Outside of the U.S., millions of people already use their cell phones to transfer money, pay bills and even buy products at a store. The concept just hasn't caught on in the U.S. A few companies want to change that, specifically when it comes to mobile payments. Recently, MasterCard inked an agreement with a mobile payments start-up called Obopay.
Obopay charges 25 cents for each transaction over a mobile phone. Amazon offers a competing service it calls TextPayMe. It's slightly less convenient, but it's free.
To use Amazon's service, first you have to sign up on the company's Web site. Then you connect that account with your bank account.
Then, if you want to send $1 to a friend, you text to Amazon the words "pay 1" and your friend's mobile phone number. After a few minutes, Amazon's automated operator calls and asks for your personal identification number to confirm you want to send your buddy $1.
After a few more minutes, your friend receives a text message saying money is waiting for them at Amazon's Web site. Your friend then must go to the site and sign up for the service to receive the money.
The next time you send money to that same friend, the process will be a bit easier — but it still takes more time than it would to just hand your buddy a buck. Still, there are some people who've found a use for mobile payments.
Rob Bergsohn of Falls Church, Va., uses Obopay to send emergency money to his daughter Gabby, who's a junior at Baruch College in New York City.
"Say she needed to buy a book or something and she needed $100," he says. "She could just call. I could just open up my Obopay account on the computer." Within a few minutes, the money would be in Gabby's account.
The Bergsohns are part of a small but growing group of mobile banking users, according to Bob Hedges, managing partner at Mercatus in Boston. His company has been tracking and promoting the development of mobile payments in the U.S.
"About 10 percent of U.S. consumers are now doing mobile banking," he says. "That is dramatically up from the same number a year ago at this time."
Hedges says his research shows use of mobile banking is increasing across most demographic categories.
"I think we'll see the same sort of takeoff speed — if not faster with mobile banking — over the next five years as we saw with online banking a decade ago," he says.