Facebook rolls out 2-step payments flow for mobile web apps

Facebook today begins rolling out a new mobile payments flow that brings the number of steps down from seven to two, the company said in a blog post.

The new carrier billing option, announced in February, is now live for the U.S. and the U.K., but will be available worldwide soon. Mobile app developers will be able to charge their players’ monthly phone bills in only two steps and without requiring users to type anything. Having a fluid payments flow could encourage developers to focus more attention on HTML5 applications than they have in the past.

Mobile web developers who already integrate Facebook payments don’t need to make any changes to their apps. Those who want to use Credits on their mobile website can use Facebook’s Payments API. Developers can see an example of the payments flow in Gamzee’s Skyscraper City.

Sprint, AT&T, T-Mobile, Vodaphone, Orange, O2 and Three will support mobile payments for users in the U.S. and the U.K. A list of participating carriers by country is available here. Though it’s hard to be sure exactly what percentage of its revenue share Facebook is giving up to facilitate the new payment option, the company could be losing a substantial portion of its 30 percent cut. Earlier this year Ray Anderson, the chief executive of carrier billing company and Facebook service partner Bango, revealed carriers often provide large companies like Facebook with much more favorable carrier billing terms than smaller players receive. However, even with some carriers now remitting 90 percent of carrier billing revenue, by the time Facebook pays the carrier and any third-party payment processers, it could be losing up to half its share. We suspect the company is willing to make the sacrifice to bolster HTML5 applications and work around the barriers Apple and Google have set up to prevent Facebook from monetizing native apps that integrate its platform.

The social network is also beginning to monetize its own mobile app with advertising. On Tuesday the company announced that advertisers can now choose to run mobile-only ads, which introduces new opportunities for app developers to acquire users with Sponsored Stories.

This post originally appeared on our sister blog, Inside Facebook, here.

Zooz offers unified solution for PayPal, credit cards and carrier billing

Zooz is aiming to improve mobile payments with a single solution service that allows developers to offer PayPal, credit card and carrier billing options in one screen on iOS, Android and — as of today — HTML5 apps.

The Tel Aviv-based startup wants to address what CEO and co-founder Oren Levy sees as a lack of standardization in mobile payment options. With some apps using PayPal, some using credit cards and some redirecting to other apps or mobile websites, Levy believes consumers are often unable to use their payment platform of choice, and are unsure if they can trust mobile apps to safeguard their financial information. Developers, meanwhile, see too many users abandoning purchases partway through the payment process.

By integrating the Zooz SDK into their apps, developers can offer mobile shoppers the choice to pay with PayPal, major credits like Visa, MasterCard and American Express, or direct carrier billing from over 70 different carriers in the U.S. and Europe. This makes it easy for developers to let customers pay how they want, which in turn boosts conversion. One app in the Zooz beta test saw its conversion increase from 30 percent when using PayPal as the only purchase option to 60 percent after offering credit card, carrier billing and PayPal payment options through the service.

Users who pay through the Zooz system never have to register with Zooz or download a separate app in order to make payments, but users can choose to complete a one-time registration process that associates their payment details with their mobile device. Users who choose to do this will see their payment details pre-populate the next time they make a purchase on their registered device in a Zooz-powered app, even if it’s a different app. If a user does choose to register their device, they can also set up a secure four digit passcode to prevent unauthorized purchases. It’s a different approach from rival payment startup Clover, which requires users to download a separate app, but then promises subsequent transactions will be completed in seconds.

“If you look at numbers, every additional step you require from the user reduces the conversion rate of an app,” Levy says. “While some competitors are looking more to process credit card payments, we’re looking to standardize the mobile checkout. Just like you’d go to a website and see the VeriSign seal and know that page is secure, our vision is for you to go onto a mobile app, see the Zooz screen and know it’s secure and you can trust that screen and app with your credit card and PayPal details.”

Zooz offers two tracks to developers who want to use the company’s services to process payments. For independent developers who don’t have merchant accounts with major credit card providers, Zooz will process those payments for them, taking a fee of 2.8 percent, plus 19 cents per transaction. For users who choose to pay via PayPal or carrier billing, Zooz doesn’t charge the developer, instead directing the transactions as part of its greater service. For larger developers with merchant accounts, Zooz acts as a mobile payment gateway, earning affiliate fees for directing transactions.

