Date: September 11, 2007
Author(s): K. Samwell
If you don’t have a credit card, chances are you know how arduous attempting to make an online purchase can be. Bill2Phone caters to people like you, and also those who simply don’t want to use their credit cards online. We sit down with the Bill2Phone team to better understand what their services offer and how they work.
I’m here with Sharon Gallardo; Marketing Manager, Scott Chapman; Business Development Manager, and Ann Dow; Senior Product Manager from BSG Clearing Solutions.
In March 2007, BSG launched a new alternative payment solution that lets players charge gaming and digital media purchases to their landline phone bill, called Bill2Phone.
Kiersten: Can you please tell our readers about current Bill2Phone services?
Ann: The current service that Bill2Phone offers is to give end users like the game players out there the ability to pay for digital content like game downloads and subscriptions and charge it to their home telephone bill. We think this is a great option for a variety of reasons, not all online users actually have credit cards, and those that do, some do not actually want to use their credit card online. It gives them extra payment options so there can be more transactions and more revenue for the game developers.
Kiersten: I believe your website quoted something along the lines of 40% of people online don’t have a credit card, and 70% who don’t want to use their credit card online.
Ann: There’s been a lot of studies done, and what they’ve found is (and maybe gamers might be among the percentage that are a little more comfortable) is generally people that haven’t been online for very many years tend to be more leery and depending on the age demographic, people are extremely hesitant to use their credit cards online.
Scott: One of the big fits I see with the gaming community is casual gaming. As I’m sure you’re probably familiar, casual gamers are typically female, and typically older females and I feel like it’s a very good fit for that segment because a lot of fraud concerns affect the older generation, the baby boomers, and having the option to have to write one less bill, or to place their credit card online, I think it’s a really big advantage.
It’s just getting those one-off people. Even if it’s only 5% of revenue on someone’s base, we’re not thinking this is going to dominate or take over credit cards by any means, but it’s just that extra revenue that you’d normally not see that can be rather valuable. Especially for a lot of these start up guys.
Ann: And some of the statistics that we were talking about, of people who don’t want to use their credit card online, falls smack dab in the middle of the casual gamer demographic. It’s the women who have plenty of disposable income, love to play, will play, will pay, can pay, but don’t necessarily feel comfortable putting their credit card data out there.
Kiersten: Right now we’re mostly talking about online games. I’ve noticed you can buy practically anything from iTunes to dating services online with Bill2Phone, what other markets are you looking to break into, or are in for that matter.
Scott: Any kind of subscription base. Music is obviously a big one, video is another big one that I think you’re going to see more and more of, as a lot of these big entertainment companies are doing more of a premium subscription model rather than just a YouTube type, but really premium television.
Ann: Any type of subscription online, if it’s a subscription to a publication that you can get online, really anything that’s digital and content or related to digital content, is fair game.
Kiersten: But you’re not limiting yourself to subscriptions, for example if I want to buy an in game item in Second Life I could use Bill2Phone.
Ann: Exactly yes.
Kiersten: What about game companies that don’t allow the sale of accounts or in game digital property for cash value. For example, I want to sell you a t-shirt in Second Life but Second Life says ‘we don’t allow that’ how are you working with these companies to prevent that?
Scott: Well it would be on the merchant’s side, whether they want to allow it. Think of it as just like a credit card process. If they’re going to block that being purchased on the credit card side, same thing applies with us. The way it is presented to the consumer is exactly the same way it would be presented for a credit card.
Kiersten: Now obviously, what telephone companies are you working with right now?
Ann: All the big ones! And we actually have access to 1400 local exchange carriers. Some people don’t know there’s that many but there are. Most of us know the big four or five, and with all the consolidation they’ve had it’s more like the big two really, but we have access to 1400, and all the big ones.
Kiersten: Obviously we were talking about security here earlier, what security protocols are in place to prevent hijacking another person’s phone information and using it for Bill2Phone.
Ann: I am so glad you asked that question. I had so much fun when we put this project together. We’ve actually been in the phone billing space for twenty years place, and hijacking people’s phone numbers to try to put charges on them is not new and it’s not solely limited to the gaming space, or even the online space. We have learned a lot in the last twenty years, in the things to watch.
With Bill2Phone we went one step further. Since you are buying online we wouldn’t want for example for me to go online to play my game and I know Sharon, I know her phone number so I might put that in, but what I don’t know about Sharon is some private things. For example, while I may know her birthday, I don’t know the last four digits of her social security number.
