PayPal Launches Its First Mobile Service on a Downloadable Application

In its first move toward a software application for mobile commerce, PayPal Inc. has launched its mobile-payments service on a new product from Sprint Nextel Corp. The Sprint product, called MyMoneyManager, is a downloadable mobile wallet allowing customers to perform banking functions from their handsets. So far, regional banking companies BB&T Corp. and IBC Bank, as well as PayPal, are participating in the wallet, which went live March 30 but has not yet been officially announced. For now, MyMoneyManager is available on some 18 phone models from four manufacturers, including LG, Motorola, Samsung, and Sanyo. Phones must be Java-enabled and support https with 128-bit encryption . With PayPal, Sprint subscribers who are also PayPal account holders can send money to other persons anywhere in the world who have either an e-mail address or a mobile-phone number. Recipients get a voice and text message letting them know someone has sent them money; those who don't have an account with PayPal must create an account to access the funds. The new service represents PayPal's first effort to rely on a downloadable software application to perform transactions and its first product link with a mobile carrier. But it may not be its last. “Generally, we don't do exclusive relationships,” says Menekse Gencer, director of business development for the San Jose, Calif.-based processor's mobile group, referring to the possibility the company will seek similar arrangements with other mobile operators. “Our intent is to make PayPal ubiquitous on the handset.” Two years ago, PayPal introduced PayPal Mobile, in which users tap out short-message-service (SMS) transmissions to instruct PayPal to switch funds from sender to recipient. Last summer, PayPal followed up with PayPal Mobile Checkout, a service that lets users buy goods from online retailers' mobile Web sites. Gencer says the use of a software application in the phone?which in the case of the Sprint product comes from mFoundry Inc., a Sausalito, Calif.-based supplier of m-banking software?will provide “a richer customer experience” for mobile users. The application can be accessed from the phone's home page, and a menu item for “send money” launches the PayPal service. In this way, the software automates the functions that otherwise would rely on text messaging, an operation some consumers find tedious and time-consuming. “People who aren't familiar with the syntax of texting may like the application,” she says. Still, Gencer denies PayPal has launched the new service out of any disappointment with adoption rates for the text-based PayPal Mobile service. While she refuses to say how many users PayPal Mobile has attracted, she says users of the service are “very loyal” to it. “The people who use it use it quite a lot,” she says, adding that the average transaction ticket is running higher than PayPal expected it would. Rather, she says, the introduction of an application-based service is intended to draw new users to the mobile service. “The distribution through carriers will bring in new customers,” she says. “The rich client experience will resonate with a large client segment.” The service with Sprint comes as competition in the mobile person-to-person payment business appears to be heating up. For example, PayPal rival Obopay Inc. last month changed its mobile service to allow users to send money directly out of their checking accounts into bank accounts held by recipients, including persons who aren't Obopay customers; Obopay also struck a deal for the service to be adopted by customers of Citigroup Inc.'s Citibank unit (Digital Transactions News, April 2).