Obopay - a pioneering service for consumers and businesses to purchase, pay and transfer money via any mobile phone. What do we know about the company background and its activity? What made someone to create this business? How did the idea arise and how is it working now?

Birth and incarnation of the idea

According to the words of Carol Realini, CEO of Obopay, the possibilities in mobile payments appeared when she was doing charity work in Africa in 2002. When she visited Kinshasa, capital of the Democratic Republic of Congo, the picture that appeared before her sight was as follows: sprawling slums, diphtheria, flickering power - a horrifying poverty in fine. In spite of the fact there was something unexpected. Almost everyone had a cellphone. And they used phones in the capacity of payment means. Are you wondering what was it like?

"I visited the prepaid-phone store, and there was a line of people trading bags of cash for cellphone minutes," recalls Realini, who was doing a volunteer stint in Africa after leaving her job as CEO of a software startup called Chordiant. Thus prepaid minutes functioned as virtual money.

It was that moment when 57 year old Realini was struck by the idea that a mobile payment system like a gift card may be created to help people store cash in their phones and transfer it via the Web to other phones (if, say, you owe a friend some money) or use it to shop. She supposed that the system not only would make simple transactions quicker and easier but it could serve as a channel for humanitarian aid that seemed more efficient in view of local corruption and was to improve lives in the developing world.

In 2004, Realini wrote a $50,000 check to fund exploratory research, and in 2005 she launched Obopay with the help from investors including Susan Mason, general partner of Onset Ventures.

"I knew the business had global potential, and -- with the rising middle class in China, India and other regions of the world -- I thought this could be a really big success," Mason said by phone from India, where she was meeting with Obopay partners for a service being rolled out there.

The company took its name from the "obol," a coin used in ancient Greece, where people were often buried with one of the small silver coins so they could pay for the ferry across the river into Hades.

So Obopay was founded in Redwood City, California, in 2005. Next year the company with 76 employees introduced a service to work as an electronic agent to link cellular companies and banks so as to move money from checking accounts via cellphones. Carol Realini arranged deals with Verizon  Wireless (VZ, Fortune 500) and other mobile-service providers to run Obopay software on their phones. In the beginning of April Citibank announced that it will make Obopay's mobile person-to-person payment service available to Citibank checking account customers on a trial basis. Citibank is the first U.S. retail bank to try an integrated mobile payment service. Thus now the system is being tested. Currently Obopay partners with a South Dakota bank called First Premiere.

Idea on stream

Today is the time when cell phones are used to listen to the music, watch TV and video as well as browse web pages. Hence it seems inevitable that financial services are incorporated into mobile handsets.

"If we can use cell phones for communication," Realini remembered her thinking back in 2002 in Africa, "why can't we use them for banking?"

This insight motivated Realini to start Obopay. Since then, she has assembled a team of tech veterans from places like PayPal and Yahoo. The Obopay management team includes CEO Carol Realini, VP Marketing & BizDev Howard Gefen, CTO John Tumminaro, and CFO Pete Hosokawa.

The company raised $48 million in venture capital over three rounds, from Redpoint Ventures, Qualcomm, and Richmond Global Cellular.

"QUALCOMM believes that there is a tremendous opportunity in mobile payments, and we were impressed by what Obopay has to offer in terms of vision, execution and an experienced management team," said Nagraj Kashyap, director of North American operations, QUALCOMM Ventures. "We look forward to working with Obopay and driving mass consumer adoption of their innovative peer-to-peer mobile payments solution on the BREW® platform."

Obopay is both simple and cheap to use: Transactions start at a mere 10 cents. When a friend of yours decides to send you $20 you will receive instructions at once on your phone which are destined to show you how to sign up as Obopay user. After the registration is completed and the software downloaded to your phone, those 20 dollars can be sent to another friend's phone, to your bank account or to any store that uses Obopay. A special Obopay card may be ordered to withdraw cash from any ATM.

Obopay believes such kind of casual, personal transactions to constitute a large market. Instead of going to an ATM or writing a check you just press a few buttons on your cell-phone.

And the company is not alone. Richard Crone, founder of Crone Consulting, an independent mobile-commerce consultancy in San Carlos, Calif., pegs the number of so-called m-commerce companies at 67. The online payment giant PayPal, for instance, launched a service similar to Obopay, leveraging PayPal's worldwide base of 150 million accounts.

