Cell phones are getting so smart,why not let them pay the bills? That’s PayPal’s reasoning with an upcoming service that will let its customers use text messaging on their phones to make payments.
PayPal Mobile, now in testing with a planned U.S. launch within several weeks, will let people transfer funds from their PayPal accounts to another person. The payer will text message PayPal the transaction amount and the recipient’s phone number, and then PayPal will contact the recipient with details on how to claim the payment. If a recipient isn’t a PayPal member, he or she would have to create an account to receive the money.
The eBay subsidiary says it’s also working with some merchants on a new system that will let customers make purchases by mobile phone. Merchants will place codes on product advertisements that might appear on a bus or billboard or in a magazine; the buyer will make the purchase by text messaging the product code to a phone number on the ad. The merchant ships the product to the buyer’s address on record with PayPal. PayPal isn’t the first to think of cell phones as wallets. Visa recently launched a pilot program at Atlanta’s Philips Arena, home of the National Basketball Association’s Hawks and the National Hoc- key League’s Thrashers, that lets its credit-card customers with specially equipped Nokia phones buy food and drinks by waving their phones near a reader.
PayPal is the king of person-to-person online payments, with a stringent verification process already in place. Bill Ho, an analyst at Current Analysis, expects Google will soon get its fingers into the mobile payment business, and so will cellular carriers seeking new revenue streams.
PayPal says it’s working through some of the security challenges by requiring people to provide a PIN when they’re making purchases. Poor cellular coverage and interrupted transactions may not be so easy to overcome.