The Redwood City, Calif., company plans to announce today a significantly revamped business model built around a new service that banks can offer to customers.
Obopay's move shows there is a growing consensus that consumers are interested in transfer services that let them move money directly from their bank accounts.
While the company is recognized as a pioneer in mobile person-to-person transfers, its earlier model required people to send funds through separate, intermediary accounts, and that met with some resistance. Some analysts now say the business-model transition might be coming too late.
"Initially, they were a bit premature," introducing a mobile payment system before banks and consumers were ready, said Nick Holland, a senior analyst at Aite Group LLC of Boston. But now, "you have to wonder at this point: are they late to the table?"
Holland said that Obopay's business plan and technology have appeal, but he is concerned that it may have wasted too much time on its earlier business model.
In recent years, Obopay has struck partnerships with Citigroup Inc. and MasterCard Inc., but has continued to push to consumers the P-to-P mobile transfer service it introduced in 2006. MasterCard has incorporated Obopay's technology into its own P-to-P transfer service, and Citi tested the Obopay service, but eventually concluded there was little current demand for the electronic funds transfer system; Citi wound down the test at the end of last year.
However, working with the banking company helped Obopay refine its own strategy.
To start, Obopay learned that if it wants users to embrace mobile payments, the technology has to integrate seamlessly with banks' existing mobile phone services, even if that means there is little or no Obopay branding and its payment service is overshadowed by other mobile features.
It also has to be accommodating to segments other than just consumers, namely, small merchants.
"Those are things we did for the first time with Citi and we've now made accessible to anybody that wants to come on board," said David Schwartz, Obopay's head of product and corporate marketing. "The way that people want to adopt mobile money services in the U.S. is really through their bank."
Obopay said it already has some banks signed on to deploy its new system, called Mobile Money for Banks, but it would not name them. It will stop marketing its direct-to-consumer product, though it will maintain it for existing users.
Obopay has not yet demonstrated its ability to build as big a network of users, Holland said, though it has made several attempts.
Obopay initially aimed its mobile transfer service at students and mobile carriers that targeted the young, but failed to attract a large following, he said. And in 2008, it took aim at the Indian remittance market. Nor did the Citi trial lead to a full deployment of the service, so Obopay is trying yet another business strategy.
"There's this Madonna-like reinvention that goes on every couple of years," Holland said. "They're persistent, at least."
With the new service, Obopay is also introducing a new feature, Get Paid, which small merchants can use to send invoices and get paid, with credit and debit cards, or through the automated clearing house network.
Michael Diamond, Obopay's senior vice president of business development, said merchants could be a lucrative market.
