What If Obopay Cannot Provide An API?

In my previous post Obopay For Businesses I talk about why online merchants need an API to interface with Obopay. In Why Micro-Retailers Need Mobile Payment Systems I also talk about why I believe mobile payment systems are going to flourish on a global scale.

My question now is what if I cannot get the help from Obopay that I seek? Will I turn to another mobile payment system? Well, I am fond of Obopay. I like their website. I have seen a video interview of CEO Carol Realini and she is very likeable. It seems they have a very noble motivation for providing this service, to reach the unbanked and enable them to participate in the global online economy. Whatever reason for not being able to help me, I do not think they willfully want to burst my bubble. They may be too busy or focused on another aspect on which they forecast the most growth.

Anyway, if I stuck with this provider for mobile payments, what could I do to automate the payment process so that I would not need to manually login to Obopay or manually send out text messages? The answer is a GSM modem attached to my server.

A GSM modem uses a SIM card and a real cellular service provider tied to the SIM card. It can function like a normal cellphone but in addition can be automated, since it is hooked up to a server running custom software. In my case I am interested in automating the text messaging to and from Obopay.

So here is the scenario. A buyer sends an Obopay payment to the cellphone number associated with my GSM modem. Obopay sends a notice (in the form of a text message) of the payment to my GSM modem. My GSM modem forwards this information to my custom software for recording and order fulfillment.

When a buyer receives the goods, the buyer notifies my system to release the funds to the seller. My custom software then uses the GSM modem to send an Obopay pament (in the form of a text message) to the seller. This completes the loop from buyer to seller.

Now my problem is finding the right GSM modem and getting someone to program the custom software. The other problem I might face is ascertaining Obopay will allow this commercial use of their system. I am confident they would because I would be promoting the use of their system. I would publicly promote Obopay on my website as a way to build user trust in my preferred payment system.

Why Micro-Retailers Need Mobile Payment Systems

A micro-retailer is an individual who intends to sell goods directly to consumers with few or no middlemen. A typical micro-retailer uses a third party website to host the catalog of his goods, such as eBay, Etsy, CafePress, Zazzle, etc. Many typical micro-retailers are based in low-income countries where the actual manufacturing of the goods happens. These micro-retailers therefore have access to many products at wholesale prices. Some of them even have the skills and materials to produce the products themselves. Fast Company wrote an excellent story about micro-retailers.

It is interesting to note many of these countries have poor banking systems and many people do not have bank accounts. So this begs the question, how can more individuals in these countries participate in micro-retailing when they do not have an account from which to deposit or withdraw money?

Enter modern mobile payment systems, such as MoneyExchange and Obopay, among many new ones popping up all the time. They offer services by which any seller or buyer can bypass the need for having a bank account. Here is what I understand about them.

An individual creates an online account at one of these services. Funds can be deposited to this account through normal means such as money transfers from banks, credit cards, etc. An individual without a bank account or credit card would pay for an ATM card at a local convenience store with cash. The ATM card is linked to this individual’s online account. Subsequently, the individual can deposit more money into the same ATM card. Money withdrawals happen at the ATM machines.

So the online account and the ATM card work hand-in-hand. When someone deposits or withdraws money to the online account, the same is reflected on the ATM card, and vice-versa.

Real transactions happen when one online account holder transfers money to another online account holder. In these mobile payment systems, these transactions are initiated on a mobile phone, typically via text messaging.

So why do micro-retailers need mobile payment systems? Because they typically live in countries with no banking systems. These are the micro-retailers who have been untapped. They have access to raw materials and manufactured goods at or below wholesale prices. I would love to buy more goods from these people because they could save me money. I don’t want to pay the middlemen any more than I need to.

The next question is: how does one tie their online catalogs with these new mobile payment systems? An online shopper would see the option to pay by mobile, during the checkout process. Perhaps at that point the shopper would be given a unique code and total amount to enter into the text messaging going to the payment system. The system would immediately respond with a confirmation payment code to enter into the website to complete the checkout process.

Do today’s mobile payment systems support this kind of interaction? I hope they do very soon because I have an immediate need for this to occur. I truly believe mobile payment systems are going to be popular on a global scale, especially because they bypass the limitations of today’s banking systems. I welcome your remarks on this very much.

Obopay For Businesses

I am thinking out loud about this right now so please correct me where I don’t make sense or have missed something important. I am thinking about how a business could use Obopay to promote peer-to-peer payments. This is very different from the normal usage of Obopay where a business takes direct payments through Obopay from its customers. Peer-to-peer payments are theoretically made directly from one customer to another.

