Airtel in talks with banks to expand money transfer service
Airtel in talks with banks to expand money transfer service
New Delhi: After the launch of its Airtel Money service, which allows users to transfer money to another Airtel account holder or to bank accounts and to pay for shopping, Bharti Airtel Ltd is now in talks with banks to upgrade the service to a so-called open wallet, which will allow end-users to withdraw money as well.
Vodafone has a similar tie-up with HDFC Bank Ltd and has launched the service in Rajasthan.
Bharti Airtel is in talks with banks to expand the service to withdrawals, said K. Srinivas, president of consumer business at India’s largest phone firm. He didn’t specify the banks with which the firm is in talks or set a time frame for the launch of the service.
He said the company is trying to create a payment infrastructure on which a host of transactions, including remittances, can be done.
“Remittance is obviously a big deal because today there aren’t enough instruments for remitting cash to people who are unbanked," Srinivas said.
For the open wallet service, Airtel will have to develop a network of business correspondents from whom consumers can withdraw the cash transferred to their accounts.
Srinivas said getting a widespread network of such representatives across the country will not be an issue as the firm “has the advantage of having half a dozen outlets in every village, which have an existing relationship with Airtel. The idea is to leverage that reach".
Technology-wise, it would also be possible to withdraw money from an automated teller machine (ATM) without having to swipe a card and by providing the mobile phone number and the personal identification number (PIN) used in the transaction.
Under Reserve Bank of India (RBI) regulations, open wallets are issued by a private entity and need to be backed by a bank. In general, banks are empowered to authorize payments, and no additional approval is required. However, most banks inform RBI when launching a new service.
“Mobile payments eliminate the need for putting in physical infrastructure such as point-of-sale terminals, ATMs, even issuing cards," said Uttam Nayak, group country manager for India and South Asia at electronic payments firm Visa Consolidated Support Services India Pvt. Ltd.
There is cost involved in setting up the payments ecosystem, and it will take a lot of time to put terminals across the entire country, he said.
“So mobile is the transformation, and they have made sure you can make and receive payments; so that will eliminate the need for infrastructure investments." The cost of the transaction drops significantly and the ability to make cashless payments also gets a boost, Nayak added.
surabhi.a@livemint.com
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