There are signs the mobile payments market is really taking off at last with Nokia announcing a substantial investment in service provider Obopay today.
The amount, understood to be in the region of $70m, is being put in by Nokia itself rather than its venture arm and gives it a minority stake in the Silicon Valley company.
Obopay operates in the US and India. It allows those signing up for its service to fund their account with cash or by linking up their credit card or current account. They can then send money to any text-message enabled cell phone. The receiver can either sign up for an Obopay account or have the money transferred directly to their bank account.
Obopay charges 25 cents to send any amount up to $1,000 and nothing to receive it.
The company says it will use the cash injection to extend its product suite and enhance its global presence. Teppo Paavola, head of corporate business development at Nokia, is joining Obopay’s board.
Carol Realini, Obopay chief executive, quoted me Gartner figures predicting just 6m users of mobile payments worldwide in 2009, but the number exploding to 100m by 2011.
She thinks this rate of growth is possible:
“You have places like India – when we started doing business there about two years ago there were 100m phones in the country, but by the middle of next year there will be 500m phones,” she said.
“Traditional banking and payment services don’t work that well there and you have the mobile network and these solutons emerging, so it’s expected to drive growth in those markets.”
Gerhard Romen, head of NFC market development at Nokia (NFC is the Near Field Communication contactless payments technology) , says phones have become easier to use over the past five years for payments.
“Security has got better, display capabilities and storage has improved as have the networks. The market is picking up speed and there are new entrants, so we have an interesting time ahead of us,” he said.
Other major companies looking at cashing in on mobile payments include Vodafone, which struck a deal with Western Union in December, and eBay’s Paypal, which joined the GlobalPlatform standards body this month.