A Cashless Odyssey

A report suggests that the mobile payment market in India is estimated to grow from $86 mn in 2011 to $1.15 bn in 2016 at a CAGR of 68%

The mobile payment (M-payment) segment is yet to pick pace in India but, of awareness and apprehensions about security remain major hurdles to its adoption. But certainly, it has a bright future. Mobile payments would not remain as an alternate channel, with its easy usability it wouldn’t be a surprise if it becomes a primary channel.

According to a recent report by Knowledgefaber, the mobile payment market in India is estimated to grow from $86 mn in 2011 to $1.15 bn in 2016 at a CAGR of 68%. Currently, there is lack of adequate banking infrastructure, low internet and PC penetration which would further fuel the growth of the M-payments market. The large unbanked population (nearly 41%) and lack of payment options for micro-transactions are the key drivers for mobile payment in India. And it is anticipated to witness robust growth.

Technology is a key enabler in this game. There are tremendous business opportunities emerging out of various payment technologies like prepaid, mpayment, and others in an emerging economy like India. Let us take a quick peep into the present status of m-payment journey, methods of payment and business models, and regulatory aspects in India.

Indian Scenario

As per the Knowledgefaber’s report, the mobile banking market size in India is $338 mn in FY12. Among the banks who have rolled out m-payment solutions, the State Bank of India topped with a market share of 51% in FY12, followed by ICICI bank with 33%, and Citi bank at 8%. HMFC and Axis Bank grabbed just 3% and 2% market share, respectively in FY12, while other banks had 4% market share.

The report pointed out that there were 90 mn m-payment transactions with an average transaction size of $0.95 in 2011 in India. Phile in China, there were 340 mn m-payment transactions with an average transaction size of $1.10 in China, in Kenya there were 700 mn transactions and the average transactions size stood at $35 last year. Brazil accounted for 110 m-payment transactions with $2 average transaction size.

The Reserve Bank of India (RBI) brings a silver lining to mobile payment segment through the favorable regulatory initiatives as it has relaxed m-payments transaction limit to 50,000 per person per day. And mobile operators, kirana stores, and corporates are allowed to act as business correspondents.

According to Amit Goel, CNO, Knowledgefaber, “M-payment has exponential opportunites as there is huge scope for mobile PoS in proximity payments due to high demand for PoS and ATM acceptance