Phone phishing

[Dave Birch] There's been much comment on this week's news (well, news for people like us) that PayPal is to launch a mobile payments service. Essentially, customers will pay for something by sending a text containing a product code (from a web site or wherever). They get back an IVR call confirming the transaction and asking them to enter a PIN. The payment is then taken from their PayPal account. This is yet another confirmation that mobile payments is one of the key digital money topics for 2006.

Technorati Tags: mobile, p2p, payments

If you have a PayPal account, you can check it out here.

The service will be launched in the USA, UK and Canada and may later be extended to other countries. You can't help but see it as significant. While it's true that other people have tried (and are trying) similar schemes, they don't have tens of millions of active users (eg, me). Having to open a new account of some kind has always been a barrier.

Here's my favourite example. A Scandinavian mobile operator presenter at a mobile payments conference I attended in Europe last year told how they partnered with local banks to launch a new mobile payment service. They had a massive advertising campaign, telling people (in essence) text “PAY” to “1234” if you want to sign up. Lots of people did so, presumably expecting to receive a “welcome to the service” message in return. What they actually received, a few weeks later, was a sixteen page application form from their bank. The hardy few (and there were only a few) who completed this form then received, a few weeks further down the road, a letter inviting them to take their passport to their local post office to pick up a letter containing log on instructions. I'm not making this up. As you can imagine, this expensively constructed service had few takers.

But I already have a PayPal account, as do millions of others in the UK. If I can use it from my phone without having to fill out forms, open new accounts, go through a complicated registration process, then I probably will. PayPal have already been through all of the address verification etc, so they have a real head start here.

Can we start the clock running now: I'm expecting to receive an e-mail any day now saying “hello, this is paypal, please text your username and password to our top secret security number (in the Ukraine) if you want to join our new mobile payments service”.

As an aside: Carl Olav Schieble from Paypal who is quoted in the Finextra article will be presenting at the Digital Money Forum next week.