Virgin Mobile, C Spire testing handset financing programs

Sprint Nextel's (NYSE:S) prepaid brand Virgin Mobile and regional wireless carrier C Spire Wireless have been quietly testing handset financing programs, the carriers confirmed. Both operators are using the startup BillFloat to support their pilot programs, which are ongoing but expected to end within the next few weeks. The disclosures come a month after FierceWireless reported that Leap Wireless' (NASDAQ:LEAP) Cricket and MetroPCS (NYSE:PCS) both recently launched handset financing options.

Sprint spokeswoman Jayne Wallace confirmed that Virgin Mobile has "a very small test going on with BillFloat in one market" but that there is there is no other commitment beyond that. She said the test will end later in the first quarter and that any decision about whether or how to expand the program will be made at a later date. Wallace declined to comment on other details of the program beyond that.

According to a BillFloat website for Virgin Mobile, the program supports five smartphones, including the Apple (NASDAQ:AAPL) iPhone 4 and 4S, Samsung Galax S II and Galaxy Reverb and HTC Evo V 4G. For example, for the Samsung Galaxy S II, customers pay an up-front fee of $59 and then pay $49 a month for 12 months.

C Spire was more forthcoming about its handset financing plan. C Spire spokesman Dave Miller told FierceWireless that the company's trial with BillFloat began two months ago and will end in March. The trial is taking place in 12 retail locations across three of the carrier's markets. The program covers 11 devices. Customers can buy an iPhone 5 for $170.50 upfront and then pay $150 per month for six months, for example. 

"We're in the early stages of the trial program and are still analyzing data and results," Miller told FierceWireless. "BillFloat fills a need, primarily in the advance pay market, by providing a quick, easy and convenient way for consumers in our footprint to own a smartphone with payment terms that fit their budget."

In December MetroPCS confirmed it is working with Progressive Finance and BillFloat to provide handset financing options to its customers. Leap is working with Progressive Finance. Progressive Finance and BillFloat essentially cover the cost of the handset and make money via interest and repayment fees. However, neither company conducts a credit check; instead, both require only access to an active bank account.

BillFloat, a San Francisco-based startup, just secured $21 million in new venture capital financing from Investor Growth Capital and returning venture investors Venrock, FirstRound Capital and Baseline Ventures. BillFloat, started in late 2009, had already raised $16 million. 

In an interview with FierceWireless, BillFloat CEO and co-Founder Ryan Gilbert said that the company has around 700,000 customers, of which 40 to 45 percent are "mobile-centric." The company focuses on giving credit to customers for short-term loans that allow people to pay bills on time. He said that in mobile it "became more and more clear to us that credit in this context was a customer retention tool to carriers and other customers." He said he sees handset financing options as a form of credit that can be used to attract customers. Further, Gilbert said, the customers that BillFloat looks for and attracts are the kinds of consumers who rely on their smartphones as their main point of Internet access.

Customers apply online for BillFloat's service by providing basic personal identification information so that BillFloat can both ensure prospective customers are legitimate and to assess some measures related to credit that can be verified, such as how long they have been with their current employer and how long they have lived at their current residence. Once customers are approved, he said, a customer's phone can be picked up at a local retail store. Customers can then manage their monthly phone payments online. Monthly service plans are not included in the price and customers can only get one phone under each of BillFloat's SmartPay payment plans.

For more:
- see this release
- see this Bloomberg article
- see this TechCrunch article

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