New Services Allow Payment Through Text Messaging

LOS ANGELES — Several tech companies have launched new services that allow consumers to pay for goods and services through the cellphone via text-messaging technology.

The wave of new options are helping businesses find ways to electronically facilitate transactions at a time when more conventional-styled credit card processors are becoming more picky about who their business clients are. The options also come at a time when consumers are more technologically adept.

Palo Alto, Calif.-based Obopay Inc. began enrolling consumers in its wireless-payment service this month; Redmond, Wash.-based TextPayMe Inc. launched a service last year allowing people to send money to each other through text messaging; and EBay Inc.’s PayPal unit this month introduced a service called PayPal Mobile that allows consumers to send payments through cellphones.

With TextPayMe, consumers can transfer money between online accounts that can be linked to a credit card or a bank account by sending a text message to smstextpayme.com, with the word “pay,” a dollar amount and the phone number of the recipient. After the first party sends the message, the second receives a message saying “You got money.” The sender then receives an automated call requesting a PIN to verify the charge. The company says it has 900 customers who, for the time being, don’t pay a charge for the service.

PayPal Mobile accounts are linked to a credit card or bank account, and wireless payments are deducted from or credited to one of those options. In most cases, the transactions are free. PayPal Mobile is available to all of PayPal’s more than 100 million registered users. So far, the company has not disclosed its fees for the service.

At Obopay, which only works on Cingular phones so far, users must register at the company’s website and download free software to their cellphone before they can send payments. Recipients receive a message saying they have cash from a particular phone number and are directed to register at the website. Obopay charges 10 cents per payment to send mobile payments to another person

Obopay also issues a MasterCard debit card linked to the mobile-payments account, so consumers can use an ATM to withdraw cash that has been text messaged into the account. While the company charges 10 cents to send payments, there is no fee for receiving payments. The company won’t say how many consumers use its service.

Theoretically, adult companies could eventually try out these services, although PayPal has traditionally shunned adult transactions.

Worldwide, financial transactions involving cellphones are expected to climb to $37.1 billion in 2008 from $3.2 billion in 2003, according to a study last year from Arthur D. Little, a management consulting firm. Wireless payments have already taken off in Europe and Asia, where many consumers pay restaurant checks and public transportation by text messaging.

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