Play­ers Get More Teeth

Pay­ment bank li­censes from RBI have come as a big booster for the mo­bile pay­ment play­ers, who have hith­erto been lim­ited to wal­let ser­vices.

Voice&Data - - CONTENT -

Mo­bile pay­ment may be seen as a VAS that has the po­ten­tial to truly and di­rectly be­come a growth en­gine for tel­cos. How­ever, due to reg­u­la­tory rea­sons, the scope has largely been lim­ited to mo­bile wal­lets, which have had their own sets of lim­i­ta­tions. Most sig­nif­i­cantly, there has been lit­tle in­cen­tive for users to keep money in their wal­lets as there would be no in­ter­est earned. On the other hand, providers earn very neg­li­gi­ble net amount since they have to pay one to two per­cent of trans­ac­tion charge to the bank from which the wal­let is be­ing recharged, even though they are able to earn a com­mis­sion of around 1.5 per­cent on each trans­ac­tion made by the cus­tomer. Add to this the fact that mo­bile wal­let play­ers need to in­cen­tivize users through dis­counts and cash­backs, which fur­ther trims down their mar­gins.

No won­der, as many as 41 play­ers had ap­plied for se­cur­ing “pay­ment bank” li­censes from RBI. With the cen­tral bank re­cently grant­ing ap­proval to 11 of them and in­di­cat­ing it could be is­su­ing more li­censes in fu­ture, there is height­ened in­ter­est in the seg­ment now.

Pay­ment bank li­censes would en­able the play­ers and the users to po­ten­tially do away with the need to recharge their wal­lets from a bank ac­count and thus ob­vi­ate the obli­ga­tion to pay a com­mis­sion to the bank. More­over, the pay­ment bank li­cense could mean­ing­fully in­crease the num­ber of sub­scribers who would be us­ing the ac­count for a whole lot of bank­ing and fi­nan­cial trans­ac­tions other than just the wal­let.

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