If you are short of change to pay an auto or taxi driver, or to recharge the prepaid phone card of your child or parent, help is on the way from an emerging breed of mobile payment service providers.
Mobile commerce, which in India has been limited primarily to basic banking transactions, purchase of travel tickets and payment of some utility bills, is finally taking off with banks, cellular operators and payment service providers coming together to find solutions that comply with regulatory guidelines.
Security, a prime concern with banking regulators, has been a hindrance to the growth of mobile commerce services such as the so-called mobile wallet, which helps make payments at retail outlets through text messages or Internet-enabled phones.
The Reserve Bank of India, for one, had issued guidelines against creation of the mobile wallet, a derivative of a phone firm’s master bank account, from which millions of subscribers can be served on their mobile phones.
Hand-held convenience: With the expansion of mobile commerce offerings, customers in India could use mobile phones to make financial transactions such as paying for taxi fare and recharging prepaid phone cards. (Photo: Madhu Kapparath/ Mint)
Californian mobile payment service provider Obopay Inc. and Bangalore’s mChek India Payment Systems Pvt. Ltd are among a fast-expanding breed of mobile payment service providers which have planned offerings that work within the guidelines and bring the convenience of mobile transactions.
Obopay, for instance, has a debit card-like model in place. “Here, the wallet is not created, but the (customer’s) bank account itself is linked with the mobile phone,” says Balachandran Unni, vice-president, business development and alliances, Obopay Payment Services Pvt. Ltd, the local unit of Obopay Inc. The firm offers mobile wallet-based transactions in the US and plans to launch the bank account-linked services in India, too. “Respective banks with whom we have partnered will be launching this in three to four weeks,” says Unni.
International remittance is another service that Obopay plans to bring to India. Unlike what Western Union, the most popular service provider for such transactions, typically does, Obopay is planning to remit money from overseas directly to the bank account linked to the phone. The customer would be then notified of the transaction through a text message. This service too should be operational this year, expects Unni.
Western Union typically charges customers around $4, or about Rs158, to transfer, say, $1,000 from Dubai, which is considerably less than the cost of a bank transfer: $15 to send $1,000 from, say, the US and other countries. Mobile payment service providers won’t say exactly how much, but transfers through mobile phones are expected to lower the transaction costs.
MChek India, meanwhile, is looking a broader reach for its offerings. It plans to launch payment solutions for common-day uses such as paying auto or taxi fares through mobile phones. The application can transfer small amounts from one bank account to another via the mobile phone.
“Auto and taxi drivers could never take electronic payment, so it will bring a complete breakthrough,” says Sanjay Swamy, chief executive of mChek, which provides such facilities for retailers in Sri Lanka and has done trial runs for the service with taxi drivers in India. The service is expected to launch later this year.
Another Bangalore mobile content service provider, OnMobile Global Ltd, which concluded an initial share sale recently, plans to offer customers the option of topping up prepaid accounts of a limited number of people. “We have worked with a couple of banks; we are going to launch this with one or two operators in three to six months,” says a spokesperson of OnMobile, a spin-off from software giant Infosys Technologies Ltd.
Technology researcher Gar-tner India Research and Advisory Services Pvt. Ltd has not done a formal survey, but reckons the market for such services to be less than $16 million, or 1%, of the data services market. Indian wireless phone firms are estimated to have made some $1.6 billion from text messaging, downloading of ringtones, wall papers and other non-voice offerings.
“The initial push for mobile commerce is expected to come from banking services,” says Neha Gupta, senior research analyst, Gartner India. “Later, point-of-purchase sales would push the market.”
A recent report by the Consultative Group to Assist the Poor—a consortium of 33 public and private funding organizations to expand the access the poor have to financial services—cites successes in other countries, such as Kenya and the Philippines.
Banks in India have already started tapping this market with ICICI Bank Ltd, the country’s largest private lender, making all of its Internet banking service available on mobile phones from early January.
“For the first two-three months we are looking for 30,000-50,000 customers; then we will scale it up,” says Manindra Juneja, head of mobile commerce business at ICICI Bank. “Because of the convenience and the way the mobile network is spread across the country, it will quickly gather the speed,” he added.
Standard Chartered Bank recently launched a service that allows a customer to transfer money across the country from an ATM to anyone with a mobile phone. The recipient can withdraw the money from any of the bank’s ATMs using a pin number which is automatically messaged to his mobile phone, and the order number that the sender should communicate to the recipient.
There are more than 220 million wireless subscribers in India—a market that adds more than six million customers every month.
Bharti Telesoft Ltd, a software products and solutions provider to mobile operators and a subsidiary of Bharti Enterprises Ltd, which controls India’s largest mobile phone services firm, Bharti Airtel Ltd, is working on providing solutions for microfinance operations, especially in data collection work.
The company, whose technology runs mobile commerce offerings of phone firms in France and Egypt, plans to help microfinance firms update their data which, in turn, will help in collecting funds from remote areas using mobile phones. “This will help microfinance companies improve their efficiency for data entry by 15-20%,” says Ashish Desai, its vice-president for mobile commerce.