With STAR Network deal, Obopay lets you transfer money instantly by mobile

Payment services firm Obopay is announcing today that it will enable real-time transfer of money via mobile phones as a result of an agreement with the STAR Network money transfer service. That means mobile users can transfer money instantaneously, as long as they are within the same country.

Redwood City, Calif.-based Obopay will use the expedited transfer service of STAR, which enables real-time transfers between STAR accounts — as part of Obopay’s Mobile Money for Banks offering. STAR, a division of First Data, created the transfer service for the instantaneous transfer of money via automated teller machines. If you look on the back of your ATM card, you’ll likely see the STAR logo, which means that the card can be used in most ATMs across the country. STAR reaches 80 million users in the U.S.

Having instantly available cash means users will be more likely to use the service. In the past, mobile transactions were subject to waiting periods that were similar to the time it takes to clear a paper check. Obopay has set up the service so that banks can easily adopt it and then offer mobile banking services to their customers. In May, Obopay debuted Mobile Money for Banks, with a variety of banks ranging from Citibank to Societe Generale participating. Now, the customers of those banks will be able to transfer money to a relative in real time, similar to how relatives often transfer money via Western Union. But this process takes place entirely on a mobile phone. One of the things that  is critical to the service is speed, said David Schwartz, head of product and corporate marketing at Obopay, in an interview.

Financial institutions that are part of the STAR Network are eligible to offer their customers the ability to initiate both outbound and inbound real-time transfers. STAR Network cardholders can send funds via their own or other people’s STAR accounts as well as pull money from their STAR cards into another account. Banks like the Obopay service because it lets them reach people whose primary means of banking is the mobile phone. It works particularly well in markets like Africa. It could also prove popular in the U.S. in places where there are no automated teller machines. Obopay says banks can implement the Mobile Money for Banks service in 30 days. For now the instant payment service works only within countries, mainly due to regulations that govern international transactions.

To date, Obopay has raised $140 million and has 200 employees. The company will collect fees on behalf of the bank and charge a wholesale fee to the bank. But the banks benefit because mobile payments can be a lot cheaper to execute than check transactions, which generate a lot of paperwork.

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Tags: atm, Mobile Money for Banks