eBay's $240 million purchase of Zong a major win for carriers

eBay is shelling out $240 million in cash to get carriers into the mobile payment business. The online auctioneer announced Thursday it is purchasing mobile payment provider Zong.

Unlike the eBay-owned PayPal, which allows members to make payments using account balances, banks accounts or credit cards, Zong simply adds the payment to the user's mobile phone bill. Zong has relationships with 250 carriers, 3.2 billion mobile users and offers payments in 21 languages and 45 countries.

"Zong's expertise in carrier billing means that it has the potential to reach the more than 4 billion people around the world who have mobile phones — including people who don't have (or choose not to use) bank accounts or credit cards online," PayPal President Scott Thompson said in a July 7 blog post.

He added that it's easy to use. "So easy, in fact, that when merchants offer Zong as a way to pay for digital goods, they see greater conversion than other payment methods."

In a mobile payments market growing so quickly that by midyear PayPal had already raised its 2011 mobile total payments volume (TPV) three times, Zong — as G+ also shows off in a helpful infographic — already has plenty of hopeful competitors.

Verizon Wireless, with Payfone, recently announced it will also offer an add-it-to-my-bill mobile payment solution (CP: Verizon venture with Payfone and Amex speeds ahead of Isis NFC plans), despite also being a part of the Isis venture with AT&T and T-Mobile.

Isis will rely on Near-Field Communication (NFC) chips in smartphones and be tied to a major credit card. (Though Discover was the trio's initial partner, they had difficulty moving forward before agreeing to include MasterCard and Visa.)

The not-yet-launched Google Wallet app for Android phones — such as the NFC-enabled Google Nexus S 4G — will synch with Google Offers, so no coupon is left behind, and make payments through Citi MasterCard credit cards, the MasterCard-affiliated Google Prepaid Card and Sprint (the only major carrier spurned from the Isis deal). An Amex deal may also be on the way, as Google says it hopes to "eventually support all the payment cards you keep in your [wallet] today."

American Express and Visa, despite their other affiliations, have their own initiatives as well. American Express Serve runs over Payfone and lets users send money between devices, and Visa Wallet, which is compatible with (but not exclusive to) NFC technology, offers payments through a Visa card or 14 additional banks and financial institutions.

Forrester Research expects mobile commerce to reach $6 billion this year and $31 billion by 2016. And according to eBay, which owns PayPal, digital goods is a market now worth $20 billion — and rising fast.

While some have warned against allowing phone companies to act as collection agencies (Unfiltered: Mobile payments: wonderfully convenient, or your money in the wrong hands?) carriers, with the rest of the industry, will continue angling to be the trusted partners to consumers, transferring all those dollars.