Zooz’s technology and security features have been in development for just over a year, and recently came out of a four month long closed beta. Although fairly new, Levy tells us about 1100 apps on iOS and Android are already using Zooz to process payments. The company is backed by $1.5 million round of seed funding from Lool ventures, Rhodium, Kima Ventures and other angels.

Mobile app roundup: Gamevil, Millennial Media and the next iPhone

Unity Awards nominations now open — Nominations for the annual Unity awards are now open. The awards were created to recognize outstanding examples of games and other projects created using Unity. The deadline for nominations is June 15 and the winners will be announced on August 23.

Industry vets unite to form Fun Machine — Video game industry veterans Patrick Curry, Michael Hadwin, Neill Glancy and Stephen Palmer have taken their mobile entertainment start-up, Fun Machine out of stealth. Based in Austin, the company’s first game Awesome Eats has been downloaded more than 800,000 times on iOS.

GameSalad expands to Windows — GameSalad’s code-less mobile app development tool is now available on Windows. To date GameSalad users have created more than 60,000 mobile and web apps.

iZettle distributes 3,000 free mobile payment readers to small businesses in the UK — Swedish mobile payment provider iZettle is looking to cement its lead over potential rivals Square and Paypal in Europe. This week the company launched its UK service by distributing 3,000 free mobile payment readers to small businesses in the country reports TechCrunch.

iOS has 55 percent of mobile advertising market, Android 45 percent — According to mobile marketing company Velti’s State of Mobile Advertising report, iOS now accounts for 55 percent of mobile advertising impressions.

Amazon selling $600,000 advertising packages on Kindle Fire — Amazon is offering advertisers a chance to get their ads on the welcome screen of its Kindle Fire tablet. AdAge reports the packages begin at $600,000 and will run for 2 months.

Everyme unveils new apps — Mobile group sharing startup Everyme has launched new Android and web apps and revamped its iOS app. According to TechCrunch, the service’s users have shared 100,000 stories and 30,000 photos since launching last June.

[Earnings] Gamevil posts $4.45 million profit in Q1 2012 – South Korean mobile-social game company Gamevil has posted a net profit of 5.2 billion won ($4.45 million) and 16.6 billion won in sales for Q1 2012 ($14.2 million), up 160 and 105 percent year-over-year. 91 percent of the company’s total sales were from in-app purchases and 92 percent of total sales were from smartphones.

[Earnings] Millennial reports net loss of $4 million — Mobile advertising company Millennial Media had a disappointing first earnings report as a publicly traded company. The company’s revenues increased to $32.9 million but posted net loss of $4 million for Q1 2012. The company lost $23,000 in the first quarter of 2011.

[Funding] Serious Parody nets £1 million — Scottish iOS developer Serious Parody has recived a £1 million investment from private investors, but also including £230,000 in funding from the Scottish Enterprise Regional Selective Assistance grant, reports VentureBeat.

[Launch] Songify comes to Android – Smule has released Songify, an app it picked up when it acquired Khush, on Android reports VentureBeat.

[Rumor] Next iPhone to have 4 inch screen – Various sources are reporting the next iPhone will have a much larger screen, measuring 4 inches from corner-to-corner, up from the current 3.5 inch screen.

[Rumor] Chrome coming to iOS — Macquarie analyst Ben Schacter is predicting Google is bringing its Chrome browser to Apple’s iOS operating system, reports Business Insider.

Amazon pairs increased in-app purchase limit with new parental controls

Android developers with apps in the Amazon Appstore can now charge more than $20 for in-app purchases, reports TechCrunch.

The update, which brings the Amazon Appstore in line with Apple’s App Store and Google’s official Google Play service, was rolled out after Amazon updated its Appstore’s parental controls. According to Amazon’s developer FAQ, customers can change the settings on their devices to require either their Amazon.com password or a four digit PIN in order to complete in-app purchases.

