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Nokia Stakes Claim on Obopay

Cell phone giant invests in P-to-P provider, as banks, telcos rush to own mobile payments.

Nokia Corp. has invested a rumored $70 million in Obopay, a provider of person to person payments by cell phone. The Redwood City, Calif., recipient this week announced that Nokia had taken an undisclosed stake in the firm and appointed an executive from Nokia, based in Espoo, outside of Helsinki, to Obopay's board.

Obopay, which began a few years ago as an independent facilitator of consumers' P to P payments, has been . It agreed last November to have its service marketed to the 1700 bank customers of core processing provider Fidelity National Information Services (FIS) Jacksonville, Fla. This followed the mid-October launch of Obopay's P to P service for Citi bank (New York, $2 trillion in assets) customers in mid-October, and in June of 2008 an agreement with Mastercard to integrate Obopay's phone payment capabilities with Mastercard's network for sending money from one debit or credit card holder to another. Michael Diamond, SVP of business development with Obopay, since told BS&T that "real money" was being sent by Citi customers.

Commenting on the Nokia-Obopay deal, Nick Holland a senior analyst with Aite Group, a Boston research and consulting firm, said, "This investment indicates that the mobile payment landscape will continue to be a territorial battle between financial institutions, mobile operators, card networks, and vendors, all of which firmly believe that they deserve a piece of this still baking pie. Aite Group expects to see other handset vendors aggressively positioning themselves within the value chain as the business models for mobile payment begin to solidify.

"Particularly in developing markets such as Africa and India where the case for mobile financial services has already been proven," Holland said, "stakeholders are rushing to capitalize on the opportunity."

Obopay is active in a project to bring one billion unbanked people in the developing world into the payments system, through mobile banking.

Nokia is the world's largest manufacturer of cell phones, with $68 billion in revenues last year and a whopping $53 billion in assets.

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