BilltoMobile gathers momentum for mobile payments plan

Mobile payments firm BilltoMobile is on the expansion path, adding new merchants to its electronic commerce program and hiring new executives.

The San Jose, Calif.-based company, a subsidiary of South Korea’s Danal, has added more than a dozen merchants to its mobile payments program since it announced a deal with Verizon Wireless in March. The company formally launched its alternative payment platform — which lets you buy things online using your mobile phone number for billing — in May.

The service is unique in that it doesn’t use premium text messages — which cost a lot of money — for its infrastructure. Rather, it ties directly into the carriers’ own billing, customer service, authentication and processing systems. That allows BilltoMobile to charge lower fees of 15 – 17 percent, compared to 45 – 50 percent for rivals. With BilltoMobile, a user shopping at an e-commerce site clicks on the BilltoMobile button while checking out and then enters his or her phone number and mobile billing zip code. Then the user gets a one-time passcode via text message, which is then entered into the online payment page to complete the transaction.

The company has also made some key new hires. It has added Warren Faleiro, a former VeriSign executive, as its vice president of engineering and technology. And it has added former Offerpal manager Madhura Belani as senior director of product and marketing. David Cho, former vice president of engineering at BilltoMobile, will move to other tasks, such as developing an international payment network for the company, as vice president of global payment strategy.

Jim Greenwell, chief executive of BilltoMobile, said the service continues to expand rapidly in the U.S., where mobile payments have just started to take off in comparison to Europe and Asia. Korea’s Danal has more than 10,000 merchant partners participating in its mobile payments service. Greenwell said his company hopes to establish the same kind of network in the U.S. market.

BilltoMobile was founded in 2006 and spun out of Danal in 2007. It has 35 employees. Greenwell said he is adding more salespeople to the team. Rivals include Mobillions, Zong and Boku.

If BilltoMobile succeeds with its ambitious plan of lowering the cost of mobile payments, then the market for mobile payments might finally take off in the U.S., where it has stalled for years because of the high fees of mobile carriers. In South Korea and much of Asia, such fees are much lower, and that’s why mobile payments have flourished there. Today, more than 50 percent of all digital content purchased in Korea is billed to a mobile phone account.

Mobile payments are supposed to be an easy way to pay for things. If you buy a tractor in the FarmVille social game on Facebook, you can either enter a hard-to-remember 16-digit credit card number, or you can use a mobile payments service to simply pay via a mobile phone number. The service sends you a text message, and you verify you made the purchase.