And so we have to tie together several different types of information, a phone number for example, the information attached to a phone number needs to match the name of the person, that needs to match the last four of the social security number which also needs to match their date of birth, and we meld all that together from several different sources and do some cross checks and it’s a pretty secure way to make sure that it is me, or it is Sharon.
Scott: And all that is happening in real time.
Ann: It only takes a couple of API calls that’s designed to be very similar to the credit card process, so the merchant doesn’t have to do anything special, big or different.
Kiersten: So what if I move and have to change my phone number, how complicated is the transition when I have recurring or pending payments.
Ann: That’s a good question too. What will happen if you have for example, a recurring payment, is when we try to put through the next payment and you no longer have that phone number, if you have not already proactively notified the merchant that your phone number has changed then the merchant will get a notice that the phone number is no longer going to work. So what they’re going to do is come back to you and ask for some fresh information. Then they’ll run that back through, we’ll get it set and off you go!
Kiersten: Same goes for pending payments?
Ann: For pending payments, because it’s done in real time and we submit transactions on a daily basis, so everything you do today gets bundled up and sent off today, so the chance of you closing out your bill and it being gone before you get your bill is very very slim, so we really haven’t seen that as an issue.
Kiersten: What about shared phone accounts such as students sharing the bill?
Ann: Then the person whose name is on the bill is going to be the person who needs to sign off on the charge, so that your roommate can’t run up a bunch of charges and leave you stiffed with the bill.
Kiersten: Another example is a married couple whose phone is under one spouse’s name, does that mean the other spouse cannot use Bill2Phone unless both names are on the bill?
Ann: It depends on a couple of factors, sometimes if your name is in the listing it will still work, there’s a couple of different things that go with that. Ultimately, the person whose name is on the bill, who is on that phone listing, is the only one authorized to put charges on that phone bill.
Kiersten: How would people authorize their children for example?
Ann: Here’s how it would work at my house, I have two kids and they both like to play online, but what they do when they are online today, even without Bill2Phone, they find something they want, they ask mom, and I’ll go and if it is credit card based, I enter my credit card. It would be the same thing with Bill2Phone, I would enter my information and off they go.
Scott: And the big advantage there is you’re giving your kids that information but it’s not like they’re going to be able to run up a $300 tab. It’s also not like they’re going to be able to buy a Xbox 360 or go out and buy a Playstation3. It’s very limited to physical applications. By controlling that spending limit on a monthly basis you’re not going to have that big sticker shock.
Kiersten: I noticed that you’re not intending this to be used as a line of credit, so are you limiting the dollar amount of purchases both individual purchases or overall accumulated purchases over the period of a month?
Ann: We do that, and it’s basically something that we’ve worked with each of the phone companies and when we’re actually getting ready to put charges on their bill we talk about the types of charges we’re trying to do and they’ve set limits. Typically it’s a monthly cap, it’s like a 30 day rolling cap and most of them are within around $100 a month for this type of charge, one has $50 right now but we think they’ll move that. So $50 to $100, which I think is a lot of leeway for playing online.
Kiersten: I wouldn’t be surprised if they base it on the past payment history of the individual as well.
Ann: There’s some of that, as well, and our system is designed that it can do that. If the merchant wants to place limits then the merchant’s limits can be imposed. If the phone company places its limits obviously those will be imposed and our system does have a way of tracking and building positive and negative histories.
For examples, if we have a lot of negative history, and this is one of the things that’s really great about the system, let’s say that someone goes to a game site and puts in Bill2Phone and for whatever reason decides that they’re not going to pay the bill, and call us and make a claim, and there’s a charge-back. Well guess what when they go on down to the next game site, we’re still going to know that and they’re not going to be able to do the same thing too many times. Once or twice, after that, we figure that they’re chronic complainers and they’re going to have to pick another payment option.
Kiersten: That’s great, that makes a lot of sense, because people will find a way to abuse it.
Ann: That’s right, and what’s great is we have a huge database of not only people who have purchased online but let’s say someone has purchased a traditional purchase and third party charged it, since we’re the largest in our space, we clear millions and millions of transactions a day, and because we’re the largest in our space, we have histories of people who have complained about collect calls, and people who are chronic complainers are already going to be on the watch list, and we’re going to be a little more careful about allowing them to do the Bill2Phone.
Kiersten: What recourse do people have when their item was paid for but not delivered such as a digital download that failed? Do they have that recourse through you as well as the source?
Scott: Yes, so there’s a couple of different scenarios there, ideally what would happen is they would call the merchant directly. So if that didn’t happen and they called us, then we would try to direct them to the merchant.
