Could mobile banking finally be making inroads in the U.S. market? A series of major investments this year could make you think that it is.
Just last week, mobile payment startup Boku – which calls itself the Visa or Mastercard of the cell phone world – said it has grabbed $13 million in financing from venture capital firms. For both security and convenience, Boku asks you to enter you phone number rather than a credit card number to process your transaction. In March, another startup, Obopay, announced it’s collected $35 million from Nokia. Obopay lets you transmit money via text message.
The mobile payment industry has had a slow start for a number of reasons. One is the difficulty of coordinating the applications with all of the different service providers and types of devices out there. Of course, basic security – getting people to trust that their money is safe – could be the biggest hurdle. Another challenge is getting merchants on board. There will need to be widespread adoption to make it work effectively.
While success has been fleeting in the past, analysts believe mobile banking could be on an uptick. Part of the reason is the success of new smartphones, which make complex transactions easier. And since people have shown they’re willing to spend money on music, games and other apps online via their cell phone, mobile banking might catch on too.
There could be a lot of money to be made in the form of fees per transaction, so there’s a race to develop these new systems that can work on your mobile phone. That could explain the large investments being made.
