Nokia bets on mobile payments with Obopay investment

Obopay’s mobile payment service, which lets consumer pay each other via SMS or other cell phone applications, is available in both India and the United States, where the service is just beginning to take off. The payment funds can come from bank accounts, credit cards or – for those who lack an account – prepaid funds from an Obopay account. According to the company, this unbanked population is significant, with 4 billion phones in the world and only 1 billion bank accounts.

Holland said other handset vendors are already aggressively positioning themselves within the value chain, and he expects more – namely the international handset OEMs, Sony Ericsson and Samsung, to be quick to follow Nokia’s foray into mobile payments and, eventually, NFC. The technology isn’t in widespread use yet outside of NFC pilots due to the lack of point-of-sales terminals and devices that support the technology, but it is most likely the next evolutionary step of mobile financial services. It’s not just about payments; it is about real-world interactivity, he said. Nokia’s investment is a good first step.

“At $70 million for Obopay, it’s a fairly safe bet it will work out in some markets,” Holland said. “They can throw it at a few things and see what sticks, but they definitely want to be part of that when it does work out, because it will be a big opportunity as your card payments migrate to a phone.”