Banking with m-paisa
Vodafone, in collaboration with HDFC Bank, brings its hugely popular m-pesa service for Indian unbanked population
Acountry where close to 60% out of the total 1.2 bn population is deprived of banking facilities and does not have access to a bank, an inclusive financial solution like mobile banking utilizing the power of more than 900 mn mobile phone users, certainly holds a lot of promise. Looking at the huge demand of the application, various leading service providers under different application names have launched this service. Airtel has joined hands with SBI followed by Idea with Axis Bank, and the latest to join the bandwagon is Vodafone with HDFC Bank.
Recently, Vodafone announced the launch of its m-paisa service nationally, operating essentially as a business correspondent of the HDFC Bank, thus allowing the company to leverage its retail network to operators as bank sub-agents and facilitating banking transactions. Vodafone’s m-paisa, though, will have a slightly more stringent procedure with a HDFC Bank mobile bank account having to be opened in order to allow the customers to deposit and withdraw cash and transfer money.
The partnership has begun in the State of Rajasthan where 2,200 retailers across 320 villages and 54 towns are operational. The national rollout will happen in phases by the end of 2012. Under this initiative, HDFC Bank will be able to use select retailers of Vodafone to represent the bank as sub-agents and enable anyone to send money or withdraw cash through their outlets.
KC Chakrabarty (who launched the service), deputy governor, Reserve Bank of India says, “We will be supervising the HDFC Bank. We have issued the mobile banking guidelines. We want to ensure that the efficient use of mobile technology takes place in the financial inclusion.”
Agreeing to Chakrabarty, Sunil Sood, director, business operations, Vodafone India says, “It is a great opportunity for a country like India to improve financial inclusion through mobile banking. It is a pioneering initiative modelled on the lines of Vodafone’s m-pesa product running in 3 different countries of Africa, offering to more than 17 mn people basic financial services beyond the reach of traditional banking.”
Importantly, it is a cheaper option than sending someone cash through money order via the post office. The money order commission is at present around 5%. Sending money through the ‘HDFC mobile bank with Vodafone m-paisa’ arrangement will cost roughly about 1.5 for 100 sent. At the moment, the maximum amount that can be sent through this arrangement is capped at 5,000 per transaction. This at present costs a customer about 100.
Vodafone had earlier announced a tie-up with ICICI Bank to offer the financial products such as savings accounts, prepaid instruments, and credit products through
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a mobile phone platform. The two had also partnered to offer financial services through the mobile phone. However the deal could not be finalized.
Nokia is building an open ecosystem for mobile payments in India with multiple partners, to drive mobile money services across the country. In March 2011, Nokia partnered with Union Bank of India to launch Union Bank money services across the country. The services are currently live in the National Capital Region, Mumbai, and parts of Maharashtra and will be launched across the country by 2012. There is no doubt that the mobile service operators are ideal channels for banks to take their services to remote areas of the country as part of their financial inclusion program.
Well, success in the mobile banking market will help mobile operators shore up their ARPU even when the mobile voice traffic slows down, as the market for the mobile transactions is theoretically as big as the economy of India, and also because it has the potential of moving all the payments on mobile phones.