Obopay Gets $20M to Send Money via Mobiles

16 Comments

Obopay, a three-year-old mobile payments startup, has scored $20 million in additional funding, CEO Carol Realini told me this afternoon. She and other Obopay executives contributed to the round by wiring their investments to the company coffers by way of their Obopay accounts on their mobile phones.

Yes, it’s a gimmick, but it’s also a very real indication of Obopay’s determination. Much like Western Union is the money transfer agent of choice in the real world, and PayPal is online, Obopay wants to be the way to send money for mobile. To do this it will have to win out over PayPal’s own mobile division, plus a myriad of startups such as KushCash and TextPayMe.com. It has the backing. Prior to the most recent round, Obopay had raised $48 million. A company spokeswoman said the $20 million round isn’t complete and that the eventual total may be higher.


Obopay is counting on the experience of people like CFO Dave Johnson, a former CFO at PayPal and Banc of America Securities, because its global money transfer plans require it to handle banking relationships in multiple countries (right now it’s only in the U.S. and India).

It had to get a whopping 41 licenses in order to become a registered money transfer agent in the U.S. The result is that Obopay allows users to store and move money on their Obopay account accessed through mobiles or the web, and also to transfer money from their bank accounts using their phone to that of another person — even if that person doesn’t have Obopay.

The ability to transfer money regardless of a person’s carrier or bank is a compelling proposition. Realini hopes allowing non-Obopay members to receive money will help the company grow over the long term. The money transfer play here is much broader than the “split the check” kinds of social payments offered by KushCash and TextMyBill. The amount of money transfered between countries is in the billions, so if Obopay can expand quickly on an international scale, it could very well achieve what it’s trying to accomplish.

16 Comments

Ismail Popov

I was searching for info for Obopay and I got here but I see the article is little outdated… I wonder if Obopay is financially stable now during the crisis? They are continuously getting millions in funding but I don’t think they show any results. Any ideas?

Malcolm

When we looked at using carriers through premium SMS services offered, to make sales/payments the carriers wanted 50%-60% of the transaction price/fee if billed to a phone, and we were told that any charge on a phone bill, could be disputed and has to be immediately removed – hence high cost of service fee’s.

We consulted with CellTrust – a Scotsdale Ariz. based text messaging company – who provided us with carrier payout rates, and we just couldn’t figure out who would work with such a bizmodel – except perhaps for ringtones! :)

So we are extremly curious, if not down right intrigued, with how these new companies work, and their viability.

How does Zong or others that have the carriers charge customers, avoid the heavy transaction fee’s? Have they renegotiated or do they require a credit card on file?

Love to know the business model for Zong; Textpayme.com and others using carriers as a transaction source – what are the numbers? Anyone?

:)

M

Guri

They have no idea of the money transfer business, they will go bankrupt faster than you think. Wait and see.

gautam

20 mn to send money from one mobile to anoter, raised 66 mn,been around for better part of a decade, and less than a few hundred transactions !

Seems a bit far fetched. Where is this headed.

To my mind smaller , but equally well known start ups, with 10 x transactions a day, but 1/10th of their fund raise – are in the market.

So what does this say for valuation !

hopeful

The first comment is so right to the point.
Welcome Dilution. A struggle to survive before the last nail on the coffin.

Stacey Higginbotham

@feedback, that could be one reason Realini wouldn’t give any numbers regarding Obopay’s users or dollars transferred so far. It may also explain its willingness to open up the network so users can send money to non-users.

However, money transfers are the big goal here, and the company just launched its money transfer program in India in March. I’d wait a bit and see if cross border transfers lead to more users.

feedback

Feedback:

Obopay after several rounds is not going anywhere. Their daily user count for the last month seems to less than 100 (yes one hundred, not thousand!). Let’s give them the benefit of doubt, say they have 1K daily users.

$66M total for less than 1K daily users! For 100 users, you do the math! WOW!

ObopayUser

“She and other Obopay executives contributed to the round
by wiring their investments to the company coffers by way
of their Obopay accounts on their mobile phones.

Yes, it’s a gimmick, but it’s also a very real indication
of Obopay’s determination.”

Determination ? I think the right word is dilution of
stocks!

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