The $70 Million Obopay Deal Is More About The UnBanked Than The Banked

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When news came out earlier this week that mobile payments company Obopay raised another $70 million, effectively doubling its total funding raised to date, some observers were surprised at the sheer size of the round. While others expressed skepticism that mobile payments would ever really take off, at least in the U.S.

But the bigger opportunity for Obopay and mobile payments in general is not in the U.S. It is in India and other parts of the world where a large portion of the population don’t have bank accounts. These are the so-called “unbanked.” There are billions of them and their relative spending power is on an upwards trajectory. Obopay CEO Carol Realini says:

There are four billion phones, and only one billion bank accounts. Our view is you have to have a way for both the banked and the unbanked to participate in the mobile payment system.

And that is her strategy in a nutshell. Obopay operates in the U.S. and India right now. If you have a bank account, you can link it to Obopay and use your phone to make payments wherever Mastercard is accepted. If you don’t, you can load up your account using a prepaid model. Realini throws out some Gartner estimates that only 6 million people use mobile payments today across the entire world, but that could grow to 100 million by 2011. (Add salt, nobody really knows).

Despite Obopay’s two-pronged strategy, if mobile payments do take hold, I’d expect them to be more popular among the unbanked outside the U.S. Most people in richer nations already have an abundance of payment options available to them, and adding a mobile wallet won’t make a huge difference one way or another for most people. In countries where payment options are more limited, the ability to turn your mobile phone into a wallet should be much more appealing. Obopay is not alone in trying to bring mobile payments to India. Other startups such as Australia’s Paymate and India’s own mCheck are also making inroads. But that $70 million should help Obopay establish a presence there.

One more thing about that money. Many of the reports suggested that the entire $70 million came from Nokia, which is wrong. Realini confirmed to me that “there are other investors.” Although she says she is not at liberty to disclose who they are at this time. One place to look is the long list of investors who have poured money into the company in the past. Qualcomm, Redpoint Ventures, Onset Ventures, and Richmond Management seem to be the company’s steadiest investors across previous multiple rounds—although I have not confirmed their participation in this one.

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