In March DeGardener broke out the scoop about PayPal intentions to launch Mobile Checkout. Now it’s finally formal. Matt Weathers, Moile Group Product Manager in PayPal tells us that PayPal will be formally announcing the availability of PayPal Mobile Checkout at the PayPal Developers Conference in Boston today. This is good news for any provider as premium SMS is complicated, sloppy and somewhat overly expensive. Our own web to mobile service, HooQs, will now be able to offer content providers a new monetizing route. 

According to Weathers, the PayPal Mobile Checkout flow is a two page WAP buyer checkout which is managed by APIs. A buyer can pay by logging in with user name and password or phone and PIN.  There’s no need for credit card info or bank info as the APIs are simplified versions of the existing Express Checkout APIs.  PayPal expects to drive selling of a range of products via mobile phone (tickets, services, hardgoods, donations, transportation cards, etc).  

“PayPal put a lot emphasis on reaching buyers and on solving the discovery challenges and have partnered with a set of design partners for that purpose. The APIs were designed to maximize merchant and developer control over the buyer experience.  Checkout can be plugged into the process regardless of bearer - SMS marketing, search, WAP sites or client.   The merchant sends the product details via the API and then gets a WAP link that can be delivered or displayed in SMS or WAP.  It can also be triggered by J2ME client (on most modern phones), which can present an almost unique option for game and mobile application developers outside the operator deck.”  

PayPal is very well positioned to take leadership of WAP based billing in the United States. This ecosystem takes a lot of presence and committed partners, and a player like PayPal holds a great position for obvious reasons. In Europe, however, PayPal will face quite some competition from quick runner Bango.  [correction: Bango works with PayPal as a channel and therefore they do not compete but collaborate - Thank Matt and Ray for correcting] In any case, these recent development is very good news for all service providers who wish to monetize the mobile channel.

A demonstration of the mobile search is now on PayPal’s WAP home page (https://mobile.paypal.com/) under the link “Buy something”.  Weather stresses that PayPal is definitely not getting into the search business,  “The search demonstration is purely designed to show the potential for mobile commerce”.

      

I was aware of the fact that ePayments were going through the most significant revolution since the invention of the credit card, but Payoneer managed to blow me away. It’s one thing to solve a real problem. Managing to simultaneously address an array of real problems, on and off the web, is a totally different story. Payoneer mastered a way to put sticking glue on both.

Payoneer’s offering is for businesses, but it is an end user product - a prepaid rechargeable debit card. The card (by MasterCard), is connected to a personal, secure, web based “checking account”. Card holders can use the card on and off the internet, collect and make payments, withdraw cash at ATMs, transfer funds in and out at their will and so forth.

Businesses, on the other hand, can use the cards to avoid the huge headache involved in managing payments. Instead of paper checks, eChecks and wire-transfers, which altogether are complicated to manage, expensive and insufficient, they can opt for a much simpler solution – issue a debit card to each payee and just credit it.

Payoneer offers the solution as a one stop shop, including issuance, management and support and all for a very cost effective price.  The company has announced this week that it has raised $4M led by Greylock Partners. It’s customer and early adopter base already includes names such as MetaCafe, oDesk, ROI Rocket and Plimus. I sat down with Moshe Mor of Greylock Partners and with Yuval Tal of Payoneer for a discussion that turned truly inspiring.

Can you pinpoint your target market?

Tal: “The sweet spot is clearly with web related companies who need to pay both companies and individuals. These companies  can now put together an effective business environment. Managing payments to a global array of individuals is close to impossible. eChecks and direct deposits are not a popular payout method even in the US and then there are all sorts of international banking and currency issues which just kill the whole thing. The result is a market that remains mostly paper based. The web 2.0 economy is dependent on the need to manage payment relationships with people all over the world. Think about paying bloggers for their journalism, for example, or about experts offering their services at expert networks. They all need a pay-out solution as a fundamental component of any business environment. Our customers have a very simple solution – they issue debit cards and then reload it on an ongoing basis without worrying about anything else”

What about the end user?

Tal: “For the individual the situation is even more painful. Take user generated content, for example. Think about what it takes to actually benefit from it as an individual. Cashing international checks is a very complicated matter for many people in many countries. Very few publishers would transfer money to personal bank accounts. This whole situation sets the bar at a point which is not cost effective or time worthy for most people and therefore withholds the huge economic potential”.

So how can another card solve a complicated issue?

