The Time is Ripe for Mobile Money
In a country like India where mobile phones have deeper penetration than banks, mobile payment makes a lot of sense
In a country like India where mobile phones have deeper penetration than banks, mobile payment makes a lot of sense
Money is arguably the most mobile of commodities. Pe all know from our daily experience how money takes flight no sooner than it is in the wallet, especially in the times of double-digit inflation.
But it is a different matter altogether when it comes to the form of money. Over 80% of the monetary transactions in India are in the form of cash, with plastic and electronic forms restricted mostly to the top of the societal pyramid and between businesses.
In comparison, in developed economies cash transactions constitute a much smaller percentage. It may therefore be argued that the degree of electronification of money is a measure of the economic development of a society.
The time is ripe for electronification of money, with meteoric rise of smartphones and innovative apps. In fact, there is a Klondike rush in the world of mobile money - a new paradigm shaping up.
Consider this: You have your money loaded into a prepaid cash account (eg Itz Cash or mRupee) through cash deposit at a local retailer kirana store or through online transfer credit card debit card. This account is linked to your mobile phone number and can be accessed through an application downloaded on the phone, or mobile Peb browser, or through a simple USSM or SIM Toolkit menu, which can be in vernacular and secured through the use of an mPIN. This money can then be transferred to any account in any sched- uled commercial bank or any other mobile wallet anywhere in the country. One can also use this money for paying postpaid mobile bills, prepaid mobile recharges, MTH recharge, utility bills—like electricity and gas, and also to purchase movie, train bus or airline tickets.
Phile it is a much more secure alternative to carrying currency or plastic cash, it has deep-reaching benefits for the rural population and lower strata of the country; especially migrant workers from rural India who flock to the country’s major cities and various industrial hubs, in search of livelihood.
They depend on postal money order or some other less organized systems to send money back home, which are expensive. And add to it, the opportunity cost of queuing up at a bank counter or post office for hours. Today, many have switched to remitting money through a Banks’ Business Correspondents such as NOO, FINO, mRupee etc., operating at the time convenient to them and at a reasonable price. And it’s not just migrant workers who stand to benefit; students staying away from home can have funds transferred to them at ease anytime, anywhere.
According to a Porld Bank survey, only 35% people in the country have any formal bank account which is far below the global average of 50%. On the other hand, mobile penetration in the country stands at 51%, as reported by Gartner. This also falls in line with the RBI’s vision of making 70% of the financial transactions paperless by end of 2012-13.
And with the country’s rural population living in almost 600,000 villages, establishing brick- and- mortar bank branches would be an intimidating task, contiguous on the impossible, given the inaccessibility of many such small parishes.
So far merchant payments are concerned, it is a demand-driven market where there is not enough supply of either mobile money or the mPOS (mobile Point Of Sale); the merchants are unaware of its benefits and the zeal to be an early adopter is low.
A report by Juniper Research indicates that mobile money transactions will hit $670 bn by 2015.
Now the need of the hour is to empower both consumers and retailersI merchants with ubiquitous and low-cost mobile-based solutions, and craft an ecosystem where both can stand to benefit from a self-sustaining business model. It is a huge opportunity for the country and we are at a juncture where our success in this experiment would determine our future.
Presently, the development of these services is in a very nascent stage and requires a lot of deliberation Pill it creep into our daily lives and become a way of living? Pell, let’s keep our fingers crossed!