• by Mark Walsh  @markfwal, October 29, 2009

Zong has become a popular payment option in the online games and social media space by letting people punch in their 10-digit mobile numbers to charge virtual goods purchases to their phone bills.

Now the Palo Alto-based company aims to make the process even more convenient by allowing users to link their phone numbers to credit or debit cards through a one-time signup on the Zong Web site. So instead of having to enter credit card information on a separate Web page for in-game purchases, users just enter their number and confirm a security transaction code sent via text message.

The move comes on the heels of rival payment service Obopay announcing that it will allow users to assign mobile phone numbers to credit or debit accounts as the company enters the online gaming arena to compete with the likes of Zong and Boku. To date, Obopay has focused mainly on enabling money transfers between people via text messages.

Both companies' steps to expand mobile payments highlight the rapid growth of the virtual goods business, expected to double to $1 billion this year, according to a recent study. For the new cadre of payment companies helping to power the virtual economy, the common goal is to increase sales -- and time spent playing games -- by making transactions faster and easier.

Zong boasts that its system, used in applications on social networks such as Facebook and MySpace and gaming sites like Gaia Online, already converts shoppers into buyers at 10 times the rate of traditional payment methods.

The company expects the new option to link phone numbers to any type of payment card will further boost conversions. That's because it will allow users to avoid the high fees that carriers charge customers for payments billed to phone accounts and the limits they place on the total amount that can be added to mobile bills.

Social networking site hi5 is among the first online properties to adopt the new service, dubbed Zong+. "The ability for our customers to bill purchases to either their mobile bills or their payment card of choice will be essential for driving transaction completion," said Rajat Kongovi, director of business development at hi5, in a statement. He added that it would allow the site to offer a wider selection of virtual goods at different prices and give users more freedom of choice.

When Zong+ may hit Facebook is not clear. But it could end up competing with Facebook Credits, the homegrown virtual currency that the social network has started testing as a payment option in applications on the site.

For its part, Obopay did not specify any gaming sites that have signed up yet for its payment service. But with $126 million raised from strategic investors -- including Nokia -- in the last few years, the startup has ample time and resources to build its business.