Tal: “The card is the best mechanism because it’s simple and universally accepted. MasterCard cards can be used at any store, website or ATM, worldwide. Unlike pure online solutions like PayPal, you don’t need to worry about how to withdraw your earnings. The global economy has created a dire need for fluent payments from US publishers to international contributors, for example, a need that presents a huge and limiting challenge and that is easily addressed by us.”

Mor: “Let’s take a look at the big picture for a minute. The web economy started mostly as a one-directional payment flow; people paying for stuff they buy online. Over the last few years, the web economy has developed to encompass many more payment flows: people paying people (which gave rise to PayPal), people getting paid for directing traffic to web sites (affiliate networks) and more recently, for generating content. While the pay-in flow has been around for a years and therefore has been addressed by multiple solutions, the pay-out flow hasn’t. The globalization of the web added a layer of complexity that required innovative solutions like prepaid cards. So we have an underserved and a growing need”

How can you compete with better established solutions like PayPal?

Tal: “I get this question a lot but you need to understand that Payoneer does not compete with PayPal. It is the credit card companies’ strategic interest to establish position in the pay-out market and they do it with partners like us. PayPal is a great solution but it is also limited. It is much more dominant in the US domestic market and with US bank account holders. You can’t use your PayPal account to get an ATM in India, for example, but you can easily use your MasterCard card and get an ATM card there. Our solution is good for individuals that are practically “unbanked” and for people who prefer not to use their day to day back account to get paid”

This seems like an opportunity for new entrants. What is Payoneer’s secret sauce?

Mor: “Payoneer is coming into this opportunity with what we believe is the first easy-to-use and comprehensive solution. I believe that the main barrier to entry is credibility and domain expertise. Very few teams have the breadth of experience that this unique space requires. It took Payoneer almost two years to develop a platform that can provide a reliable and credible solution and they started with a team that already knew what they were doing! “

Tal: “We needed to rally a major bank behind us, then get through MasterCard and this is before addressing any “regular” start up issues. Both needed to feel very comfortable with our ability to manage this type of operation. Our deep experience with online banking was necessary just to get started. This isn’t a space you simply walk into”

What is your longer term vision?

Tal: “I believe the real benefit businesses begin to realize is the upgraded relationship they will have built with their users. An ongoing billing relationship with an individual is a very meaningful asset. It means your customer carriers your logo in her pocket, literally and metaphorically. It means your customer pay regular visits to your website. Transforming any engagement to a sustainable billing relationship carries much deeper potential for brand attachment and for additional business.

Evidence shows that people tend to spend on the web what they earn from the web. This sets the stage for much bigger economics and our customers already begin to realize that. Check out Plimus, for example. A market place for user generated software that has integrated our solution. A classic example of a web 2.0 service provider that gets it” 

Look, this market will clearly happen, the only question is whether it’s going to be us that get to lead it”

I remembered it was not too long ago that PayPal was a young, promising start up too. I have a strong feeling I will sit back and reflect on this post in a few years when Payoneer will long be a household name.

      

PayPal is about to make a strategic entry into mobile web with the launch of Mobile Checkout, a mobile service that will allow anyone with a PayPal account to buy things using their mobile browsers. 

Rumors have been flying around as PayPal apparently has been diligently working on the product for quite some time. In fact, I wouldn’t rule out an announcement next week at CTIA. The product is in beta right now and is planned for release later this year. Once out, PayPal Mobile Checkout will allow people to buy stuff they’re searching for on their mobile phones.

We could not get an official comment from PayPal of course, but a credible and passionate inside source has indeed verified the rumor and was kind enough the leak the following screen shot:

The payment process is the same as PayPal online – you enter your PayPal user name and password. Along the way you can create a pin so that future transactions are much faster. You don’t have to fill out a long web form of addresses and credit card numbers – which is unsafe and a pain on a mobile phone.

The mobile web has been yearning for payment solutions for a while now. Premium SMS is commonly used for mobile payments but mostly for single, micro transactions such as voting, media and alerts. While premium SMS is very intuitive, it is not trouble free. Mobile operators grab roughly 50% of the revenue and there have been quite a few reliability issues. The opportunity for real ”Mobile Payments 2.0″ is definitely there.

PayPal announced last week that it has reached 35 Million subscribers in Europe and about 150 Million subscribers worldwide. It was only expected that the successful web giants would start porting their services to the mobile space and PayPal is apparently the first significant player about to make an entry.