Have you ever tried to order something online with a mobile phone? It's one of the most infuriating experiences you can have that doesn't involve physical injury. The keyboard and screen are just way too small to easily enter in credit card numbers without difficulty. This is not a desirable state of affairs for online retailers, especially those who stake their bread and butter on impulse buys like ring-tones and items in online video games.
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Retailers want smartphone shopping to be as easy and intuitive as it can possibly be. The less of a hassle it is, the more likely you'll be to make those silly little impulse purchases. Spending a couple of bucks a month on ring-tones doesn't seem like much to you, but the sheer number of smartphone owners (and the potential for growth within the smartphone market) makes it a very lucrative enterprise.
The New York Times today brought us some new information on just how venture capitalists are trying to cash in on smartphone owners. A company named Boku may have landed upon the perfect solution the mobile shopping problem. They've turned phones into credit cards by allowing users to charge online purchases straight to their cell bill. Your phone number (not your credit card number) is all you need to enter.
Boku has definitely landed upon a solution that is easy enough to succeed. Everyone knows their own phone number, and entering it in to make a purchase will be easy enough to convince a lot of people to buy on the fly. Unfortunately, Boku's system won't work on transactions that cost more than a couple of bucks. The carrier eats up 50% of the cost, while Boku takes out another 5-10%. That's not a big deal on a two or three dollar purchase, but it would make any substantial product considerably more expensive.
Other companies, like Obopay, have hit upon a different solution. They've developed services that let people send money via text messages to other people. This is used primarily for dealing with things like Craigslist purchases, but it could conceivably be used to make all manner of transactions.
A lot of different companies are working on ways to make mobile shopping easier. As more and more consumers start to use their smartphones as their primary Internet devices, corporations are going to become increasingly obsessed with finding ways to milk them for money. I think Boku's system is the most likely one to succeed, but it's going to have to divorce itself from the carriers before it'll have a prayer of taking off. No one is going to pay an additional 60% to use a service like Boku on anything that costs more than two or three dollars.
When the banks and credit card companies finally get into the mobile shopping business in a big way is when we'll see some real change. They've got the resources and the experience to find a way to make Boku's system work, or to develop one of their own.