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Seeking to distinguish itself in a growing crowd of mobile-payment processors, Obopay Inc. saw its application go live this week on Amp'd Mobile Inc., a wireless network aimed at the youth market. This development follows by one week an agreement the Redwood City, Calif.-based startup struck with ViVOtech Inc. that will connect its person-to-person payment service to the promising trend of contactless payments at the point of sale. The mobile-payments business has attracted a slew of startups and established processors in recent months, including PayPal Inc., which launched its PayPal Mobile person-to-person service in April (Digital Transactions News, April 6). Started only last year, Obopay is talking to other mobile operators about supporting its service, which can be used via short-message service (SMS) transmissions, through the company's Wireless Application Protocol (WAP) site, or through an application users download to their phones. “The tier-one operators are all thinking about how to enable us,” says Howard B. Gefen, executive vice president for marketing and business development at Obopay. Amp'd Mobile, one of a number of so-called mobile virtual network operators (MVNOs) that resell cellular service from the major carrier networks, represents what Obopay sees as an especially promising conduit for its application. Gefen sees them as less conservative than the wireless carriers in their approach to new services like mobile payments. “It's a new category for [the carriers],” he says. “They're cautious, and they need to figure it out.” Obopay charges users 10 cents per transaction to send money from prepaid accounts and 2.5% plus 30 cents for transfers funded by a credit card. Gefen says the processor shares with wireless networks a percentage of its fee revenue, as well as a fee for each Obopay account using the network, though he won't be more specific. At the same time, he says, the company stays away from processing payments for content downloads, for which carriers get fees exceeding 30% of the sale in return for handling payment through their billing systems. Obopay so far has signed up account holders in the “low thousands, mostly friends and family,” says Gefen, who adds the company has not yet begun full-scale consumer marketing. The company is promoting signups now with an offer of $5 for each account as well as $5 for each account referred by current users. Each Obopay accountholder receives a MasterCard debit card linked to the funds in his account and issued by First Premier Bank, allowing users to get cash from ATMs and buy products in stores. Obopay will establish a further link to physical merchants next year when its application is expected to become part of the wallet software developed by ViVOtech for contactless transactions conducted with mobile phones. ViVOtech's wallet was part of a recently completed, nine-month test of contactless payments using cell phones and near-field communication (NFC) chips in Atlanta. Under the agreement with ViVOtech, Obobpay's application will run separately to start with, then will be integrated into ViVOtech's software in a later phase, which Gefen says the company hopes will come by the end of the first quarter. In this second phase, Obopay users will be able to pay merchants by specifying their accounts within the wallets on their phones. Transactions will be treated as prepaid debit payments on the MasterCard network. Ultimately, usage will depend on the extent to which NFC-enabled mobile payment rolls out. But Obopay is optimistic. “We think NFC is the way to go,” says Gefen.
