eZpay (Career Direct Payment / Gen Y Mobile Payments)

eZpay is a new way for buyers to pay for digital content bought online. The buyer selects the items on the merchant's website, loads it into her shopping cart. At checkout, the buyer simply enters her mobile phone number. After a couple of seconds, she receives a unique, one time PIN number on her mobile phone. Upon entering this PIN on the merchant's website, she is transferred to another webpage from where she can download the digital content and complete the shopping. The purchase amount is deducted from the buyer's mobile phone balance (prepaid) or added to her monthly bill (postpaid / contract) by the mobile carrier. The mobile carrier makes a single consolidated payment of all eZpay transactions during the month to eZpay. After deducting its processing fees, eZpay makes a consolidated payment to the merchant once a month.

Benefits:

1. Buyer does not disclose any confidential financial information. In fact, buyer simply provides mobile phone #, which happens commonly.

2. Because of its revolutionary nature, it can attract new customers to shop online, who otherwise have been put off either by the lack of perceived security or lack of convenience (too many hoops to jump for security).

3. Conversion rates (i.e. lead to deal) for this method are claimed to be 10X of credit card and 5X of PayPal.

Questions:

1. How to pursue merchants that they will suffer 40-50% reduction in revenues with this payment method? (typically, 5-10% processing fee by payment service provider, 20-40% commission typically charged by mobile phone carriers). Higher conversion rate is an intangible benefit and difficult to demonstrate, especially in emerging markets with low marketing awareness.

2. Given that there are already a couple of competitors, differentiator?

Competition:

As of Mar. 2009, competitors are: Zong (www.zong.com) with 15M USD funding, PayMo (www.paymo.com) with 5M USD funding. Zong is not available in India. PayMo claims to be available, but demo does not work on Indian mobile phone #.