Tying the increase in the value of in-app purchases to an update in parental controls is a smart move for Amazon, considering the troubles Apple has seen in the same area. Last year a Pennsylvanian father filed suit against Apple in a Northern California district court, alleging the company’s in-app purchase policies were exploitative. Although in-app purchases can now be disabled entirely in an iOS device’s settings menu, Apple was unsuccessful at getting the case dismissed; on April 16, the district judge ruled the hearing will still go ahead, despite Apple’s policy changes.

For Amazon developers an increased in-app purchase limit is welcome news. Although the Amazon Appstore already delivers comparable revenues per average user to iOS, according to a report mobile analytics firm Flurry released last year, in-app purchases over $50 make up a third of the revenues developers generate from free-to-play titles. With Amazon developers now able to offer high-priced in-app transactions like they can on iOS, it will be interesting to see if the Amazon Appstore’s average revenue per user will rise to match, or even surpass Apple’s.

Amazon taking control of in-app purchases in the Amazon Appstore

Amazon is finally taking control of in-app purchases in its Amazon Appstore for Android.

According to a report from Bloomberg, the online retailer is currently testing its own in-app payment system. The new system will support both one-time transactions and subscriptions. Amazon’s commission will be 30 percent, the same rate Apple and Google charge in the iTunes App Store and Google Play.

The Amazon Appstore already supports in-app purchases, but doesn’t have restrictions around in-app payment systems, which leaves developers free to choose their own payment systems and providers.

It’s not surprising to see Amazon rolling out an official in-app payment system for its Appstore. According to Distimo’s latest figures, the majority of top grossing apps on both iOS and Android now monetize with in-app purchases. Amazon rival Apple, which has always taken a cut of transactions made through its iTunes App Store, has already earned more than $1.7 billion from its 30 percent share of mobile app revenues.

The Amazon Appstore has already proven successful at delivering revenues to developers via in-app purchases. Last week Flurry reported for every dollar earned through in-app purchases on iOS, the Amazon Appstore delivers $0.89. With the success of the Kindle Fire, its also likely the Amazon Appstore market is now large enough to make developing an in-app payment system worthwhile. After the debut of the tablet in November, app downloads in the Amazon Appstore were 14 times higher than they had been pre-launch. Glu Mobile also reported its Amazon revenues had increased by more than 1,000 percent after the device launched.

It seems as the Amazon Appstore starts to look more like a viable alternative to Google Play, Amazon isn’t risking leaving revenue on the table. Although a 30 percent commission fee doesn’t make the Amazon Appstore a better deal up-front for developers, the store’s ability to deliver revenues through in-app purchases will still make it attractive to Android developers.

Chinese Anti-Black Card Alliance stops more than $1.5M in iOS scams

Just how much money are virtual currency “black card” scams costing Chinese iOS developers? The Chinese Anti-Black Card Alliance has stopped more than $1.5 million USD in fraudulent transactions in just six months.

Black card scams, so named because they use fake or stolen credit card numbers, operate mainly on Taobao — China’s eBay equivalent. Sellers on the site offer virtual currency at a steep discount, often 50 percent off the actual value. The currency is bought on iTunes accounts attached to fake or stolen credit card numbers from outside China, and then transferred to the buyer’s game.

These scams are the reason it’s increasingly common to see Chinese apps with no English language support on the upper reaches of the U.S. top grossing apps charts. Once Apple filters out fraudulent payments from a developer’s earnings, as much as 50 percent of a company’s revenues can vanish. Beijing-based Hoolai lost over $300,000 in one month alone due to the scams.

This is why CocoaChina, also known as Chukong/PunchBox, created the Anti-Black Card alliance last October. Made up of some of the biggest developers in China, the group’s member 14 companies include the likes of Kongzhong, Haypi, WiStone and Gameloft’s Chinese studios. The group employs a full-time employee just to monitor Taobao for fraudulent listings connected to games from the Alliance’s member companies and any apps published by CocoaChina. Since starting the program, the Alliance has issued more than 1,000 takedown requests, which has translated into Taobao removing over 30,000 listings.

With the sheer number of fraudulent listings, it’s hard to measure the true financial impact, but according to Lei Zhang, the U.S. general manager of CocoaChina/Chukong. Most listings were for the highest tier of in-app purchase, with average costs ranging from $49.99 to $99.99 each. At 30,000 listings, one can conservatively estimate the anti-black card alliance has shut down more than $1.5 million in fraudulent transactions.

