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Inside PayPal's Mobile Payments Initiative

Paypal_text2buy_1 PayPal now lets people pay -- and everyday restaurants and merchants accept payment -- using plain vanilla SMS text messaging.

A PayPal user with an active mobile phone account can send a payment to another PayPal account belong to either an individual or a merchant. PayPal Mobile payments are sent by sending a text message to 729725 ("PAYPAL"), and then keying in the amount and destination of the payment.

In an WebProNews.com interview, PayPal spokesperson Amanda Pires said, "Imagine the ability to split a lunch bill. I could just text you 20 dollars." She added, "Our customers told us this is something they want. Everyone's sending everyone else a dollar to try it out. It's addictive."

Retailers should note that this lets a bricks-and-mortar merchant associate their land-line number with their PayPal account. If you're a yoga studio in Denver, and a visitor wants to take a class from you and says "Do you take PayPal?"

"Sure," you say, "Just send the payment to 303-296-1234". While she's standing in front of you, your customer uses her cell phone to text PayPal to have the payment sent to your number. She receives a quick call to authorize the payment, and then, bingo! A minute later you receive an automated call informing you of the payment. (Just to make sure, you go online to check your bank account to see if the funds have been transferred. They have.)

No word yet on payment processing fees. PayPal recently announced a micropayment initiative which processes payments at a rate of 5 percent plus 5 cents per transaction for transactions less than $2. This initiative could save merchants 40 to 60 percent when compared to the industry's current payment processing rates of approximately 2 percent plus 20 to 30 cents per transaction. But, with the cost of handling one mobile-originated SMS, two mobile-terminated SMS, and one automated phone call requesting a PIN, methinks that adds up to more than 5 cents for the transaction. 

For the future of this initiative, look to PayPal's owner, eBay, which recently acquired IP phone service provider Skype. eBay CEO Meg Whitman recently indicated one way Skype might be integrated into its core business might be to add the ability of buyers and sellers to communicate in real time rather than via e-mail, helping to close complex deals in categories such as new cars and real estate. Further, the Text2Buy initiative may help address eBay’s “gray market” issues, in which a buyer and seller take their transaction offline in order to close the deal without incurring a fee to eBay.

Google Goes To Washington: "Local" Has a New Spin

Google_politicsGoogle has hired PodestaMattoon to help manage its far-flung interests in privacy, employee compensation issues and China, according to documents filed with the U.S. Senate. This development is getting coverage in today's San Francisco Chronicle and New York Times (registration required).

"It's sad," lamented Esther Dyson, editor of the technology newsletter Release 1.0 and former chairwoman of Icann, a nonprofit group that plays a role in Internet administration. "The kids are growing up. They've lost youth and innocence. Now they have to start being grown-ups and playing at least to some extent by grown-up rules."

As municipal wi-fi heats up, look for Google's efforts to ramp up slowly to encompass state and municipal politics, historic strengths of telcos and cable operators. As was the case with newspapers, Google's lobbying efforts will collide with the interests of real estate owners and property managers, who are just beginning to explore the intellectual property potential inherent in their portfolios.

IEG's Take on Emerging Sponsorship Categories

InspirationIEG released its list of emerging sponsorship categories, which destinations might find useful as they seek out nontraditional revenue sources:

  • Healthcare - nearly every sector of the healthcare industry is putting more focus on direct-to consumer marketing as changes in the industry push more decision-makiong responsibilities to customers.
  • "Cosmoceuticals" - companies that market prescription and over-the-counter skin treatments use sponsorship to educate consumers, sample product and build their brands. Strivectin - a top search term on mall web sites a few years ago - had purchased the title of an NHRA drag race team just recently.
  • Urgent care centers - Extended hour clinics are ramping up sponsorship to strengthen their positioning as lower-cost alternatives to hospital emergency rooms and demonstrate their commitment to local communities.
  • Online gambling - These online sites are trying to introduce the masses to the concept of gambling online. They may seek to work with restaurants, for example, for the purpose of "education".
  • Flash drive manufacturers - These smallish devices, capable of storing 256 megabytes to gigabytes are finding themselves in everything from key fobs to fashion statements.
  • Private jet services - William Chipps thought this service is becoming a status symbol among professional athletes, celebrities and executives that don't want to be subjected to the post 9/11 hassles of flying.
  • Internet telephone service - I think this category is broader than IEG realizes. VOIP is especially useful for chain retail, since phone numbers can easily be relocated anywhere Internet is available.
  • Microprocessor manufacturers - While the battle in the two-company microprocessor marketplace is heating up as Intel and Advanced Micro Devices (AMD) seek to demonstrate how their new products improve the computing experience, I think a nascent option in RFID chips - specifically Micron - may be a dark horse.
  • Flavored milk - An overall decline in milk consumption combined with pressure on soft drink companies for healthier lifestyle products has resulted in a bevy of new products. Chocolate milk is being billed as the "ultimate fitness drink", for example.
  • Department stores - something I've blogged frequently, mergers and acquisitions are driving management's need to find new ways to build personal connections with shoppers.
  • Digital music companies - as the number of format types proliferate, it becomes even more important for digital music providers like Napster or RealNetworks to demonstrate how their core proposition works for a mass audience.
  • Prepaid wireless companies - companies like Boost Mobile are offering unique propositions, using the mobile phone as a passport for VIP experiences. They are pioneering a pretty unique community service proposition: if a Boost sub works for four hours on a community project (creating artwork for a neighborhood, doing renovation or otherwise making a difference on pre-approved tasks), they'll be able to score tickets that would be otherwise unavailable. They seem to have had luck in major markets like NYC, Los Angeles, Minneapolis, Washington DC, Atlanta, and Minnesota -- it remains to be seen what other companies might be able to do.
  • Labor unions - some unions have turned to sponsorship for help in talking to consumers about the benefits of joining. As unions struggle to find their identity in an election year, this sector is likely to heat up even more.

(Thanks to William Chipps for giving me permission to liberally republish his findings in this blog.)

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