Direct carrier payments get a boost as startup Boku scores $13.75 million funding round
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Boku does not require credit cards or mobile wallets, shifting payments straight to customer phone bills (Photo credit: YouTube Screenshot, Boku)

Boku does not require credit cards or mobile wallets, shifting payments straight to customer phone bills (Photo credit: YouTube Screenshot, Boku)

Cutting out SMS, MMS and other middle-man services, Boku is betting on sending mobile payments to your monthly phone bill as the future of paying for things digitally

Mobile payments startup Boku announced a new $13.75 million funding round Thursday to expand “direct carrier billing” in new markets, bringing their total fundraising to a whopping $91 million since launch in 2009. The Series D round was led by a consortium of UK investors that included Andrew Black (founder, Betfair) and Robert Markwick (Goldman Sachs alum and current AngelList investor) along with existing investors New Enterprise Associates, Khosla Ventures, and Benchmark Capital, among others.

Boku, a startup founded in the UK and now based primarily in San Francisco, focuses on direct carrier payments, which involve billing your phone company which in turn charges you for purchases on your account. While this sounds straight-forward as virtually identical to other mobile payments methods, it’s just one of many payment pipelines in use for mobile payments platforms.

The most predominant model right now is Premium SMS, which does something similar to direct but sends a payment request by SMS to be applied to a phone bill. Direct carrier payments, as you can infer, cut out that texting step. Premium MMS (multimedia messaging service) fits in the same category. Still, the Premium SMS/MMS model might be falling out of favor because of accrued costs like setting up short links, slow approval and response, and security. Mobile web payments (WAP) makes payments through a mobile site or an app. But this still needs to be linked to an account of some sort.

All that cycles back to direct carrier or direct operator billing. The method uses an existing account and relies on the carrier’s existing security. It also makes payment instantaneous, at least relative to other services.

“Carrier billing is evolving from being a niche product for phone-centric content into a mainstream payment method used by the world’s major brands for all types of digital products,” said Boku CEO Jon Prideaux in a press release. Clearly, he is confident this is the future of mobile payments, though the field is still crowded in terms of payment options and competitors.

Boku’s announcement did not mention who led the round, but it included follow-on investments from Khosla Ventures, NEA, DAG Ventures, Benchmark Capital and Index Ventures.

“Carrier billing has now moved beyond this to become the preferred alternative payment method for many of the world’s largest merchants,” added David Weiden, Partner at Khosla Ventures in the press statement. “The adoption of carrier billing among big companies like Google, Sony and Microsoft is accelerating now, and this investment will help Boku further cement its position as the global leader.”

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