Last October, Obopay and Citi announced a pilot to tie the Obopay mobile P2P payments capability directly to Citi DDA accounts. First Annapolis recently tested the now live capability by using text messages (SMS) to send and receive payments from a Citi DDA via Obopay to and from another Obopay registered user outside of the Citi customer base. We should note, the service is also available in a WAP version, accessible via a mobile web browser, but our review was limited to the SMS application.
In the case of the Citi checking account, the funds were available for use in the checking account instantly. The non-Citi Obopay customer still experienced a 2-4 day delay in withdrawing funds from the Obopay account to a non-Citi DDA account. We should note that Obopay provides an option to open a pre-paid MasterCard (with fees) that enables non-Citi account holders to access the funds immediately.
Our point is not to promote Citi or Obopay, but to highlight industry efforts that advance the Mobile P2P experience and truly remove friction from the consumer facing process. It literally took less than three minutes for the Citi bank account holder to activate the Obopay functionality and make their first transaction. Upon initiating the transaction, the sending party received an automated call on their cell phone that required a PIN to authorize the transaction. The money posted to the receiving account a few seconds later. Costs for the transactions initiated from the non-Citi account were $0.25 to the sender and free to the recipient. Citi is waiving fees until April and will institute a similar $0.25 sender fee for transactions less than $50 and 1.5% for amounts over $50, which is notably cheaper than most merchant discount rates available to small business owners.
There are still many questions about Mobile P2P such as the willingness of the average consumer to trust the SMS channel with financial transactions, the fees they will be willing to pay, the process performance at scale, and the security being tested against sophisticated fraudsters. Obopay imposes very low transaction limits for new accounts that could be a turn-off to some, though they claim that limits may be adjusted based on specific account usage patterns. However, it cannot be denied that sending $20 to a friend is now as easy sending the following text message (command, cell number, and amount): send 555123456 20
The late night trip to the ATM to get cash to pay the baby sitter could become a thing of the past.
