Obopay Offers White-Labeled Payment License Service
The company has refined a tool that can initiate transfers with texts, one of several efforts Obopay is making to shed the inefficiencies of its original consumer-facing mobile payments system and create a faster, simpler system that banks can offer to both consumers and small businesses.September 27
Obopay, a provider of a person-to-person payment and transfer service system and a licensed money transmitter in the U.S., is offering a Licensed Payment Service other companies can brand as their own.
The company is offering partners the ability to leverage its payment system and its regulatory compliance services. Some of these companies, particularly large players or players that have established services in other markets outside the U.S., have their own applications and some payment systems and operations, but lack licensing and U.S. based compliance teams. Obopay says its service can help such companies reduce their time to market, leverage their existing systems where they have them, augment them with payment capability as desired, and ensure compliance with state and federal money transfer regulations.
States have been cracking down on unlicensed payment providers. In September, 2010, for instance, the California legislature passed the Money Transmission Act, which imposed new requirements for companies conducting domestic money transmission, including a $500,000 tangible net worth requirement and a $750,000 aggregate surety bond requirement. Subsequently, Think Computer Corporation, the company that runs FaceCash, was forced by the California Department of Financial Institutions to stop operating in the state.
Under the Obopay arrangement, the Redwood City, Calif.-based company would take care of any licensing issues that might emerge. The company has licenses in every state except Indiana and Rhode Island, which don't require them.
Chris Martin, executive vice president of operations and chief compliance officer at Obopay, estimates the cost of becoming licensed in all states that require it at $5 million plus. Not only do the states put money transmitters through a rigorous review process, he notes, but every state also has its own renewal and reporting process — some annually, some every two years.
The target market for this service includes large retailers, banks and payment processors.