Bringing Banking To The Cell Phone Masses : Obopay CEO Carol Realini (Part 5)
Check other articles in the series...SM: Can you deposit into the cell phone account?
CR: You can’t do that and nobody has asked us for that. Behind the scenes the money is always in a bank. When I send you money you as the user have to make a decision. Do you want to keep the money on the phone and set up an Obopay account linked to your phone? Do you decide you want to set up an Obopay account, link the Obopay account to your bank account, and then put the money in your bank account? You can also decide you don’t want an Obopay account and put the money directly into your bank account, which makes you a one-time user. In the US we are working on figuring out how to allow you to get cash directly like you would from a Western Union location.
SM: When I request a check where does that money come from?
CR: It comes from Obopay. Behind the scenes we manage where the money is kept and how the money is moved. We have a pooled account where we are simply a money transmitter. We manage the pooled account where everybody’s money is maintained in one consolidated bank account at one bank. We keep track of all of the various transactions and where money needs to go.
SM: That is the stored value Obopay account?
CR: That is right. We have three configurations in the backend. One is exactly like PayPal. It is configured in a bank. As a PayPal user when your money goes into your PayPal account do you know what bank it is in? No, and you don’t care because PayPal has it. It is the same thing here.
SM: We almost think of PayPal as a bank.
CR: We do and we should because it is front ending banking services.
SM: With that you are charging 1.5% of the transaction value?
CR: Today we charge 10c, which is our introductory price irrespective of transaction size. We have not announced this yet but over time our business plan says that we will probably move to a model which is equal to approximately 1.5% of the transaction. Today the consumer pricing is 10c per transaction.
SM: What are the relationships you needed to establish for Obopay to be successful?
CR: Banking is a regulated industry. To do what we do we have to have money transmitter licenses. In the US there is a federal license and there are state licenses. We have approximately 40 state licenses since not all states require licenses. We also must built technology to accomplish all of this and then establish relationships with financial institutions to allow us to deliver the services. We are not a bank and we do not want to be a bank. We have to have a partner bank that lets us keep the money in their bank and we just handle the movement of money. The bank is providing us, on a wholesale level, the ability to store that money.
This segment is part 5 in a 8 part series Segment 6 →
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