PayPal gets new rival in offline payments race

PayPal, the online payments company owned by eBay Inc, just got a new rival in the race to develop a mobile payment service that can be used in physical stores.

Boku Inc, a big online mobile payments company backed by venture capital firms including Andreessen Horowitz and Benchmark Capital, unveiled a new service on Thursday that lets people pay with any mobile phone anywhere credit cards are accepted.

Boku already provides carrier billing through about 230 wireless carriers, including AT&T Inc, Vodafone Group Plc and Verizon Communications Inc in more than 60 countries. This service lets people pay with their mobile number and get the transactions charged to their monthly phone bill.

A new rival emerges

Carrier billing is typically limited to smaller online purchases, either through personal computers or within mobile phone apps.
Boku's new platform, called Boku Accounts, allows purchases in physical stores, a much bigger market. The service will be branded and offered by wireless carriers to customers, with Boku running the system in the background.

The move puts Boku in closer competition with PayPal, which is pushing its popular online payments service into physical stores. Google Inc is also trying to get its Google Wallet service into stores through a partnership with giants such as MasterCard Inc and Citigroup Inc.

PayPal's in-store offering works with merchants' existing point-of-sale terminals, but usually requires a software upgrade. Google Wallet works with phones that have Near-Field Communication, or NFC, chips in them and merchants need a terminal that supports this technology.
Boku's service comes with a sticker that users can slap on the back of their mobile phones, turning any handset into an NFC-enabled device. It also comes with a payment card that can be swiped using existing retailer terminals, without a software upgrade, according to the company.

"We wanted this to be available in any store," Ron Hirson, co-founder of Boku, said. "You don't need a new phone or a new terminal."