The Way It Began…
Like it is with most other inventions, necessity is the primary reason behind the creation of the mobile wallet. About a decade ago, it had become impossible for people in Kenya to deal in cash due to the high crime rate – robberies and thefts had become common across towns. Then, a private telecom service provider introduced mobile ‘money transfer service’ under their social responsibility project. The project was successful and within a decade it was adopted by almost all African countries.
The number of people doing financial transaction on the phone is consistently growing. Industry estimates tell us that in 16 countries, mostly in Africa, there are more people with mobile money accounts than bank accounts. The service is not so popular in the developed world, but it is a game changer in emerging economies. While in 2012 there were 30 million active users of mobile money around the world, the number grew to 60 million in two years. In May 2015, the figure had breached the 100 million mark.
Banking the Unbanked in India
India first tested the service in Rajasthan in 2010, when a leading mobile service provider used it to disburse money directly to their social responsibility project beneficiaries. The service became popular as mobile wallet, or m-wallet, and expanded its reach across states.
A few years ago, when three poor women in a nondescript area near Ranchi, Jharkhand, gave birth to healthy children, their joy was marred by exasperation as they did not know how to avail of the money due to them under Janani Suraksha Yojana (JSY), a financial assistance plan under National Rural Health Mission (NRHM). The scheme promotes institutional delivery and gives Rs 1,400 to the mother on the birth of every child, but these new mothers did not have a medium to receive their money. At this juncture Vodafone intervened; these women were enrolled under their mobile money service, and the money reached them via m-Pesa, a Vodafone initiative in tie-up with ICICI Bank.
The m-Pesa is a USSD-based (an SMS-based service that does not need Internet) technology that helps people send and receive money over the mobile phone, remit money to any bank account in India, and make payments to recharge prepaid mobiles and for utility bills like electricity as well as DTH service subscription, apart from using it for online shopping transactions.