Although the are time and resource intensive, the Alliance’s efforts are paying off. Members have seen their fraudulent transactions drop by 80 to 90 percent and one game even saw a 30 percent revenue increase after the alliance began. While Zhang couldn’t disclose the title of that game due to Apple’s restrictions, he did tell us the game has gone from earning about $38,500 a month to $50,000 a month.

The alliance also now has a special relationship with Taobao. Although the company’s standard policy is to remove fraudulent listings 15 days after a complaint in order to assess the claim, Taobao now removes any listings reported by the Alliance within 24 hours.

“This is a problem that involves loopholes of the entire ecosystem, beginning from the relatively easy access to fraudulent credit cards,” explains Zhang. “It’s not fair to portray Taobao as one of the main causes of this issue or even part of the scheme, they are in fact an active and important part of the solution.”

While Taobao may have the ignoble honor of being the most popular place for black card scams, it’s also not the only destination for fraudulent players. According to Zhang, Tencent’s Paipai.com (a Taobao competitor) also has similar listings, and there are still plenty of black card scams conducted off the easily monitored e-commerce sites.

All this means Chinese developers may still be losing millions of dollars in revenue every year, all while they’re still on the hook for the server and hosting costs of the fraudulent players. An article on the CocoaChina website states that some Chinese developers have reported more than 88 percent of their revenues turned out to be bad debts related to the scams. According to Zhang, the only way to truly stop the black card scams is an absolute crackdown — which is of course, easier said than done.

Because Apple doesn’t share detailed user payment information with developers, it’s extremely difficult to sort out legitimate users from fakes. Hoolai, which saw its game 胡莱三国 (Hoolai Three Kingdom) hit No. 10 on the U.S. top grossing app charts at the end of February, has tried to build algorithms to identify what it calls “strange payments,” but it largely comes down to guesswork.

Still, the best approach may be harsh penalties, even if developers aren’t able apply them universally. “Game operators need to clearly convey a message of zero-tolerance for fraud payment to players,” says Zhang. “This is especially important for MMOs and other high lifetime value games. [They need to decline] features or content to fraudulent players.”

Google Play delivers a quarter of the revenues per user Apple and Amazon do, says Flurry

For in-app purchases on a per-user basis, Google Play is now the least lucrative mobile app market behind both the iTunes store and Amazon’s Appstore.

According to the latest report from mobile analytics company Flurry, for every dollar of in-app purchase revenue the average user generates on iOS, the same app will see $0.89 in the Amazon Appstore and just $0.23 in Google Play.


To come up with these figures, Flurry measured the average in-app purchase revenue by user in a series of apps popular on iOS, Android and Amazon app stores over a 45 day period. As the study excluded both up-front app purchases and advertising revenue, it’s unwise to take Flurry’s numbers as a perfect breakdown of revenue per platform.

Overall a top grossing iOS app can earn between $2 and $3 million a month on iOS and about $1 million a month on Android. It’s not yet known what a top grossing app on the Amazon Appstore makes, but the figure is likely lower because of the Appstore’s much smaller userbase.

It’s also important to note that overall, in-app purchases are less important on Android. Earlier this week, Distimo reported 80 percent of the top 200 grossing iPhone apps used in-app purchases, but only 56 percent of the top 200 grossing Android apps did.

However, Flurry’s study does help explain why Crowdstar — developer of the free-to-play game Top Girl — reported its average revenue per user in the Amazon Appstore was five times higher than in Google’s official Android market.

As we have said previously, the key issue with monetization on Android hinges around developing a userbase that is ready to pay. iOS and Amazon users not only have accounts set up with payment information, they’re used to purchasing things from Apple and Amazon. Android users, on the other hand don’t often have their payment information on file, something that google is trying to remedy through discounted app promotions.

The lack of progress Google Play is showing — in December, Flurry reported Android apps earned $0.24 cents for every dollar spent through in-app purchases on iOS — only demonstrates the scale of the problem Google is trying to tackle.

[Update: Please note that on April 15, Flurry updated this report to clarify it was comparing app revenue per active user, not overall revenue. Inside Mobile Apps has updated our story to reflect these changes.]

