“Honey, please wait a second. I am talking to our son over Skype and sending him some money.” In less than a minute, father finishes the call, and junior has already received his money. Wow, that’s fast and it’s the kind of service that is going to happen soon with Skype.

Web telephone calling service Skype will allow users to transfer money from their PayPal account to that of another Skype user, founder Niklas Zennstrom has told a conference in San Jose.

How is going to happen?

Zennstrom brought along a few screenshots of the new app. All the users have to do is to run their Skype software client module, the “send money” option will soon be available from the front page menu choices. Once clicked, the user signs in, input the Skype user information to which money will be sent, enters an amount and click sends. The money is then transferred from one user’s PayPal account to the other’s.

A Skype spokesman said following Zennstrom’s remarks that the service should be formally unveiled within a month.

The service is targeted to the growing population of people with family and friends overseas who are significant users of free voice services such as Skype. “A lot of people who are using Skype have friends and family on the other side of the planet; this will allow them to send money home,” Zennstrom said.

Skype had 171 million registered users worldwide at the end of 2006. A year ago, PayPal began limited experiments allowing users to send money to other cell phone users via text messages, but has done little to promote that service so far.

While Skype’s Send Money service may be a dream for many, there are things that can make or break the service. Two most important are the cost and security.

The main attraction of Skype is its low cost, so it seems reasonable to assume that its users are price-sensitive. That being said, the total cost of remitting funds send in this way should be priced competitive. If other means of sending funds are cheaper, why mess around with Skype?

Transaction security is of prime importance. If they implement proper security controls this could be very handy. I hate to sound like an alarmist, but there is a higher possibility that it will be actively attacked by phishers. My gut tells me this will end badly, but hope it will not.

Related:

Entry was posted on Tuesday, March 20th, 2007 at 8:23 pm under Technology.

Read more entries by Ruben Francia.
Stumble It!