Three months after Nokia Money launched in India, the service is now dead

On December 13, 2011, Nokia announced the launch of “Nokia Money” in India. The service was created so that people living in rural parts of the country could conduct financial transactions digitally instead of using hard currency. Today, one day before turning three months old, ZDNet reports that the service will be shut down. Why? Because Stephen Elop, the CEO of Nokia, considers mobile money to not be a core part of the company’s strategy. Let that sink in for a moment. Elop wants Nokia to pump out phones until the end of time instead of branching out and trying other things that might prove to be more lucrative. It wasn’t that long ago that Nokia was making television sets, and before that cables, and before that paper. Evolve or die? Not at Nokia apparently.

So what’s going to happen to people currently using Nokia Money? Refunds for registration fees will start being issued on the 15th of this month. The service will keep working for three to four months, but after that … it’s gone. Nokia has already asked the Reserve Bank of India to revoke their license to be a financial institution. The 100 or so people who were responsible for keeping the service up and running will be reabsorbed into Nokia and will have to find new positions.

Looking at the competition, Google is trying to get Google Wallet off the ground and they’ve got the insanely ambitious goal of replacing the wallet that’s in your back pocket. Meanwhile Microsoft isn’t going to talk about their mobile wallet initiative until their phones support NFC, which is expected to happen when Windows Phone 8 ships in Q4 of this year. Apple hasn’t said anything about mobile money either, but they have plenty of patents that show that they’re at least thinking about becoming a player.

Will Nokia find themselves playing catch up yet again in a decade?

  • John Dudely

    Stefan- I think Nokia realised that payments and becoming a ‘financial institution’ was a bridge to far. Very different to Apple, Google and Pay Pal who have a large base of customers with bank accounts, which they can link to the mobile, but still have the convenience of using the banking the infrastructure when they need it. 

    Nokia on the other hand tried to convert the asset of a large distribution network into ‘pseudo bank branches’ to create a bank for the the unbanked. Two key problems with this strategy; 

    1. Getting the unbanked to transfer highly valued and liquid cash into electronic money is a big ask, especially when the only comparable service is mobile phone airtime, which gets consumed from a customer’s account with no transparency…unlike banks with detailed account statements

    2. The distribution network’s incentive to enable account ‘cash-in & out’ was too small. Why have a queue of customers doing transactions and earn $0.05 for a 30-60 second action along with potential high financial liability for a mistake, when they can focus on handset sales which have a stronger margin. 

    Out of the 200 unbanked focused mobile payments businesses launched in the world only 6-8 could be viewed as successful. Stephen Elop made a tough but correct decision here. 

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