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SAN FRANCISCO -- Making purchasing products via a cell phone easier is the reason why investors, start-ups and major corporations are pouring money into services that make it easier to do so, The New York Times reported.
Proponents' goal is to turn phones into virtual credit cards or checkbooks, but making such technology fit onto a phone, and work with different phone models and service providers, poses several challenges. One is that the technology adds complexity to the safe and secure transfer of funds among financial institutions and merchants, the report stated.
Mobile payment systems have seen only modest success, but demand has grown with the success of the iPhone, BlackBerry and other smartphones.
"A lot of big players with big bucks are investing a lot of money in this," J. Gerry Purdy, an industry analyst for market research firm Frost & Sullivan, said in a statement. "They’re seeing that returns could be so huge."
"We know it’s going to be there," he said of the technology. "The question is how to make it easy for people."
Obopay, which lets people transmit money to one another via text message, raised $35 million from Nokia’s investment division in March, according to the report. Last week, MasterCard introduced a service called MoneySend that uses some of Obopay’s technology.
Meanwhile, a mobile payments start-up called Boku received $13 million in venture capital financing. Boku asks users to type in their phone numbers for payment of virtual purchases, rather than credit card numbers.
The system sends a text message to buyers for transaction authorization with a texted response, and the charge appears on their mobile phone bill.
"Everyone knows their cellphone number. Not everyone knows their credit card number," Mark Britto, Boku’s chief executive, said in the report.
Another company, Zong, lets people use phone numbers to buy games, virtual goods and virtual currency. The focus on virtual items rather than tangible goods is due to transaction fees charged by wireless carriers in the United States, which would make those offerings uncompetitive or unprofitable, the Times reported.
Boku and Zong plan to handle sales of real products if fees decline.