In a deal that could make financial tools more widely available through mobile phones, the handset maker Nokia Corp. has bought a stake in the payments technology company Obopay Inc.
Obopay is one of several companies that have developed payments features for mobile phones, but a major hurdle in bringing banking capabilities to the mainstream market has been persuading users to download the applications or wireless carriers to deliver them preloaded in handsets. Analysts said that Nokia's minority stake in Obopay, announced Wednesday, would let the Finnish company hardwire the technology into its phones and could make it an important player in the global remittance market.
Gerhard Romen, Nokia's director of strategic partnerships, said his company wants to make phones into widely used financial tools, and he compared payments capabilities to cameras. "In 2004, you might have seen a camera in a phone and wondered what this does," he said. "Today a majority of people use the phone as their primary camera."
Mobile banking technology will follow a similar path, he predicted, but declined to give details about the Obopay investment or to say whether Nokia plans to incorporate the technology in its phones.
Nokia's handsets have been part of numerous trials of contactless payments at the point of sale, using chips with near-field communications capabilities.
But observers said its investment in Obopay takes Nokia in a new direction. Obopay's core technology lets people transfer funds to each other. Citigroup Inc. was the first major U.S. banking company to integrate Obopay's technology with its core demand deposit account system, and MasterCard Inc. offers it to its issuers.
Analysts said the cellphone giant is looking for a place in the payments market where it can transact not only at the point of sale but also remotely. The agreement also could let Nokia determine what capabilities banks will be able to offer their customers.
"This is a big deal for financial institutions," said Richard K. Crone, the founder of Crone Consulting. "If somebody else is provisioning the application before it gets to the consumer, that affects how the bank can provide its suite of services."
Nick Holland, a senior analyst at the research and advisory firm Aite Group LLC in Boston, said that Nokia, with its global reach, is angling for a piece of the cross-border remittance business, especially in developing markets. "The heavy hitters here want to be in there early," he said.
"There is tremendous room to grow in developing markets in providing basic banking," he said. "Mobile penetration is very high. Banking penetration is very low."
In Kenya, for example, a nonbank money transfer service called M-Pesa has attracted more than 4 million users by working with the regional carrier Safaricom Ltd.
And Western Union Co. announced a test in December that lets immigrants in the United Kingdom send funds directly to mobile phone users in Kenya.
Obopay said it would use the investment to extend its product line and boost its global presence. It named Teppo Paavola, Nokia's head of corporate business development, to the Obopay board.
Neither Obopay nor Nokia would disclose the size of this investment, but published reports said it could be as much as $70 million. The online publication E-Commerce Times, for one, used that figure, citing an Obopay regulatory filing this month for the sale of up to $70 million in preferred stock. The filing also noted Paavola's board appointment.
The Securities and Exchange Commission's Internet database said that Obopay submitted a filing this month; the document was not available online, however.
Michael E. Diamond, Obopay's senior vice president of business development, would not say whether Nokia would use the Obopay technology, but said "there's going to be a lot coming out of this relationship."
Obopay offers money transfers in the United States and India and has said it plans to expand into Africa. "We think there is great opportunity not only in the United States and India but in a lot of different countries," he said.
Crone said the transfer capability is only a beachhead for the more lucrative point of sale market. "Fund transfers and person-to-person are only niche markets," he said. The point of sale is "where these companies are going to make their money."
