Boku Raises Beaucoup Funds, Becoming 'Paymo'

Mobile payments platform BOKU has announced that it raised "$25 million in series C capital led by DAG Ventures, Inc. with continued participation from Benchmark Capital, Index Ventures and Khosla Ventures." This brings the company's total funding to nearly $40 million. 

BOKU launched in the middle of last year and is immediately one of the leaders (the other being Zong) in the mobile payments and virtual goods space, already worth about $3 billion globally and expected to be worth billions more over time. BOKU said has "relationships with over 1,000 game and application developers, including almost all of the top applications for virtual goods and currencies purchased on Facebook.  BOKU’s mobile payment service, Paymo, is enabled across 190 carriers worldwide in 58 countries, and reaches a potential 1.8 billion customers."

Almost identical to Zong in its approach, the company enables online payments by using a mobile phone number. The benefits of this are that a mobile phone number is easily remembered, hard to commit fraud with (given the authentication/confirmation system) and removes friction from online payments.

The company acquired competitors Paymo and Mobillcash and will be changing its consumer brand to "Paymo." BOKU will remain on the platform and developer side. The company's CEO is Mark Britto, who ran Ingenio before it was acquired by AT&T. 

I spoke yesterday to Ron Hirson, BOKU's SVP Product & Marketing. We discussed various future scenarios for the company. Right now BOKU relies exclusively on mobile carrier billing, which limits transaction thresholds (although BOKU's are higher than competitors). In the future it could add credit card account association, which Zong has done.

Hirson and I discussed payment systems such as Square, that involve offline payment acceptance via mobile devices. Hirson expressed some skepticism about the size of that opportunity.

BOKU wants to move into more traditional e-commerce, but for that to happen carriers need to reduce transaction fees (which can be as high as 50% in some cases). Hirson said that was slowly happening. In addition payment thresholds would need to be significantly raised (from their current $10 to $30). I'm not sure there's an appetite for buying big ticket items with carrier billing, expect perhaps by people who don't have credit cards (analogous to BillMeLater). 

Most interesting to me is the use of mobile as a credit card substitute in the real world. That's not a market BOKU is yet focused on.

I asked Hirson about who he thought BOKU's major competitors are/would be over time. He said PayPal, Facebook (potentially) and maybe iTunes, if Apple chooses to go in that direction. I said I also thought that Google would make a bigger play at some point and acquire someone, given that they largely missed the opportunity in round one with Checkout. 

Here's a video demo of how BOKU works: 

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