US Operators start cracking down

Cingular: Aggregators offering PayPal will be shut off - Payments News

Cingular has tightened control of its aggregators' billing practices by prohibiting credit card, PayPal-like services or any billing service other than the Direct Bill option. According to a memo sent to Cingular's aggregator partners and obtained by FierceMobileContent: "...the current Cingular Wireless Customer Experience Policy...prohibit[s] the options of credit card and/or Paypal services for payment of content to Cingular Wireless customers. Please be aware that Cingular customers should always and only be offered the Direct Bill option for payment of content and/or services. Any programs that offer Paypal and/or credit card options to Cingular Wireless customers will be escalated and reviewed by Cingular Wireless for possible immediate shut off." While Cingular wouldn't comment on the leaked memo, Jay Emmet, president-Americas for mBlox, said, "We are aligning ourselves with Cingular's new requirements."

The crackdown on third-party billing options comes close on the heels of PayPal's recent launch of its Text2Buy program, and the memo references PayPal by name more than once. However, PayPal says that program enables users to purchase hard goods like t-shirts, posters, etc. and not "content" or a "service." The crackdown then mostly speaks to the larger issues of revenue leakage and the potential bypassing of carriers' billing mechanisms as off-deck content continues to gain momentum in the U.S. "Revenue leakage" refers to lost revenue from the sales of content or services because of faults in billing procedures. Obviously, being the sole billing mechanism gives Cingular a greater ability to stop revenue leakage. T-Mobile's policy on third party billing has always been that they are cool with it, for the most part, as long as they still get a cut--they charge their aggregators a small percentage for any transaction that goes through a third party.

Stay tuned to FierceMobileContent for more on Cingular's new policy on third-party billing systems.