Friday, June 8, 2007

Obopay: Free $10 prepaid card


Based: Redwood City, CA
Founded: 2005

Why it’s Fierce: The mobile wallet concept the industry has been dreaming of is finally coming to fruition. The idea that consumers could use the mobile device at retailers or transfer funds was stymied in the past because of a combination of inadequate technology and questionable business models. But the market has seen a flurry of activity as startups, retailers and financial institutions rise up to help consumers spend with their mobile devices. One startup with momentum is Obopay. It inked deals with MVNOs Amp'd Mobile and Helio last year for a service that allows users to set up stand-alone accounts, Obopay Prepaid MasterCard cards, that can be used to send and receive money between users or make purchases. The company charges 10 cents per transfer of funds between users, paid by the sender. Retailers are charged based on the amount of each transaction. Obopay Prepaid MasterCard cards are accepted at 24 million merchant locations and over 1.1 million ATMs around the world. Obopay also inked an impressive deal for a pilot program to allow Citi customers to send and receive money from their phones. Peer-to-peer services like Obopay's may account for a tiny fraction of the overall mobile payment space today, but we believe they may offer a more viable long-term business model. Consumers might be willing to pay a few cents per transaction to transfer funds or send money to a friend, and financial institutions are scrambling to lure new customers with such services.

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