Facebook is probably paying an arm and a leg for its new carrier-enabled, mobile web payments system

Now that Facebook finally unveiled carrier-powered payments for the mobile web yesterday, it’s time to look at what the potential costs might be. Last month, U.K.-based mobile billing and analytics provider Bango announced to shareholders that it had a new partnership with Facebook, but that it couldn’t disclose the terms. Bango powers billing for app stores and also has a deal with Amazon.

Here are Bango’s standard payout rates for the carrier partners Facebook mentioned yesterday. (Important note: These are not Facebook’s actual rates. These are Bango’s standard rates. It is likely that because of Facebook’s clout and scale, the company wrests slightly more favorable terms. Bango’s chief executive Ray Anderson actually gives some color in the comments below. But this should give you an idea of how expensive the carrier’s cut is for Facebook.)

Bango’s standard carrier payout rates:

AT&T – 60%
Deutsche Telekom – Unknown, because Deutsche is not a Bango partner.
Orange – 83%
Telefónica – 55%
T-Mobile USA – 57.5%
Verizon – Unknown, because Verizon is not a Bango partner. is only available to Bango’s strategic partners.
Vodafone – 79.2%
KDDI – Unknown, because KDDI is not a Bango partner.
SOFTBANK MOBILE Corp. – Unknown, because Softbank is not a Bango partner.

Since Facebook pays out a 70 percent revenue share to developers, any time a carrier remits less than 70 percent, Facebook is taking a loss on facilitating these transactions. When you factor in the research and development costs of building the mobile platform, it’s almost certain the company will be losing money on this area of the platform for some time.

Update: Bango’s chief executive Anderson gives some helpful context in the comments below. He says that special partners often have better rates. He says that Blackberry-maker Research in Motion uses Bango to power its Blackberry AppWorld and gets 70 percent back from AT&T. That’s better than the normal 60 percent rate listed above. But even if Facebook got 70 percent back from AT&T, it would still mean that the company is taking a loss on these transactions since it pays all of that back to the developer and must still invest in R&D and maintenance for the platform.

Now to anyone in the mobile industry, this really shouldn’t be a surprise. Terms for carrier billing have always been onerous. After losing so much of their power to Apple and Google over the last five years, carriers are maintaining a steadfast grip onto mobile payments — one of their last and most potentially lucrative revenue streams that distinguishes them from being “dumb pipes.”  It’s hard to see them giving up revenue share or additional control to Facebook even if it means a better user experience and greater transaction volume.

Facebook has dealt with this in the past as it’s been possible to pay through carriers for Credits on canvas games through the Zong partnership. Google is also in a similar position when it comes to in-app payments on Android via carrier billing.

Facebook users can still pay for Credits by directly entering their credit card information into a web form, thereby keeping the 30 percent revenue share. But that’s often not the best user experience since there are many friction points as people have to go through a multi-step process when entering their credit card numbers. What Facebook announced yesterday is more seamless. In a one-step process, consumers can click to pay with Credits on mobile web apps and have those charges delivered to their monthly phone bills.

But the complexity of setting up a decent mobile payments infrastructure underscores a risk Facebook mentioned in its IPO filing. Facebook acknowledged that increased usage of the company’s mobile products may undermine its financial performance.

The company said in its filing at the beginning of the month:

“We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.”

One way that Facebook could make up for these losses is in mobile advertising, which the company just unveiled in a New York-based marketing conference today.

Facebook partners with world’s largest carriers to bolster mobile web-based payments

Facebook has partnered with some of the world’s largest carriers to make the experience of paying with Credits more seamless on the mobile web.

The company has done a deal with AT&T, Deutsche Telekom, Orange, Telefónica, T-Mobile USA, Verizon, Vodafone, KDDI and Japan’s Softbank Mobile Corp to let Facebook users pay more seamlessly with Credits through carrier billing. The deal comes at a critical time for Facebook as Apple’s iOS and Google’s Android platforms threaten to cut the social network out of influencing and earning revenue from the mobile app ecosystem.

Facebook’s chief technology officer Bret Taylor said that the current system for making web-based payments has too many friction points to make it useful to consumers or developers.

