Obopay Inc. is trying to simplify its payments system with text messages.
The company has refined a tool that can initiate transfers with texts, one of several efforts Obopay is making to shed the inefficiencies of its original consumer-facing mobile payments system and create a faster, simpler system that banks can offer to both consumers and small businesses.
The new text interface allows users to make payments from cards to recipients who have accounts at participating Obopay banks. The process starts with the sender typing an instruction to a text-message short code. Moments later, the sender receives a text message with a link to the bank's website, where the sender inputs payment information. This process does not need a special prepaid account or a dedicated app, as earlier approaches to Obopay's system required.
"We marry the smartphone experience … with the simplicity of text messages," said David Schwartz, Obopay's vice president of product and corporate marketing. "It starts with something that everybody is really familiar with … and it completes the process on the smartphone [browser]."
Many mobile banking and payment systems allow some degree of text message interaction, and although few make it the focus of the experience, Obopay said that the simplicity and familiarity of text messages will be an advantage in encouraging user adoption.
"The technology has come a long way," Schwartz said. "People have really become accustomed to that text interface."
The text-payment interface is one of several new features the Redwood City, Calif., company is set to announce Tuesday to streamline its system, which Obopay first launched in 2006 to allow consumers to exchange money through their mobile phones. Over time, Obopay began working with banks, and in May it shifted its business model to focus on banks and credit unions instead of consumers.
Obopay's system had long handled payments over the automated clearing house network, but Obopay determined it needed a faster way to send payments if it wanted the system to appeal to banks.
In September, Obopay announced a deal with First Data Corp.'s Star debit network to allow for instant payments from an account connected to Star. Obopay has also set up a similar link to Fidelity National Information Services Inc.'s NYCE network.
Obopay's system also allows payments funded from Visa Inc. and MasterCard Inc. credit cards, which would also move faster than ACH payments.
Obopay has designed a Web interface that lets financial companies and their customers control which system handles each payment. Consumers and businesses can also go online to set up the text message short-code that initiates the hybrid text/mobile Web payment.
For example, the nonprofit Haiti Outreach can receive donations sent to 48510 with the keyword "Haiti." "Anybody can get their own keyword and accept a debit or credit card payment," even individual consumers, Schwartz said.
Schwartz said his company's efforts are already being noticed by financial companies, and that Mountain America Credit Union in Utah is among the first that will offer the full suite of Obopay's new features. Mountain America did not return a call requesting comment.
Beth Robertson, the director of payments research for Javelin Strategy and Research of Pleasanton, Calif., said that with its latest set of updates, Obopay is attempting "to remove barriers to transaction activity."
It is necessary for Obopay to address every aspect of its payment system that banks might perceive as a hurdle to use, she said, since mobile payments are still a tough product to sell for many banks and credit unions.
"The receptivity on the part of the bank is really going to vary," she said. "Banks are entering mobile banking cautiously, and anything related to payment and transfers is something they are really evaluating carefully."
Obopay must also be clear to end users how the process works and especially how it handles security, a major concern for consumers.
"Do I have to enter [payment information] every time that I make a transaction, or is it stored somewhere?" she said. If it is stored, consumers may then ask, "where is that information stored?"
Aaron McPherson, a research manager for payments at the Framingham, Mass., research firm IDC Financial Insights, said that while Obopay has made significant progress with the behind-the-scenes issue of payment speed, the customer-facing interface still requires some work.
In particular, he said, the Web form for the mobile payment experience is extremely detailed, requiring users to enter their names, card numbers, and full billing address.
"It will work technically, but I don't think people will jump through this many hoops — and they shouldn't have to," he said. "Obopay's own platform is being used for MasterCard's MoneySend, and that's easier than this."
Another issue McPherson had is that the system does not work as well on BlackBerry phones as it does on iPhone and Android handsets, since McPherson's BlackBerry would not let him open a link in a text message in the browser.
There may be an audience for this system, McPherson said, but it would require a bit more polish.
Though many people sent money via text message to help victims of the earthquake in Haiti this year, McPherson said the key to that program's success was that there were no forms to fill out: the donation was listed as just one more charge on a donor's phone bill. "You could send one message, and you were done," he said.
One thing Obopay could do to improve the experience is make it clear how to use the Star and NYCE connections with its mobile interface, so that recipients are not left waiting several days to receive their payments, McPherson said.
"This works a lot better if it's real time," he said. "It's still kludgy, but at least it gets there fast."
