Firm Helps Consumers Pay for Smartphone Upgrades When Carriers Won't

Go to Asia or places in Europe and you’ll find consumers baffled by the American cell phone market.

“Your new iPhone is only $200?” they might ask. “What, you must stay with the cell phone carrier for two years? Can’t you just get a month of cell service at the 7-Eleven?”

The cellular contract system where buyers get a free or discounted phone if they lock into a contract with their carrier does not exist everywhere. And as the market matures and more people discover they don’t want to wait two years between phone upgrades, the prepaid, no-contract model is gaining traction in the U.S.

But this creates a problem: How does the consumer easily afford an unsubsidized smartphone when it can often cost up to $500 for the phone?

BillFloat has an answer. Just like a car lease, it allows consumers to pay for their smartphone over time with a term that usually runs from six to 12 months. The buyer can pay off the remaining balance at any time without penalty, and after they have paid the balance the phone is theirs to keep like a lease-to-own program.

“Everybody wants the best phone, but they might not have all of that money to pay for it right away,” Robin O'Connell, VP of business development for BillFloat, recently told MobilityTechzone. “We really provide a flexible payment option for the consumer.”

This financing option will become increasingly important as more U.S. consumers decide on contract-free prepaid cellular, and also just to keep pace with innovation from the likes of Samsung and others.

“What we could see is more of a model shifting towards what happens in Europe, where you don’t necessarily go to the carrier to buy the phone,” he noted. “You buy the phone and then the carrier is just there for the service.”

BillFloat started with the simple proposition of giving consumers more time to pay their bills, and they now work with 10 of the top 12 wireless carriers to help consumers pay their cellular bills more easily. Then a couple years ago, the company got into the business of helping people buy smartphones.

The next piece of the puzzle, according to O'Connell, is helping small businesses offer phones to consumers instead of just the carriers. The company is launching a new service to help dealers purchase the smartphones that it expects consumers to increasingly buy unsubsidized and off-the-shelf. The new service is a small business loan for smartphone inventory, basically.

“We like to think of it in terms of the whole lifecycle,” he told MobilityTechzone during the interview. “Help the store buy the phones from the carrier. Help the store move the phones with the consumer. Then help the consumers stay on track with the bill payments to the carrier.”