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Consumers ring up mobile purchases via many methods

As more marketers are using mobile phones to promote products, many firms are answering the call to create new platforms that make payments via cell phone possible.

Through premium SMS, cell phone carriers work with mobile marketers to create a bill-to-phone option in which consumers can purchase through the phone by sending short codes. The short codes linked with each promotion are as memorable and effective calls to action as call center numbers or Web site URLs.

“The biggest and largest opportunity in the market is for monetizing traditional calls to action,” said Michael Becker, executive vice president of business development at iLoop Mobile, San Jose, CA. “That interaction can be monetized with a call to action put on a billboard, TV [and] radio, and is driving consumers back to these traditional media.”

Popular use of the SMS billing method is for downloading music, ring tones and video. Typical calls to action include print ads that feature short codes to purchase ring tones in a print ad, voting for contestants on TV shows like “American Idol” and billboards for an album drawing consumers to buy a song.

Many of these transactions are currently limited by the dollar amount. Cingular limits purchases to $9.99 a transaction and other carriers limit the monthly short code charges to $100 to keep bills under control.

But payments systems are not just on deck, or through the vendor directly. With PayPal Mobile, users in the United States, Britain and Canada can send payments and buy items using mobile phones through a text message-based service off deck. This includes sending money to others by dispatching a text message or by calling an automated voice system or buying items with Text to Buy by delivering a text message to PayPal with an item code.

“There are different media channels people use to make purchases and purchasing decisions,” said Kevin Dulsky, general manager at PayPal Mobile, San Jose. “Our aim is to be there to facilitate purchases over the phone and the Internet. And the phenomenal growth of mobile subscribers means more PayPal users have mobile phones, and those mobile PayPal users are texting more often, using the mobile Web and getting more comfortable with e-commerce.”

PayPal users can send money or pay for purchases via credit card, bank account, stored balance or PayPal Buyer Credit, which is linked to a PayPal account. PayPal then calls users back to confirm mobile payment using a secure PIN number. Once the payment is confirmed, PayPal sends the money to the merchant or recipient. For purchases, the merchant ships the item to the address in the user’s PayPal account.

PayPal Mobile has been used to purchase hard goods like mobile exclusive products from Universal Music, MTV, the NBA and the Bravo Network.

Mr. Dulsky expects these promotions to expand.

“It literally can take a retail store and make it open for business 24/7, just like the Web,” he said. “An example of this is a merchant who would put a Text to Buy code in their windows, so even when the store is closed, passersby can still buy.”

While PayPal offers the ability to purchase, the most common products to buy over the phone are content for phone usage: ringtones, songs and videos.

Technology company SanDisk makes Flash memory cards that access payment over the mobile phone by using a credit card through Internet payment system ClickandBuy. Consumers can purchase memory cards that include locked music files. After previewing snippets of songs, customers can purchase the phone-ready tracks directly on Palm phones.

The latest Rolling Stones album, “A Bigger Bang,” was offered through this SanDisk memory card format.

“We definitely see more and more full track downloads – it’s taking off,” said Pascal Caillon, director of mobile product management and business development at SanDisk, Milpitas, CA. “It is still slow though, but I think as handsets change to be more accommodating, so will the purchase of songs.”

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