The Finnish company announced the service this week, promising to add more details at the Nokia World conference next week. The service is set to launch in 2010.
The service, called “Nokia Money,” will enable mobile phone users to send money to others using a telephone number, make mobile purchases, or pay bills wirelessly. The service is designed to make sending and receiving money as simple as making a call or sending a SMS message.
Nokia is playing up the importance of “Nokia Money” in developing markets, attempting to leverage its dominance and brand equity in such markets.
“We believe mobile financial services offer a market opportunity with long term growth potential,” said Mary McDowell, Nokia Chief Development Officer, in a statement. “In many countries, mobile phone ownership significantly exceeds bank account usage, suggesting that many mobile phone users have very limited or no access to basic financial services.”
The company says that the service will bridge a gap where traditional forms of banking and money transfer in certain areas are lacking.
“Rural consumers will particularly benefit from money transfers and, for urban consumers used to online services, we are enabling services such as payment of utility bills, purchase of train and movie tickets, top-ups, all through their mobile phones,” said Teppo Paavola, Nokia’s head of Corporate Business Development, in a statement.
“Nokia Money” is designed in partnership with a company called Obopay, which develops mobile payment platforms and is an affiliated company of Nokia.
There are several hurdles for the new service to gain relevance. Nokia must convince mobile phone carriers, financial institutions, and national regulatory agencies to sign up.
“To be successful Nokia must provide a legitimate bridge between operators, banks networks and security infrastructure in order to unlock the broad uptake of mobile financial services,” said Bob Egan, Global Head of Research at Towergroup.
The technology gurus at Boy Genius Report don’t foresee Nokia’s service taking off in the United States. “We don’t anticipate seeing the service become available in the U.S. any time soon, if ever,” wrote Boy Genius’s Zach Epstein. “It would be nice to see a company step up to make mobile banking more of a reality in America but considering Nokia’s lack of presence here, we doubt it will be the company to lead the pack.”
PayPal, a service of eBay Inc., is currently the leading online money-transfer service for Internet merchants in the United States.
Expanding Horizons
The announcement comes after the company saw its net profit tumble 66 percent last quarter, compared to the prior year, as stiff competition has put a big dent in Nokia’s global dominance.
Price declines of mobile phones and soaring popularity of smartphones—a product segment where Nokia lags behind its rivals Research In Motion Ltd. and Apple Inc.—has hurt the company’s bottom line. Nokia also experiences its greatest market share in developing nations, where profit margins on mobile phones are razor-thin.
Some analysts see the company’s recent new product and service announcements as a new direction to broaden Nokia’s revenue base.
Earlier this week, Nokia released a netbook computer, its first product in the computer market. The netbook features a 10-inch screen and is configured to run Windows 7, Microsoft’s next-generation operating system.
The netbook, called “Booklet 3G,” will take advantage of 3G wireless networks globally.
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