Nokia is pulling the plug on its Nokia Money business in India, The Hindu Businessline reported earlier today. Nokia has confirmed the development to MediaNama, and shared the following boilerplate statement:
As a result of Nokia’s evolving strategy and the business environment, we are exploring options for a structured exit from the Mobile Financial Services business at Nokia, including our own-branded Nokia Money services. Our services will continue to operate whilst we work with our banking, market and technology partners as well as our employees, agents and others to plan future options in accordance with all customer and regulatory requirements
Nokia PR said that they don’t have any information yet on deadlines, the refund mechanism or the services current user base in India. BusinessLine, though, has some data, and quoting sources, says that subscribers will be asked to use up the money in their account within a 3-4 month period starting March 15th 2012.
The Annual Report from Elephant Capital, an investor in Obopay, which powers Nokia Money, states that at the end of August 2011, Obopay’s customer base in India had crossed one million users.
What Happens To Obopay? Raising Money!
Nokia Money was being run on the Obopay platform, and the company had invested $70 million (alongside some smaller partners) in Obopay, in funding rounds closing in February 2009, April 2009 and January 2010. According to Elephant Capital, an investor in Obopay, Obopay raised another round of financing last year, a Series G investment, in which it did not invest. Elephant Capital’s investment was written down by GBP 1.5 million, and it stake in the company was valued at GBP 0.2 million, as of 31 August 2011; the first closing of Obopay’s Series G round was $8.76 million, and the second round is expected to be closed by May 2012. Now with Nokia stating that it wants “a structured exit from the Mobile Financial Services business”, this serve as a serious blow to Obopay’s future.
Elephant Capital does say that Obopay’s “recently implemented change in strategy from being a customer facing mobile money transfer service provider to a back end technology and platform provider to its partners has been delivering results. But the growth in Obopay’s business has been below expectations. Although the company has significantly increased revenue and reduced expenses, the company is not yet profitable. The new management team under the CEO Deepak Chandnani has been working on building relationships with key strategic partners, and these efforts are showing signs of success.”
This switch to becoming a platform company instead of a consumer facing payments company was expected, since the regulatory structure of the digital payments space effectively forces companies to either work with banks, or apply for a license for semi-closed prepaid card from which customers cannot withdraw money.
Download Elephant Capital’s Annual Report here.
– Nokia Launches Nokia Money Prepaid Mobile Wallet
– Nokia Preloads Obopay Mobile Banking App In India; Critical Stage
– Updated: Nokia & Union Bank Of India Launch Mobile Payments
– Deepak Chandnani Made Global CEO Of Struggling Mobile Payments Co Obopay
– Obopay Powers BillPay Bill Payment Service For BSNL