
Mobile Payments Getting Traction On Social Networks, But Fees Are Sky High - mattmaroon
http://www.techcrunch.com/2009/01/13/mobile-payments-getting-traction-on-social-networks-but-fees-are-sky-high/
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mattmaroon
I actually agree with almost everything Arrington says here. Our app is
monetizing, and the page we do it on had SMS for a while. The fees were over
50%. At that rate, you almost have to remove them, because if 50% of the
people who use SMS would have used PayPal (which is still easier, if you have
it) or Credit Card instead, you lose money. Conversion rates have to be
significantly higher to recoup what they cannibalize. (And for us they were
nearly nonexistent anyway, so we removed it).

My feeling is that the networks really don't want to become credit card
companies, which is why they make the fee so high. You can loan money out to
anyone if you're charging the vendor a 50% service fee. You'll never get an
amount of defaults that high. Charge 2% like Visa and suddenly you have to be
wary who you extend credit to.

