Obopay Inc. is trying something new. Again.
The Redwood City, Calif., company is expected today to introduce a mobile payments system in Senegal, the latest in a string of marketing strategies the company has used — some more successful than others — to deliver its money-transfer technology.
Obopay is nothing if not inventive. It has aimed its person-to-person funds transfers directly to consumers. It has struck partnerships with Citigroup Inc. and MasterCard Inc. It's moved into India and Kenya. And last month it announced a new business model focused on selling its software to U.S. banks.
These efforts have had varying degrees of success, but the company says that each new marketing strategy has helped it further refine its business model.
Obopay is "building on their experiences," said Beth Robertson, the director of payments research for Javelin Strategy and Research. "They have a lot of initiatives in a lot of markets."
These initiatives demonstrate that developing a payments technology with plenty of potential is just the first step; vendors also need to figure out who might want to pay for it, and how to deliver it. Obopay's many ventures show the company continues to look for the right approach to define and target its customer base.
In expanding its African payments operation, Obopay is "leveraging aspects of our service that are in other markets," said David Schwartz, the transfer company's head of product and corporate marketing.
For the new service, Obopay is partnering with Societe Generale to launch a mobile transfer service in a nation where just 6% of the population has a bank account. The Senegalese model, in which Obopay's service is offered both with and without an attached bank account, can be exported to other countries in Africa. Obobay's system lets users send one another money through their phones.
This two-pronged approach builds on Obopay's experience in the U.S., where it works with banks, and its experience in Kenya, where it works with nonbank agents.
The Senegal service is called Yoban'tel by Obopay — a phrase in the local dialect Wolof that translates roughly as "send by mobile."
Schwartz said this model is a better fit for Senegal than its approach in the United States, where "we made the bank account the anchor of the transaction."
Obopay's U.S. model initially required a dedicated prepaid account to fund person-to-person mobile payments that are managed from a mobile phone. It later refined this model to allow users to fund transactions directly from bank accounts, after learning that users want to send and receive funds through their primary bank accounts.
In Senegal, Obopay is downplaying the ability to link to bank accounts; its service can be used without one, although it can draw funds from a Societe Generale account if the user has one.
Societe Generale says the partnership can help it win customers in the region who already know their brand but have never seen the appeal of working with a bank.
"They will not go to the bank to open a regular bank account — it's too much work for them," Jean-Michel Guillaumond, the head of research and development for Societe Generale's international retail banking division, said. "But the way we provide this service through a number of agents they know already," such as the satellite television provider Canalsat Horizons, "for them, it is easy."
Schwartz said those merchant locations "may be much more available to them than a bank branch."
Richard Hababou, the managing director of the innovation group at Societe Generale, said that his company's brand will help sell the Yoban'tel service — as will the service's detachment from Societe Generale bank accounts or any particular wireless carrier.
"What we envision here is that the customer and the population are looking for an open system, and what we are looking for is to provide a network effect … to reach other customers without regard to the carrier or the merchant," Hababou said.
This openness should also help set Yoban'tel apart from other mobile payment systems, such as the widely used M-Pesa service offered by the Kenyan carrier Safaricom Ltd. and the U.K. wireless company Vodafone.
Ultimately, Guillaumond said, the plan is to graduate Yoban'tel users to other bank account types; the most logical next step is a small line of credit. In this way, Societe Generale is using Obopay's service "as a new channel to reach customers," he said.
Nick Holland, a senior analyst with Yankee Group Research, said Obopay's approach in Senegal goes against the trend of a carrier-specific payment systems.
This could be good or bad, he said — only time will tell.
"There's nothing wrong with their approach at all, but it's not the norm," he said.
"Obopay is wanting to have a system that works over any mobile device, but … [carriers] want to be involved in this," Holland said, and have been involved in "the ones that have worked well."
Aaron McPherson, a research manager for payments at IDC Financial Insights, said Obopay should consider carrier ties, since such relationships "would enable stuff like remote top-up, which would really benefit everybody."
Without a carrier partner to help switch on such features, "that becomes less interesting, because now it's much less powerful."
Though Obopay's system has a bill-pay feature, it is still largely a person-to-person payment system, and McPherson said this could hold it back.
Whereas Obopay and Societe Generale played up the advantage of working with merchants where customers already go, McPherson said it could go a step further by trying to eliminate the need to visit those merchant locations at all through a more robust payment structure.
"I don't think it goes far enough," he said.
Obopay's strategy of working with both a bank and nonbank agents makes sense in this market, McPherson said.
"I absolutely am a big advocate of the combined approach," he said. "For mobile payments to succeed, you have to have both sides involved."
However, he questioned whether this partnership is as good an opportunity for Societe Generale.
While Societe Generale hopes to attract new customers by showing them the advantages of working with a bank, the Yoban'tel service "could just as easily work the other way — it makes it easier to not have a bank account," he said.
Red Gillen, a senior analyst for the Boston market research firm Celent, said by e-mail that "Obopay's approach is a wise one," particularly since its combined approach "will allow it to sell its technology to a wider number of potential customers."
However, he stressed, the nonbank agents it works with may prove to be the most challenging part of its deployment.
"The success of any approach that entails building out an agent network can be tricky — humans are much harder to manage than technology," Gillen said.
This story has been reprinted with permission from American Banker.
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