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.

A Business Model for Open Social Networks

Lately I have been very much interested in Lovdbyless and Insoshi for developing my own social network because they are based on Ruby on Rails, which make them super easy to extend and modify. However, there is one missing feature which I truly need. I need an integrated escrow service, as I explained in my previous posts. By exposing my need, I may be introducing a possible business model for these open social networks and I will briefly describe what I mean.

Based on current trends, we will be seeing many more new vertical social networks that revolve around a single topic, product, or service. We will also be seeing many more crowdsourcing sites. It is therefore easy to conclude that we will be seeing more crowdsoucing, vertical social networks. It is also to be expected that people will want to conduct shopping at these new sites. Some are coining these new types of sites “s-commerce” sites.

From an entreprenuer’s point of view, I would like an open social network to provide me an integrate escrow service that would appear seamless to my buyers and sellers. I would also like for the cost of the service to be under a dollar. The ultimate cost of the service is payed by the buyers, and I want this cost to be minimal to encourage a greater exchange of goods at my site. I would not mind this fixed fee, and perhaps a low percentage-based fee would be okay as well.

We now ask how an open social network could benefit by meeting this need. First, these types of sites can appeal to a global audience. Depending on the product to be sold (and crowdsourced), there is the possibility of a huge international exchange of goods between individual buyers and sellers. Read my earlier short story about this that points you to a story about the growing number of individual Chinese sellers. We therefore could be talking about billions of transactions.

Second, each transaction would be dependent on the escrow service for fulfillment, for both the buyer and the seller. If the escrow service collects even just a few cents for each transaction, the revenue would be tremendous. One possible service which may be seeing the potential in providing an escrow service is Alipay, which is providing such a service to the China market.

Here are some things which would make me choose to use your escrow service over another:

  1. The escrow service is integrated seamlessly into my social network. This provides a tight coupling with all the stored private messaging occurring on the site. It is during these conversations that the order details are ironed out and will serve as evidence of what was agreed upon in case of arbitration.
  2. It gives me a share of the escrow service fees so that I can profit, as the owner of the site. This would give me a very big incentive to keep the site running and to keep promoting it.
  3. The escrow service fees are below $1 to encourage more s-commerce on the site and a greater variety of products. Some products have very low margins and adding a very big fee for the escrow would not be good. A fee based on a percentage of the product price would also be okay, and this would encourage the sellers to keep the price down on their products.

Please let me know if you find this service for me or if you plan to develop one yourself and what is your expected date of availability. I am so eager to start using it because I may have the right product for it.

Social Network Escrow Service

This topic is quite extensive but I will keep my comments very brief. I am have much more information about what I write here and I may later include this extra stuff later. If not, feel free to ask me and urge me to continue to share more information about this.

First of all, I will be creating my own social network, possibly with Insoshi or with LovdByLess because they are both based on Ruby on Rails and are therefore easy to extend and modify. I haven’t decided which to go with. I would prefer the one with the most active developers on it. They are both open-source. LovdByLess seems to be further along. Lately, Insoshi has been getting a lot of attention and funding and the founder is the author of RailsSpace, which I first installed on my server and worked great.

After I create my social network, I have the need of allowing my user to sell “stuff” to each other. To safeguard, both sellers and buyers, I would like to integrate an escrow service. During the private messaging between buyers and sellers the details of an order are ironed out, such as pricing, shipping, delivery date, any additional customizations, etc.

After the details are ironed out, the buyer uploads the asking price to the escrow service and the seller sees the funds are now available to start production and/or delivery of the item. The seller know this is a guaranteed purchase because the funds have been allocated for this order alone. The buyer knows this is a guaranteed product because the seller must delivery the product according to the stored private messaging that has occurred prior to the order. Anyway, there are a whole lot of other benefits an escrow service gives, but I won’t get into that here.

What is interesting is that if you read about some trends with Web 2.0, you will see how providing an escrow service to other social networks would be a very lucrative business. My thing is that I am not interesting in developing an escrow service myself, because I do not want to deal with so many regulations concerning the privacy of payment information.