggested, that we do not target masses. Our target audience is set of people who are HNIs (high net-worth Individuals). So giving Free…blah blah wouldn’t affect them. What would perhaps affect them would be the premier club that they join and the advantages that they can take.

What they wanted a sales channel which was low cost, a feel of premium brands being associated with, and the feeling amongst customers, that they are joining a premium club with facilities which only a privileged lot gets. And they wanted to still charge people for the credit card.

Strategy Components:

A Paid Credit Card – Amongst dozens of Free credit cards, AMEX positioned itself as the first paid credit card that too in a country like India where people just run to grab anything free. It was able to maintain its premium position and offered its strategic alliances the value for their investments with AMEX.

Sales Channel and Funnel –
->They chose Email Marketing as the channel. Low cost, quick and direct response and effective tracking.
->The email campaigns across India generated leads which were passed on to a 25 odd team in Gurgaon call centre to qualify at level 1 of interest and net worth.
->The qualified leads were passed on to the sales reps / relationship executives on field for final closure.

Brand Association -
->They chose Kingfisher as a brand to get associated with, again a premium brand with high equity.
->And finally they tied up with Airtel (oh by the way, Airtel offered Mobile VAS card free of charge, perfectly thought out target audience).

Service –
->The brand distinction will continue with their high class service.
->They have tie ups with most of the major banks to make online payments for their credit card bills.

Sell More –
->Obviously you won’t stop here; if you take a life time membership for 25K you then get a whole lot of benefits. So let’s say this year you enjoyed the services, you are bound to see more customers lining up though references as well as more renewals. But this is yet to be seen based on how the service promised actually turns out to be in practice.

Probably the next step would be promoting the offerings more over internet, mobile and some more email marketing.