However the company works not only with individual consumers. It provides services to organizations either. Collective-Good, a ten-employee cellphone-recycling business based in Tucker, Ga., with revenue in the low six figures, found Obopay a convenient way to process its transactions. The firm pays its customers for their old cellphones, which are cleaned up and resold to used-phone brokers or for scrap. By using Obopay, CollectiveGood pays just 35 cents per transaction with a customer. On large orders, using Obopay can be cheaper than most other payment systems.

Some business customers even use Obopay to compensate low-paid, part-time employees. Chegg, a Santa Clara, Calif., company that runs a used-textbook business called textbookflix.com, uses Obopay to pay some 50 marketing interns on college campuses around the country.

"It's a very cheap way to move and track money," says Osman Rashid, Chegg's co-founder and CEO.

So, let's get an obol to pay

Obopay represents more than a mere payment service. Actually it is a prepaid debit card account that is enabled for mobile payment functionality. Such an approach is called by the company as "Obolizing" the account. Further other accounts will be available for "Obolizing". For example, a bank may "Obolize" its checking accounts, enabling them for mobile payment and mobile banking applications.

As soon as you successfully open and fund an Obopay account you receive an Obopay MasterCard Debit Card in the mail. You can use it to spend money in your Obopay account (or to take out cash at ATM's) at any point where MasterCard is accepted.

Well, let's start it. First, you need to create an account using the Obopay's web site, and then download an application to your mobile phone. In contrast to other mobile payment systems Obopay is not primarily SMS-based (although it optionally supports SMS). There is more convenience and functionality due to Obopay application software resident on your mobile phone.

There are several ways to load your funds into an Obopay account. You may link the account to an existing bank checking account, or you may use credit card. Besides you may go to "load network center" in your neighborhood and use your cash to fund the account. New users are given a little incentive that is entered into the Obopay account after registration for the service. Presumably by having to register the phone number you avoid some of the difficulties that PayPal had years ago when it offered similar "bounties" on new user registrations tied to email addresses (that can be easily obtained in quantity!).

Turn it to your advantage

Obopay is not a completely closed system. On having received money from an Obopay user you just go to the web site and have it direct deposited to your bank account, even without signing up for the service yourself unlike other services which require an account on both ends.

"Obopay's mission has always been to provide the best tools possible to conveniently get, send and spend money from any mobile phone," said Obopay Chief Executive Officer, Carol Realini. "Now we provide it directly from any bank account. This is a significant enhancement of our features, and one that is based on direct feedback from our users. We're excited to make Obopay even more useful to millions of Americans."

Users of AOL's AIM service, the largest instant messaging community in the U.S, can make payments directly from the AIM Buddy List feature. Free AIM Obopay plugin may be downloaded at the company site. It enables eligible AIM(R) users who have signed up with Obopay to link directly to their mobile payment account to quickly send or receive money. Besides users may add money to their accounts and check account balance and history right from the AIM service on their desktop.

The system also has an m-commerce payment solution for mobile merchants and application providers, named the Obopay Mobile Merchant Platform. With it your mobile phone transforms into a complete marketing, merchandizing and point-of-sale device for more efficient, real-time transactions. Cellfire, provider of compelling mobile promotions and coupons that can be redeemed via the mobile phone; and, remote purchasing provider, Xringer, are among the first companies to partner with Obopay to create new mobile commerce opportunities in advertising, entertainment, retail and search.

"Every business should have a mobile commerce strategy," said Obopay, CEO, Carol L. Realini. "With Obopay, customers can quickly plug in a comprehensive set of m-commerce capabilities into their digital applications to allow consumers to pay for what they want, whenever they want."

The Obopay Mobile Merchant Platform along with Obopay Checkout makes it simple and secure for consumers to purchase goods and services in real-time directly from mobile phones. Consumers benefit from easier transactions and thus drive more business to mobile merchants.

The company didn't pass over even young consumers of mobile services. It launched a Sponsored Accounts feature that allows individuals under 18 to benefit from the fun, convenience and security of sending and receiving money in real time via the mobile phone. Due to this option parents can open an Obopay account linked to his or her own mobile phone for their children. Youth may enjoy freedom of spending cash in a peculiar way and parents in their turn can get the tracking and control they need to ensure fiscal guidance.

