PayPal announced their Mobile PayPal offering this week. Really nothing new here from a technology standpoint as it leverages existing services and the Verisign/PayPal security key. Why I was interested in the release was the signal that they are putting more resources behind this market. I am still shocked that payment via cell phone did not catch on like wildfire in US. Look at adoption rates of cell phones, SMS, twitter and the like, and I would have bet that payment would have been right there with them. Small dollar, in context, person to person, embedded payments could be easily provided. I saw my first payment via cell phone method in 1996 through one of the major European cell phone providers. Built a system capable of providing ‘micro-payment’ over the phone in 1997. Nada. No interest from the public.

Still, it would be far safer for me to pay for that thing I bought on eBay over the cell phone than using the Internet access for whatever hotel I am usually staying in. Need remains, so I am very interested in seeing how customers react to this recent announcement. There are plenty of other companies who offer quality service but struggle with adoption. Startups like Obopay have done a good job in building awareness and vendor relationships (with banks & telecommunications carriers) needed to succeed in this market. But while they may be winning the war with the tiny providers like CellPay, Paymate, TextPayMe and countless others, they are at a disadvantage in a couple of ways. First, these vendors typically build a new payment mechanism, unlike PayPal, who is simply a wrapper on existing infrastructure. Second, even if they do come up with a novel approach, most likely what they have done is build a blueprint for the larger providers as they are not large enough to make a market. After 10 years I think we have proven there is not going to be viral adoption, so the smaller players are going to have a very tough time if PayPal’s offering is adopted by their customers, something neither the banks nor the cell providers have been able to leverage.

Now I am off for a long weekend. Have a great Thanksgiving Holiday!