Verizon Wireless is getting into the consumer credit business.

Amidst Congress-mandated restrictions on credit card companies that is raising their costs of doing business in the middle of a consumer credit crunch during a fragile economic recovery, Verizon Wireless is planning to introduce a Bill-to-Mobile payment service. Starting with a $25 maximum spending limit, Verizon Wireless users can visit Danal-supporting web merchants and enter in their mobile telephone number and billing zip code for authentication. An SMS is sent to the mobile phone with a one-time use authentication code which must be entered into the checkout window to confirm the transaction.

Mobile Commerce has been talked about for eons, and in a recent trip to Seattle, I came across a place where you could actually credit your parking fee to your mobile phone.

Danal is the dominant mobile commerce provider in Korea where 80% of all mobile users use mobile payments and up to 60% of all online content purchases are added to mobile phone bills.

This is a natural fit for mobile operators. They have established credit trust relationships with their customers and is a simple method for them to compete with credit card companies which are more onerous for users to input into a website for small dollar amount items. Just about everyone knows their telephone number and billing zip code by memory, few know their credit card number, let alone security code on the back.

Furthermore, operators will tend to accept perishable products like intellectual property – songs, software – which are difficult to resell (reducing the threat of fraud and theft). No doubt, in any dispute with merchants, the merchant eats all the costs. It will be a long time before they accept tangible products like food and furniture which would make them and their customers a target for theft and abuse. Something that mobile operators plan to avoid.

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