PayPal Goes Mobile

PayPal, the online payment company owned by eBay, appears to be gearing up to let customers send money or order and pay for products by text message from a mobile phone.

According to a new section on PayPal's Web site, mobile phone users will be able to send a text message with instructions to send money to another person, using a cell phone number to identify the recipient. The recipient will be notified by PayPal of the transaction and will be instructed how to claim the money, according to the Web site.

The site offers a number of examples of situations where someone would want to send money to someone else, such as to pay team or organization fees or to buy a gift along with a few friends, settling the cost using PayPal Mobile.

PayPal Mobile will also include a new service called Text to Buy. Advertisements in magazines or posters will include the words Text to Buy and a special code, the site says. Users must set up a PayPal account and activate their phones for the service and then they can send a text to the number from the advertisement to buy the product. PayPal calls the user back to confirm the order and then the product is shipped to the user.

The Web site doesn't say where or when the new services might become available. So far, a Text to Buy special offers page on the Web site doesn't include any offers.

How Useful Is It?

The Text to Buy feature is interesting but it may be some time before most mobile customers will use it, says Daren Siddall, an analyst with Gartner. "I think we're a long way yet from getting consumers to use the mobile channel for commerce," he says.

Most mobile users still see their mobile phones primarily as a communication device, although they're beginning to experiment with using their phones to access Internet content, he says. It will take another step for most users to become comfortable with the idea of buying actual products using their phones, he says.

In addition, mobile users will have to trust the company facilitating the payment, he notes. Existing PayPal users will likely trust PayPal for such services but other mobile users could be more comfortable with a major credit card company or bank facilitating payments, he says. "There's room for other payment providers who have established brands," he says.

PayPal isn't the first company to offer such services. TextPayMe is one company already allowing mobile users to send money to other people via text message. A number of trials have been launched in the U.S. in places like sports arenas where visitors can pay for food or other items with their mobile phones. In some European cities, people can pay for things like parking tickets or items from vending machines with their mobile phones. Motorola recently said it plans to introduce a mobile wallet service in the U.S. and some banks and credit card companies are said to be developing mobile payment services.

PayPal already offers a Mobile service that is limited to allowing customers to check and use their PayPal accounts through a browser on a mobile phone. Earlier this year rumors began to circulate about an expansion to that service when PayPal ran advertisements looking for staff to run a new mobile group at the company.