Mobile Money For The Unbanked

Obopay is a mobile payment service that allows users to get, send and spend money. It works on all handset models and currently powers the mobile payment systems of MasterCard MoneySend in the U.S. and Nokia Money globally. Obopay sees its biggest opportunity in the developing world, where some 2.5 billion adults have no access to banking but a growing number have mobile phones. It is one of 26 companies named a 2010 Technology Pioneer by the World Economic Forum.

Computer scientist Carol Realini (pictured on Informilo’s home page) was planning to take an early retirement after Chordiant Software, the company she chaired, went public in 2000. Relishing her newfound freedom, she went on a social action mission to Africa. In the Democratic Republic of Congo (formerly Zaire), she watched people haul sacks of devalued currency to local vendors, to buy scratch cards that would provide a few minutes’ calling time on their mobile phones.

Pondering that image, Realini wondered: Couldn’t mobile phones become defacto banks, allowing people to move money around in ways they never could before?  “I could imagine this transforming into a banking system that could serve billions of people much more easily than Wells Fargo branches being built in remote villages,” says Realini, now 55.

That’s the idea behind Obopay, a mobile payment service that allows users to send and receive money via text message and the Internet. Founded in 2005 by Realini, now the chief executive officer, the company already offers services in the U.S. and India. Its technology also powers the mobile-payment systems of MasterCard MoneySend in the U.S., and Nokia Money globally.

Its biggest impact, though, is likely to come in developing countries, where few people have access to basic financial services – but many have mobile phones. It plans to expand soon to 10 more countries, including some in Africa.

To that end, Obopay has partnered with Grameen Solutions, a company founded by micro-finance guru Muhammad Yunus, the recipient of the 2006 Nobel Peace Prize. Their goal: to use mobile technology to deliver banking services to a billion of the world’s poorest people by 2018.

Obopay is one of 26 companies named on Dec. 3 by the World Economic Forum as  “tech pioneers,” offering new technologies or business models that could advance the global economy and have a positive impact on peoples’ lives.

Obopay’s service is simpler and cheaper than traditional wire-transfer services. Transaction fees are minimal, and customers need only a mobile phone – no credit history or bank account is required.  And unlike some mobile money-transfer services run by banks and mobile operators in developing countries, Obopay’s is not tied to any bank or operator, which broadens its appeal.

Customers can put money into their Obopay accounts  with cash paid to a local vendor, or else through a direct deposit from an employer, or a transfer from a credit card or an existing bank account. They can then send money to any text-message enabled mobile phone. In the U.S. Obopay charges 25 cents to send any amount up to $1,000 and nothing to receive a payment.

The privately held company, which does not disclose revenues, has raised over $100 million in financing. Investors include Nokia, mobile phone chipmaker Qualcomm , Silicon Valley venture capital firms Redpoint Ventures and Onset Ventures, banks Citibank  and Société Générale and Wolfensohn & Co., an investment firm founded by former World Bank chief James. D. Wolfensohn.

Nonetheless, it faces potentially tough competition from the likes of online money transfer service PayPal, which has been trying to build a mobile version, and San Francisco-based Boku, which has offices in Europe, Asia, and Latin America, and is funded by well-known Silicon Valley entrepreneurs and venture capitalists Benchmark Capital, Index Ventures, and Khosla Ventures.

What’s  more, Western Union and the GSM Association, a global trade group representing over 750 mobile phone operators, are working to develop a framework that operators can use to provide money-transfer services to their customers. Britain’s Vodafone, India’s Bharti Airtel, and the Philippines’ Globe Telecom and Smart Communications have already signed up.

“A lot of people are going after the global banking opportunity,” says Realini.  Worldwide, an estimated 2.5 billion adults lack basic banking services – a huge untapped market. What’s more, she predicts that the convenience of mobile payment services will appeal to people who already have bank accounts. “In 10 years we won’t have wallets. All  of our money will be on our mobile phones.”

To see a video interview with Realini click here

Informilo has syndicated its coverage of the 2010 Tech Pioneers to BusinessWeek.

 

 

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