In my scenario, I have a website that promotes peer-to-peer transactions for a product or service. The product or service is provided from one person to another. This follows a current trend called crowdsourcing and also social e-commerce (s-commerce) where individuals called micro-retailers are selling to other individuals.

My websites promotes these kinds of interactions by providing an escrow service which reinforces the trust between buyers and sellers. Like any other escrow service my site will hold the funds of the buyer until the goods or service is delivered to the buyer, subsequently releasing the funds to the seller.

For this kind of process to occur, a buyer would use Obopay to send me the funds. The buyer would not send the payment directly to the seller. My system would be alerted about the Obopay payment which would also contain some information about the purchase so I can reference the buyer, seller, and purchase details. The buyer would notify my system when the goods/service are delivered, then my system would make a payment to the seller using Obopay.

So where is the missing piece for all this to occur? Well, a buyer can easily send his payment to me using Obopay. I can also use Obopay to send the payment to the seller. What is mssing is the interaction between my system and Obopay so as to automate this processrather than rely on today’s manual process of logging into Obopay.

The automated piece would provide two pieces:

1. Obopay would alert my system, via an API, about a payment made to me. I would not need to login to Obopay to realize someone made a payment to me. The alert message would contain the minimum purchase information with which I can reference the rest of the purchase details, such as buyer and seller. Behind the scenes, my system would allocate this money for this purchase alone.

2. My system would automatically login to Obopay to make a payment to the seller. This would occur when the buyer notifies my system that the goods/service has been delivered. Presently, I would need to manually login to Obopay to forward the funds to the seller.

You may be thinking about how I would make money on all this. One possible way would be for me to take a small cut from the funds before forwarding the funds to the seller. I don’t really like this, personally, because I hate to cut into the profits of my users. Since Obopay is charging $0.25 per transaction, that would already amount to $0.50 for the funds to go from buyer to seller. Fortunately, there are other ways to make money.

Anyway, my proposition to Obopay still stands. Please provide an API, but not just for my sake, in the case of my wanting to build my own escrow system. An API would also benefit the common online merchant who wants to take payments via Obopay and wants to automate the process as opposed to manually logging in to view the incoming purchases.

I hope some of this make sense to someone. I hope someone at Obopay is paying attention. Thank you!

A Proposition For Obopay or MoneyExchange

If you have read some of my previous posts you may already know about my need for an escrow service to support the growing number of micro-retailers who are selling to other individuals worldwide. Fast Company did an excellent story discussing this trend among Chinese micro-retailers.

It seems to me one of the primary concerns about building such an escrow system is the overhead for customer service and also in the event of arbitration between the parties. I can see how this could get expensive to support. An ideal escrow service would need to keep a record of all the communication between the buyers and sellers and handle all the necessary automatic notifications to either party for a smooth transfer of goods and services.

So now my thinking is to handle all the customer service and partner with a service who can simply “park” the money in an escrow without having to handle the communication between sellers and buyers. This partner would provide to me the developer’s API so that I can tie the alerts and notifications to my system. These would include such information as money received, amount received, to and from accounts, etc.

One such partner I am considering is Obopay.com. They can handle the transfer of money for 10 cents a transaction. That is cheap and very attractive for global micro-retailers. The idea would be for buyers to use Obopay to send my system the purchase amount. My system would receive a notification from Obopay containing all the transaction information. My system would then alert the seller that the funds were received for this purchase so he can go ahead and fullfill the order. When the buyer receives the goods, he notifies my system. My system then uses Obopay to send the funds to the seller.

If there is any arbitration needed between the parties, my customer service would take care of that. Obopay would therefore not need to get into the business of building an entire escrow system. If any buyer needs a refund then I can use Obopay to send back the funds to the buyer. From Obopay’s viewpoint, they would not need to change their business model.

There are therefore two missing pieces for this partnership to occur. First, an API from Obopay. Second, international support. I am especially targeting the United States and China. I read some good news Obopay is expanding into India. However, to really explode this kind of service, Obopay needs to be available worldwide and provide third party sites with an API.

I truly hope Obopay can foresee the potential in catering to micro-retailers. I am building a site where micro-retailers can sell their goods. I just need the right kind of payment system that does not add so much overhead costs and works internationally (or at least the major countries). Other services I am considering are mCheck.com, CitiMobile and Revolution Money Exchange.