Merchants, are you tired of losing online sales because you only take payment by credit card? Mobile First, a provider of premium SMS text messaging services, just announced their Mobile Payment processing solution. Your online customers can now make purchases using their text messaging-enabled cell phones – a method that Mobile First claims has at least 8x the conversion factor, at least in the USA.

Imagine a 65% conversion rate for phone-based payments compared to 7% for credit card payments, in the USA, and a potential 1.7B customers. (Consider that the number of Facebook users with a credit card is less than 20%.) The company is offering this text message-based payment service in the USA, Canada, UK plus other markets, for a total of 40 countries, with new markets being added monthly. Mobile First says the process is simple for both merchants and customers. Here are the steps, in a nutshell:

Merchants:

1. Register and get approved.
2. Receive a snippet of HTML and JavaScript code, to be embedded into a payment web page for products or services.
3. Login into the system, with new username and password, to track real-time reports.

Customers:

1. Add an item to your shopping cart. If you select Mobile First’s payment by phone widget, you are prompted to enter your mobile phone number.
2. Check for a text message with a 4-digit security PIN code.
3. Enter the code on the merchant’s payment web page, for user authentication purposes.
4. Indicate the number of credits you are purchasing, which become available immediately after authentication.
5. Complete your purchase.

It’s not clear from Mobile First’s webpage whether the purchase cost ends up on the customer’s mobile phone bill or is deducted from paid minutes, although the former seems the most likely method.

Pros

Here are some of the pros for both merchants and customers.
Benefits for Merchants:

1. Mobile First handles all the payment details for merchants.
2. Eliminates credits cards and thus opens up the mobile billing and payment market. Merchants can reach customers who are connected online and by phone and text messages, but may not have ready access to credit cards or other payment processors such as PayPal. Alternatively, merchants who sell goods and services that are disallowed by other payment processors can still operate. (Mobile First’s typical niches include virtual currency platforms, online games, social networks and various entertainment offerings.
3. No setup or monthly fees, and registration process is fairly easy.
4. Can be easily integrated into a merchant’s site. After registration is approved, a snippet of HTML and JavaScript code is emailed to the merchant, to be added to their payment web page(s).
5. Real-time reporting lets you track sales.
6. Mobile first offers merchant support services and local language translation.
7. Proven system. ‘Mobile Payment’ solution is built on Mobile First’s platform, which has handled over “[US$250M] in mobile payments since 2003.”

Benefits for Customers:

1. Online purchasing power without a credit card or PayPal account.
2. Easy-to-use, user-friendly payment widget.
3. Security. You have to have access to the phone number used for payment, and verification is in real-time.

Cons

1. Incomplete documentation. There’s little indication of the cost of the service, other than the revenue calculator widget, above, that says there’s a Telco share fee of 35%.
2. High fee. The revenue calculator widget shows that, based on current conversion rates, a merchant in certain niches will do better sales by accepting phone payments. However, given the 35% indicated Telco fee for First Mobile compared to the indicated 2% handling for credit cards, there could be money left on the table if a certain market gains access to credit cards or PayPal, and becomes more comfortable with CC payments.
3. Username limitations. Username for registration is too small: 4-8 characters, letters and digits only. (Suggestion: 12 characters max, including underscores.)
4. Signup is not instant. You have to wait for them to contact you. (So I was unable to test and comment on their API code.)
5. Untapped markets. India and China are not amongst the forty markets currently listed, despite the growing number of residents who own smartphones (Note: In a number of countries, Internet access is via smartphone.)
6. No mobile app. An application on a mobile platform, such as the iPhone OS, would be handy for merchants to track real-time reports on the go.

Mobile First, which was founded in 2003, is based in Silicon Valley, with over 100 employees in offices in the USA and Hong Kong.