“Right now, the payments experience on the web is just broken for end users,” he said in a keynote at Mobile World Congress in Barcelona. “Even with operator billing support, most require a step called SMS device verification. That means if I’m in the middle of the game and I want to pay 99 cents, I have to wait for an SMS to arrive.”

After that, the user has to verify that the device is connected to their Facebook account.

“Then I have to awkwardly memorize the code and resubmit the transactions,” he said. “If I manage to make it this far, then I can finally go back to playing the game.”

With the new solution, third-party developers will be able to integrate a single SDK that lets their players charge their monthly phone bills in a single step through Facebook.

Having a fluid payments flow could go a long way in convincing developers to spend as much time on their HTML5 apps as they do on their native ones. To make HTML5 viable for mobile developers, Taylor said Facebook needed to focus on three problems: 1) discovery 2) fragmentation and 3) payments.

Facebook is addressing discovery with new viral channels for mobile apps that it launched last fall. On the second problem, Facebook also announced an industrywide group today that will push mobile web standards forward in concert with the W3C, or World Wide Web Consortium.

The payments agreements address the third problem. The only thing that seems certain about this new arrangement is that Facebook must be paying a lot — if not nearly all — of its 30 percent revenue share to carriers in this deal. Google knows this situation well, as it had the same hurdles in negotiating revenue share for carrier billing on Android.

The other problem that Facebook is confronting is that it likely only has a tiny percentage of users that are sharing payments information with it. Apple has more than 250 million iTunes accounts with billing information attached to them. In contrast, I would bet that Facebook has payments information or credit card data on around 30 million users or less, considering that around half of its 845 million monthly actives play games, and then 2 to 6 percent of those monetize through virtual currency purchases. The platform’s biggest developer Zynga saw only 2.9 million of its 153 million monthly unique users pay for virtual currency last quarter. So Facebook is likely facing the same uphill battle Google has been dealing with in convincing more users to pay on its Android platform.

Every iOS device means an additional $12 in revenue for developers, Asymco argues

On average, every app downloaded from the iOS store generates about $0.23 in revenue, argues Apple analyst Horace Dediu of Asymco. That means that as Apple is set to pass its 25 billionth app download, every one of the 335 million iOS devices sold has generated about $12 dollars in revenue for developers in the ecosystem.

Dediu bases his analysis on two well-known figures — first, Apple has paid developers $4 billion over the lifetime of its store, and second, the fact that Apple is just days away from its 25 billionth app download.

According to Dediu’s math, if the app store has paid out $4 billion to developers, it has earned $5.7 billion in gross revenues because Apple keeps an additional 30 percent cut of revenue. That means if you divide the App Store’s total revenue by the number of downloads, it each app has created about $0.23 in gross revenue and about $0.16 cents for developers after Apple’s 30 percent cut.

While those figures may be fairly loose estimates, they do roughly align with Apple’s most recent payout figures. In the fourth quarter Apple paid $700 million to developers, meaning the store likely earned around $1 billion in gross revenues.

Dediu assumes Apple has sold 335 million total iOS devices to date after the company reported it had sold more than 315 million devices in total in its fourth quarter earnings call on Jan. 24. That means that between the 25 billion apps downloaded, each device has generated 75 downloads on average. Multiplying $0.23 by 75 indicates that every iOS device sold has created $17 in gross app revenue and developers have taken home $12 of that.

Get the latest news in your inbox
interested in advertising with inside mobile apps?

Social Media Jobs
of the Day

Assistant Editor

8 Inc.
New York, NY

Copywriter & Editor

Santa Monica, CA

Director of Marketing & Communications

Neumans' Kitchen
New York, NY

Social Community Manager

Tallahassee, FL

Editorial Director

Phoenix House
New York, NY

Featured Company

Join leading companies like this one and recruit from the nation's top media job seekers on the Mediabistro Job Board. Every job post comes with our satisfaction guarantee. Learn More

Our Sponsors

Mediabistro A division of Prometheus Global Media home | site map | advertising/sponsorships | careers | contact us | help courses | browse jobs | freelancers | content | member benefits | reprints & permissions terms of use | privacy policy Copyright © 2014 Mediabistro Inc. call (212) 389-2000 or email us