The market for virtual goods and online gaming is worth $8 billion worldwide and is growing,
Startup Boku on Tuesday launched a simplified payment service that uses a person's mobile phone to buy virtual goods offered on online games and social networks.
The service enables people to charge the online purchases by typing in their mobile phone number, rather than a credit card. Besides avoiding the hassle of grabbing a credit card, the service also makes the transactions possible for people without credit cards, which would include residents in many countries and teenagers.
Once a purchase is made, Boku sends a text message to the buyer's mobile phone. The transaction is completed when the person responds by typing "Y." The charge is then included in the next phone bill.
"Our vision is to provide a new industry standard for mobile payments, bringing ease, accessibility and security to the market," Mark Britto, chief executive of San Francisco-based Boku, said in a statement. Britto was CEO of Ingenio, a pay-per-call online ad network acquired by AT&T in 2007; and was also an executive at Amazon.
Virtual goods are digital images typically used to outfit game characters and dress up profile pages, as well as mini-applications. Such items are offered on online games, such as Second Life, and on social networks, such as Facebook, which offers its 200 million users 135,000 applications and games.
The market for virtual goods and online gaming is worth $8 billion worldwide and is growing, according to Boku. Meanwhile, there are twice as many mobile phones as bank accounts, 4 billion versus 2 billion.
Boku has signed up 170 telecommunications carriers to allow for payments through its system in 50 countries. The company also has attracted investors, raising $13 million in venture funding led by Benchmark Capital, with participation from Index Ventures and Khosla Ventures.
Also on Tuesday, Boku announced the acquisition of two privately held mobile payments companies, Paymo and Mobillcash. Financial details were not disclosed.
While Boku's payment service is focused today on gaming and other sites, the potential is there for the company to expand its mobile payment system into other markets. For example, people today in South Korea and Japan make alot of online purchases with mobile phones.
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