Picking a Payment Service

On TechCrunch today, Michael Arrington covered a mobile payment service, TextPayMe, and concluded by saying “I’d also like to see something like this partnered with BillMonk“. TextPayMe’s blog alludes to the same.

This thinking makes sense because we are two different but potentially complimentary services. TextPayMe is a payments service, like a mobile PayPal. BillMonk does accounting, akin to a social Quicken with a mobile component. We solve the tracking and math problem: we split your bills, add up the bits and pieces, and generally help friends with money.

Roommates, for instance, love BillMonk because their problem is not paying one another, but tracking debts over time so they know how much to pay. But there are other situations, like after a big vacation with friends living in different parts of the country, where after tracking debts you would want to settle up.

BillMonk does not currently support payments, but we will soon – we are currently in talks with several potential partners. While PayPal is the most obvious, we have have some concerns. Their focus is not on the consumer-to-consumer space, and there is poor support for a third party like BillMonk to facilitate transfers, so fees might be too high (see PayPal veteran Ryan Donahue’s analysis; n.b. he covers BillMonk here).

Why aren’t we building our own payments service? Cost. A small company like ours cannot afford to do this on its own without significant investment. Fraud protection is extremely expensive becuase when you deal with other people’s money, you are liable and a target for attack. Chuck saw this first-hand when he worked on the fraud-protection team at Amazon. A senior PayPal executive we recently talked to said “[they] spent 1/5th of their inital $500m on fraud protection”. Ryan’s conclusion about building a payments system? “Do not attempt this.”

Our goal is to pick the system which is safest for our users, easiest to use, allows BillMonk to earn a small commission, all while keeping fees as low as possible for our users. Rest assured, we are working hard on this – and as always, we’d love to hear your thoughts.

5 Responses to “Picking a Payment Service”

  1. jason murphy Says:

    To be honest, regardless of cost I’m glad you’re not building your own payment system. As a user I enjoy what BillMonk represents: virtual IOUs. I can payback how and when I want, or let BM tally up to the next bill. If you were also a payment system, I’d feel obligated to pay the person back immediately from my funds – even if it wasn’t required. It would be a lot like a glorified invoice from PayPal.

    Having BillMonk as a payment service may take away from the experience, but teaming with another service would not. Using paypal as the example again, Ebay didn’t lose the user experience when they teamed up with PayPal. A lot of people were afraid they would, but it actually enhanced the overall experience and made a lot of additional features available that weren’t before. Users of ebay who preferred other pay systems didn’t lose what they use Ebay for either.

    Your product is solid. Keep up the great work guys.

  2. billmonk Says:

    Thank you Jason!

    And we totally agree: by separating the core of BillMonk from actual payments we keep an informal feel to the system; more like the notepad on the fridge door, and less like a financial institution. By plugging in a third-party payment system, we give users the best of both worlds.🙂

    Cheers, and thank you also for this very positive post on your blog: http://www.thejasonmurphyshow.com/index.php/2006/01/30/iou_1_bill_monk

  3. Kavin Du Says:

    Check this paypal by phone article out. Maybe of use to you guys
    http://www.iol.co.za/index.php?set_id=1&click_id=115&art_id=iol1143117211111P140

  4. Mike Roud Says:

    Great application , but I would advice that you folks could partner with Obopay to avail the pay anytime by mobile phone option.

  5. Olgunka-jc Says:

    redlips ru ods 3500fl+ + +

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