Mumbai: Ashok General Stores is a mom-n-pop store in Lower Parel, Mumbai’s erstwhile textile hub, which is popular with the middle-class families living in the area who still prefer the neighbourhood grocer to the big retail stores. Ashok offers services beyond the goods on the shelves.
Charged up: RBI has allowed prepaid card issuers to offer mobile-based cash cards for up to Rs5,000 for buying goods and services. Madhu Kapparath / Mint
It also recharges the prepaid mobile phones belonging to homemakers, students and construction workers. It collects cash amounts as small as Rs10 and uses the mobile itself to recharge user accounts.
Soon, Ashok will be able to do the reverse. Customers will be able to pay for soaps, cigarettes and milk pouches with their mobiles.
The banking regulator has allowed vendors such as Ashok to collect money from the prepaid cards of mobile users. In August, the Reserve Bank of India ( RBI) said prepaid card issuers can offer mobile-based cash cards for up to Rs5,000 for buying goods and services. This essentially means that even a customer who does not have a bank account can go for cashless transactions through mobiles.
Squeezing a person’s wallet into a phone relies on a technology called near-field communication, which allows any enabled device to communicate with a cash register. When a phone is enabled with the near-field communication technology, shoppers can load bank and credit card information onto their devices and use it to buy goods at grocery stores and fuel stations.
Mehul Desai, chief operating officer, c-Sam Inc.—a company founded by Sam Pitroda—said the existing recharging merchant network offers a good foundation to build upon.
RBI first issued guidelines for mobile banking transactions in October 2008, allowing the use of mobile phones for checking bank balances, bank transactions up to Rs10,000 and transfers up to Rs5,000. In April 2009, RBI made it clear that “the use of mobile prepaid instruments for the purchase of any other goods or services shall not be permitted”. But in August that year, RBI allowed mobile prepaid cash cards for purchases of goods with a cap of Rs5,000.
Since then, three non-bank entities have been allowed to issue such cards and many more are in the queue.
According to the Telecom Regulatory Authority of India (Trai), there are 471 million mobile phone subscribers in India. Roughly half of them do not have bank accounts. Even among mobile users with bank accounts, the usage of mobiles for commercial transacting is very low.
The new RBI norms have the potential to bring together a network of around 1.5 million merchants who use their mobile phones for e-recharging and a large segment of mobile users who do not have bank accounts.