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PayPal prepares SMS payments

Text cash with your mobile

PayPal, the online payment company owned by eBay, appears to be gearing up to let customers send money by text message from a mobile phone.

According to a new section on PayPal's website, mobile phone users will be able to send a text message with instructions to send money to another person, using just a mobile phone number to identify the recipient. The recipient will be notified by PayPal of the transaction and will be instructed how to claim the money.

The site offers a number of examples of situations where someone would want to send money to someone else, such as to pay team or organisation fees or to buy a gift along with a few friends, settling the cost using PayPal Mobile.

PayPal Mobile will also include a service called Text to Buy. Advertisements in magazines or posters will include the words Text to Buy and a special code, the site says. Users must set up a PayPal account and activate their phones for the service and then they can send a text to the number from the advertisement to buy the product. PayPal calls the user back to confirm the order and then the product is shipped to the user.

The website doesn't say where or when the services might become available. So far, a Text to Buy special offers page on the website doesn't include any offers.

The Text to Buy feature is interesting but it may be some time before most mobile customers will use it, said Daren Siddall, an analyst with Gartner. "I think we're a long way yet from getting consumers to use the mobile channel for commerce," he said. Most mobile users still see their mobile phones primarily as a communication device, although they're beginning to experiment with using their phones to access internet content, he said. It will take another step for most users to become comfortable with the idea of buying products using their phones, he said.

In addition, mobile users will have to trust the company facilitating the payment, he noted. Existing PayPal users will likely trust PayPal for such services but other mobile users could be more comfortable with a major credit card company or bank facilitating payments, he said. "There's room for other payment providers who have established brands," he said.

PayPal isn't the first company to offer such services. TextPayMe is one company already allowing mobile users to send money to other people via text message. A number of trials have been launched in the US in places such as sports arenas where visitors can pay for food or other items with their mobile phones. In some European cities, people can pay for things such as parking tickets or items from vending machines with their mobile phones - in London it's possible to pay the congestion charge using a mobile. Motorola recently said it plans to introduce a mobile wallet service in the US. Some banks and credit card companies are said to be developing mobile-payment services.

PayPal already offers a limited Mobile service that allows customers to check and use their PayPal accounts through a browser on a mobile phone. Earlier this year rumours began to circulate about an expansion to that service, when PayPal ran advertisements looking for staff to run a new mobile group at the company.

This story first appeared on Techworld.com


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