Biz correspondents to enter mobile payment services
The rush for mobile money has now caught the fancy of firms acting as business correspondents for banks. These entities help banks provide financial services in rural centres. With $350 billion of payments and banking transactions expected to flow through cell phones in India by 2015, many of these companies are now in the process of introducing their own mobile transaction services.
FINO, India’s largest business correspondent, with operations in 24 states and 386 districts, has recently introduced a mobile payment service on a pilot basis. “It is called m-Rupya. We are testing this model on a pilot basis, with 20,000 customers. We will launch this service by the end of the next quarter,” Manish Khera, chief executive officer, FINO, told Business Standard. The company has developed the software platform for its mobile payment service through its in-house research and development team. The company plans to offer this service to its 36 million customers in India.
SEED Financial Services plans to introduce a similar mobile phone-based payment service. The New Delhi-based business correspondent is likely to partner a technology firm to develop the software platform. “We have appraised the latest developments in mobile banking and payment services in India. We are looking to launch a similar service soon,” said Anirban Roy, managing director, SEED Financial Services
According to Boston Consulting Group (BCG), it is far less expensive to offer banking and payment services using mobile technology than setting up bank branches in remote parts of the country. “In India, electronic payments are in their infancy. Today, withdrawals through automated teller machines, rather than payments, account for more than 90 per cent of all card transactions. Mobile payments, meanwhile, are younger still,” the global consultancy firm said in a study released last month.
However, BCG expects mobile phone usage in financial transactions in India to surge in the coming years. It estimate payments and banking transactions through mobile phones at $350 billion by 2015, compared with $235 billion of aggregate debit and credit card transactions today.
Top banks in the country, including SBI, ICICI Bank, Axis Bank and Union Bank of India, have already announced tie-ups with mobile phone operators to capitalise on this opportunity. Bankers and industry analysts, however, said most of these joint ventures have failed to take off because of regulatory hurdles, improper planning and divergent objectives of banks and mobile phone companies.
In January, SBI had announced a joint venture with India’s largest telecom operator, Bharti Airtel, for offering payment services through mobile phones. In a joint statement, the duo had said, “The joint venture incorporation between SBI and Airtel will be concluded by March 31.” The venture, however, is yet to be floated. “It has not been completed, as we have not received the permission from the Reserve Bank of India. We had proposed a 51 per cent stake in the joint venture. We are now awaiting a decision from the regulator. The discussions are still on,” said a senior SBI official privy with the development. This has provided business correspondents an opportunity to enter the mobile banking space with their own products and services. “We don’t think these joint ventures are a threat to our mobile payment services,” Khera said.
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