Thus teenagers and schoolchildren with access to Obopay can:

• Spend their allowance more easily in a digital society; i.e. iTunes, Amazon and other popular sites;
• Have real-time access to emergency funds;
• Always have their lunch money;
• Learn fiscal responsibility

Obopay's consumer service, which is enjoying rapid deployment and consumer adoption in the U.S., allows mobile phone subscribers to send money, give gifts, pay each other and make purchases from their mobile phone. The comprehensive solution provides customers with a real-time, secure, mobile peer-to-peer payment service.

As you can see Obopay posses a great deal of useful and distinctive services destined to different kind of people with different needs and demands. The company keeps on driving for more innovations in offering its products. Little initiative originated just a few years ago is already bringing good results and the business goes on living...

Is it safe?

"A lot of what's happening in commerce today, particularly in Japan, is that the mobile device is the new Swiss Army knife -- it's a cell phone, a camera, an mp3 player, a wallet," said Jacob Greenblatt, director of corporate strategy at Discretix, a provider of embedded security for mobile devices. "It stores money on it, so security has a big role to play in terms of protecting that."

Realini hired high-level employees with experience in financial security -- including Obopay CFO Dave Johnson, a former CFO for PayPal and BancAmerica Securities -- to make sure its customers are protected. Its system red-flags the same type of suspicious transactions as credit card companies, and PINs protect the accounts the same way as a debit card would.

Mobile payment services across the globe use several methods. One of the most common is a server-oriented system used by Obopay that stores data on the server behind a firewall, Greenblatt said.

"Credit card fraud is a fact of life. There's no way to get around it; it's too enticing for people not to do it for the criminal element," Greenblatt said. "Mobile commerce is the same thing -- as soon as it develops a significant presence in the market, fraud will come."

Consumers will demand more protection, and the systems will become increasingly secure, Greenblatt said.

And the company is constantly seeking for more protection. On February 20 IDology Inc., an innovative provider of identity and age verification solutions, announced that Obopay had integrated its knowledge-based authentication solution.

IDology was selected by Obopay after the company carefully studied a number of identity vendors. Obopay appreciated its experience in the financial and mobile markets as well as the convenience and control IDology gives its customers to manage the verification process. In view of the fact that IDology may change its services on demand Obopay can count on easy and quick adaptation of its system to meet the rapidly changing needs of the mobile payments market. And since IDology's services are not based on credit data, consumers are not asked intrusive questions - or ones that are easy to answer when, for example, a wallet or piece of postal mail is stolen.

"Since mobile applications are really an extension of the Internet and its convenience and ease, the identity issue mobile payment providers face are the same as online providers," said John Dancu, President and CEO of IDology. "Being able to quickly and easily determine someone is who they say they are is an important part of the payment process and we are happy Obopay selected IDology."

In addition Obopay implemented iovation ReputationManager, iovation's device-based fraud management service, 'to reduce the risk of online payment fraud by enhancing its ability to proactively identify devices which have been associated with fraudulent activity.'

This integration allows Obopay to get deeper insight into the history of accounts requesting financial transactions. The technology makes it possible to avoid the necessity to collect any personally identifiable information (PII) or impact the user experience. iovation identifies devices which have been used to commit fraud and exposes hidden relationships between fraudulent devices and their accounts to help stop fraud regardless of the user's identity.

How about the idea's goal?

Speaking about Obopay mobile payment system, it would be incorrect to omit the fact that the kind intentions of Carol Realini to help people in developing world to improve their life didn't remain just the intentions. Moving gradually the company has already been thrown open for Indian population what should be valued. Obopay appointed Aditya Menon as chief information and technology officer for India "as part of an international expansion to bring mobile payments to banks, carriers and consumers all over the world."

"As we continue to build on our momentum in the United States, we are actively exploring new opportunities for mobile payments on a global scale. Clearly India is a great market, which drove our decision to invest there," stated Carol L. Realini, CEO of Obopay. "With his vast knowledge of India's mobile marketplace and strong industry track record, Aditya Menon is highly qualified to capitalize on the large and growing opportunity in India."

"What the iPod did for music, the mobile phone will do for money. With Obopay, people have convenient and affordable access to their money from any mobile phone. Our service, which will be provided through leading banks and telecom providers, will bring affordable financial services to every mobile phone subscriber-even those not currently benefiting from banking services today," added Realini.

Maybe in near future African paupers with mobile phones in their hands will be able to enjoy the blooming services born by the idea owing its origin to those people who traded bags of cash for cellphone minutes in Kinshasa.

Petrony, freelancer for Ecommerce Journal