Ann: If they were insistent that they absolutely needed the refund we would provide the refund and we’ll let the merchant know, then if the merchant wants to contact the consumer they certainly have the ability to do that.
Kiersten: Are you working with any of the credit reporting agencies or affecting people’s credit rating or are you leaving that up to the phone companies?
Ann: We are not at the present time affecting people’s credit ratings but we do block them from making future purchases, so we are protecting our merchants from further charges from that individual.
Kiersten: You have a database and does providing your phone bill and therefore your phone number in any way allow BSG, its affiliates or the sites where items were purchased to use that phone number for direct solicitation or sale?
Ann: The contracts that we have in place with our merchants prohibit that. So that’s not what we intend to do at all.
Kiersten: Does BSG charge the customer a fee to use Bill2Phone and are merchants charging additional fees to use your service as a payment option?
Scott: Absolutely not. In fact the pricing structure really works well for not just a twenty dollar purchase but works really well for microtransactions. So it can go either way, we can really adjust the payment structure to really fit the merchant. It’s something we want to see as a successful additional payment option so we’re not going to make it prohibitive.
Kiersten: So basically the phone companies pay you a type of royalty?
Scott: Again it’s like a credit card transaction so when the payments we receive from the phone company, we take our fee out and deliver the remainder to the merchant.
Kiersten: So if I set up a website selling custom t-shirts, can I as an individual offer Bill2Phone as a payment method?
Scott: You could offer t-shirts not as like the initial purchase, so if you wanted to have a subscription to a game, and as part of that you can buy a t-shirt that’s representative of the game, that would be fine, but just to sell t-shirts, it’s really not meant for hard goods. There are some associated hard goods that work out well, even if it was like a CD tack on to a game for example or and actual artist CD then that would be appropriate but selling merchandise is not something we’re doing.
Kiersten: But as far as integrating for the payment if you were selling a game or digital download?
Ann: Absolutely it’s easy to integrate, we have an API type of system, very simple integration it’s patterned after credit cards and what we have heard from the merchants who have worked integration is it is very easy to implement.
Kiersten: What games can I bill to Bill2Phone right now?
Ann: We haven’t done any press releases yet, we are working with a lot of game companies whose names I guarantee you’ll recognize, they’re very well known. Part of it has to do with development schedules, and getting things coordinated and rolled out, but keep watching as you’ll see announcements in the near future of recognizable game sites that are going to roll out Bill2Phone.
Kiersten: Are you looking at some of the older games or the smaller games that maybe only have 400 subscribers?
Scott: Absolutely we’re not only going after tier 1 customers, and the way I treat them all is just the same, especially in this space. I mean who would have thought that Second Life was going to happen? Who would have thought? We were talking about this last night and when it was released initially it was you in this big space. And now there’s a banking institution that wants to do real life dollars banking within Second Life, it’s out of control!
Ann: And here’s the thing with that too, our core business is, what we built our business on for twenty years, was being an aggregator, and when being an aggregator, you have to have a mix of big customers but you don’t want to hang all your eggs in a big customer basket, you want to have a diversified customer base where you have large medium and small customers to fill in.
We’ve done that very successfully with the traditional billing side, and we have the same business model in mind for Bill2Phone. We want those little guys to come to us. Our implementation is so simple it was designed so that they could do that and we are also hoping to work with some different types of payment service aggregators so they can access Bill2Phone through third parties as well.
Scott: And it really works out well for the smaller merchants. The bigger guys are going to be slower to adopt this and seeing smaller companies do it, they’re going to be more likely to do it. That’s one strategy we’re using, but at the same time if an early adopter smaller company decides to use Bill2Phone, it really gives them a competitive advantage because you’re trying to no eliminate any of your potential customer base.
Kiersten: Speaking of which, what about x-rated sites?
Scott: Because we’re dealing with the phone companies, they don’t want an image of any kind of adult oriented materials associated with their brands.
Ann: So if we have someone who comes in with their site, we’re an intermediary with the phone company and we say, ‘here’s what they’ve got, here’s how they market it, here’s the product’ and we help them get that approved. We know from past history they don’t want anything that’s too graphic or hard core, so we do tell our merchants that in advance. But who knows what the future holds.
Kiersten: Thank you all for your time!
It would seem the future is Bill2Phone! To find out more about BSG Clearing Solutions or Bill2Phone, visit their website at http://www.bsgclearing.com or read their pdf file on Bill2Phone: Payment Solution.
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