Obopay vs. PayPal: Ease-of-use vs. cheap to use


Obopay vs. PayPal: Ease-of-use vs. cheap to use

The battle is on for mobile money transfers as eBay's PayPal, the online payment veteran, is taking on the plucky, young up-start, Obopay for domination in the budding space. Just this past week PayPal announced its inclusion in Sprint Nextel's MyMoneyManager suite of mobile financial services. PayPal and partner mFoundry are on deck to provide banking services for Sprint, making the carrier the first major operator in the U.S. to enable mobile money transfers between subscribers. The battle could hinge on ease-of-use vs. price points.

Obopay made the headlines today with a new president for the U.S. business, Gregory Holmes, who has spent 20 years in the payments industry. Yesterday Obopay announced that Indian telecom Essar had bought a strategic stake in it for an undisclosed amount. The news follows a $20 million fourth round of venture capital for Obopay.

Until recently both Obopay and PayPal have had somewhat similar approaches to enabling users to transfer money through their mobile phones: Users needed an account with Obopay or PayPal in order to send money or access the money sent, and to sign up for an account you need a credit card. Users can send the money via SMS, WAP or an application residing on their handsets.

Obopay exacts a 10 cent sending fee per mobile money transfer but those receiving money do not need to pay. Users who fund their accounts from their credit or debit cards have to pay a fee of 2.5 percent.

PayPal's deal with Sprint for its MyMoneyManager suite brings a nearly free mobile money transfer solution to Sprint subscribers but it may not be as easy to use as Obopay. MyMoneyManager requires a data plan. Sprint charges users the standard rate for text messages, but no additional fees apply, according to the carrier.

Earlier this month Obopay started to allow its users to send money to other people directly out of their checking accounts. Recipients no longer need to have Obopay accounts to access the money either. Those who receive money can provide their routing and transit numbers from their mobile phones allowing the money to go directly into their accounts, too.

So, ease-of-use or cheap to use: Who wins the mobile money transfer market? -Brian