Bank­ing with m-paisa

Voda­fone, in col­lab­o­ra­tion with HDFC Bank, brings its hugely pop­u­lar m-pesa ser­vice for In­dian un­banked pop­u­la­tion

Voice&Data - - ANALYSIS - Ritu Singh

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

For more re­lated ar­ti­cles go to voicen­

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.


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