Nokia Money target regions where bank accounts are rare
Published: 27 August, 2009
READ MORE: Nokia
Nokia said yesterday that it planned a concerted attempt to bring financial services to the mobile, with the introduction of Nokia Money. The service is launched in conjunction with Obopay, a US company that Nokia took an investment in back in April, paying $70 million. We noted at the time that this was a strategic investment and that it was Nokia, not its venture capital arm, which made the investment, so everyone has been waiting to see what Nokia would do with Obopay. We didn't have to wait long.
Initially the service is a mobile money service, and as such it will leverage the ideas of Obopay in emerging markets where the majority of people don't even have a bank account, but are more likely to have a mobile phone.
Before the Nokia investment, Obopay had already raised $69 million in venture capital plus $7 million from Qualcomm, which already has a strategic interest in mobile banking through its Firethorn acquisition.
There are many financial frontiers to conquer on mobile phones, and whereas Firethorn has tied up most of the top ten US banks, and strategic relationships with AT&T Mobility and Verizon Wireless, to bring banking applications to US phones, the Nokia Money launch has a far wider reach to billions of people in India, China, Africa and South America, serving people who need a way of moving money around electronically and converting it into cash for day to day payments.
The other aspect to mobile financial transactions is Near Field Communication contactless payment systems, and Nokia is already pushing towards the front of this queue in Europe, offering the first standards compliant NFC phone in Europe earlier this year. But this, like mobile banking, is about a Western World where everyone has a phone, a credit card and a travel season ticket, and wants to see them all merged into one.
The Obopay's system relies on SMS and is already available in India and the US. The payment funds can come from bank accounts, credit cards or prepaid funds into an Obopay account, for those with no bank. Obopay is fond of saying that there are four billion cellphones in the world, but only one point six billion bank accounts. Obopay in the western world is effectively up against established favourites like eBay's PayPal, which is now moving into the mobile arena, but which is dominant on fixed line internet transactions. Also Vodafone has been trying to target this area with trial in Africa and a partnership with Western Union.
However, Western Union is unhappy sharing its existing service with mobile partners, and has always tried to cap the amounts of money (and commission) that can be earned on a purely mobile transfer. In the Western Union world money travels from fixed points A to B and is then turned back into money. In the Vodafone and Obopay world, and therefore in Nokia Money, funds can travel from A to B, and then can be paid to a merchant directly from the phone, converted to cash at a supermarket or other Nokia partner or forwarded yet again.
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