Nokia’s Mobile-Payments Gambit Could Give a Boost to Obopay

The announcement on Wednesday by Nokia, the world's largest cell-phone maker, that it will launch a mobile-payments service is likely to give a competitive leg-up to Obopay Inc., the Redwood City, Calif.-based mobile-payments processor that developed the software for the new venture, called Nokia Money. Four-year-old Obopay, in which Nokia invested up to $70 million earlier this year, competes in an increasingly crowded market for mobile financial services. Neither Nokia nor Obopay revealed key details about the service, including which countries will get it when rollout begins early next year. It's unlikely the United States will be one of them, though some press reports indicated Nokia Money will come to the U.S. eventually. “The initial focus is emerging markets,” Obopay founder and chief executive Carol Realini tells Digital Transactions News. Nokia will demonstrate Nokia Money for the first time at the Nokia World conference Sept. 2-3 in Stuttgart, Germany. Nokia Money will enable consumers to send money to another person by using the recipient's mobile-phone number, make purchases at stores, pay utility bills, and recharge their prepaid cell-phone, or SIM, cards. The software will come preloaded on some Nokia smart phones and also will be available as a downloadable application. In addition to its existing distribution network of carriers and stores, the handset maker said it is building a network of Nokia Money agents, where consumers can deposit money in or withdraw cash from their accounts. Nokia thus will make contact with consumers more easily than banks in many countries where cell-phone users far outnumber consumers with bank accounts, according to Realini. “The potential is huge,” she says. “In a lot of these countries, banks just don't physically reach” consumers. In a news release, Nokia said, “it intends the service to be open and interoperable with other payment services as well.” And, notably, the service also will run on other manufacturers' handsets, according to Realini. “In all cases, their [Nokia's] service commitment is bigger than handsets,” she says, adding that, “there's nothing about our relationship that would prevent us from having an offering on other people's handsets.” Riding on Nokia's distribution network will enable Obopay to extend its reach in many countries where it might otherwise make little headway against indigenous payments providers, according to Nick Holland, senior analyst at Boston-based Aite Group LLC. “I think it's a lifesaver for Obopay,” he says. But Realini says Obopay already was making good progress abroad and that with the possible exception of Kenya, no mobile-payments provider has locked up any country yet. “There's just a huge amount of opportunity,” she says, comparing the potential to that of the Internet in 1993. The market for mobile banking and payments has attracted a slew of competitors in recent years, including both startups and established companies like PayPal Inc. Joe Salesky, chairman and chief strategy officer of an Obopay competitor, Novato, Calif.-based ClairMail Inc., said in a statement to Digital Transactions News that “this news [about Nokia Money] is strong validation for the value of the mobile phone and its importance in both current and emerging markets as a game-changing device for the next generation of financial services. Mobile payments are a key step on the path to the expansion of financial-services offerings that will continue to evolve across existing and new business models.”