Zong Turns the Mobile Phone into a Credit Card

I spoke to Zong yesterday and was impressed by the simplicity of the user experience. Zong is a "mobile payments" system and part of a company (Echovox) that has been around for almost a decade. The company has relationships with most of the mobile carriers in North America, Western Europe and elsewhere around the globe.

Mobile payments in this context is a bit misleading; the payments system/infrastructure uses the mobile phone and carrier billing (up to a per transaction total of $9.99). But CEO David Marcus says that 95% of revenues are coming from online-driven payments (games, virtual goods, etc.) from social networks. Many of the apps on Facebook for example use Zong. (The site will be introducing its own payments system soon.)

Here's a demo of the Zong payment user experience.

When users intend to buy something on a site or application that uses Zong, they enter their phone numbers (see below). A text is sent to their mobile phones with a pin code that they then enter online, validating the transaction in a few seconds. The user pays through his or her carrier bill, eliminating the need for any credit card input.

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I asked about competitors and we discussed a number of payment companies in mobile (Obopay, Bango, others). Marcus says the payment processor he most often encounters in dealing with companies is PayPal. He says he doesn't consider the eBay subsidiary to be a competitor but rather another payment method that is often offered side by side with Zong -- akin to businesses that take both Visa and Mastercard. 

Marcus added however that while fraud can be very high on PayPal he contends that Zong is virtually fraud proof, which is a selling point with publishers and site owners. 

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Related: CNET does a general overview of the mobile payments segment. And here's another payments round up, focused mostly on startup Boku, from the NY Times.