Converge to monetize m-payments

The third international conference on Mobile Payment India 2011 centered around the theme ‘Convergence is the need of the hour’.

The inaugural session began with industry leaders deliberating on the topic of ‘The Future of M-Payment in India and Services Providers’ Perspective’. Converging on a single platform, speakers from MTNL, Bharti Airtel, Reliance Communications joined spokespersons from Yes Bank, Axis Bank, IBM and KPMG to speak about the various initiatives between banks and telcos towards m-payments, and how this is slowly leading to a cashless society, driven by m-commerce.  

Banking, remittance and m-commerce are the three focus areas for RCom, which is looking at the market of payments worth less than Rs 1000, which will be a $30-40 billion market by 2015.

“We are therefore looking at payments on a daily basis, periodic basis and special occasion basis, and we plan to cash in on the prepaid consumption, for which strata m-payments is missing. We are also aiming to provide universal user experience by all telecom operators, and for this investing in customer education, keeping it simple, universal acceptance of standards across merchants, cash-in- cash-out, and building system of trust are all necessary facets,” said Kunal Ramteke, head, M-Commerce, Business, Reliance Communications.

The government, market and mobiles were all catalysts for a cash-less society, and the cashless revolution would be driven by mobiles.

For urban customers, m-payments were a matter of convenience, while for rural
areas, it is a matter of accessibility and hence m-payments should first be
tested in rural areas, and then urban areas.

“Some of the main growth drivers for m-payments in India are the growing retail market, unbanked rural population, a secure and trustworthy network, payment services and transaction utilities, and M-POS.
M-payments, in addition, is also an enabler for financial inclusion, in terms of accessibility, transaction capability, and scalability,” said J Venkatramu, AVP- Rural Banking, Axis Bank.

Talking about how India will have to formulate its own model for m-payments, which will no doubt be a converged model – as a measure to bring about accessibility and convenience, Kunal Pande, director, KPMG said that while the m-banking sector is now dominated by single players, telcos and banks need to work together to save on wasteful expenditure and also for the sake of a broader ecosystem. VAS should also be added to the m-payment platform.

Besides this, affordable and pervasive technology, newer ways of competition, and modern techniques for rapid growth are things to be considered. Some of the challenges ahead include data security and integrity, regulatory and compliance issues, risk management, infrastructure management, fraud management, technology innovation, dependency on tools and cards, technology interoperability, enhanced engagement with regulator, collaborative models and innovation,” Pande added.

New services are much needed to keep customers active, and middleware and technology vendors are needed to stop customer confusion. Elaborating on this point, Alpna Doshi, CIO, Reliance Group mentioned that a day is soon coming when people no longer have to carry wallets, and can conduct micro transactions and remittance from their mobiles itself.

M-commerce uptake will be more aggressive in less-developed countries, like India and Africa, and the target is to keep it safe. Piggybacking on telcos seems like a good and obvious choice. Besides, a value-based ecosystem, which has everything on one device, and is user-friendly, is what will drive m-payments, along with niche apps for remittance, banking, convenience, PDS and micro financing,” Doshi added.

Ending the panel discussion with a thoughtful statement that customized m-payment for Indian ecosystem is the need of the hour, and stating that banks and telcos have to converge to drive m-payments as clearly the mobile users in the country today outnumber the number of citizens with a bank account, Peeyush Agrawal, executive director, MTNL said that while there are approximately 6.8 lakh mobile transactions today, this number is estimated to touch 860 mn by 2015. With the RBI now allowing
transfers of up to Rs 50,000 daily, m-payments is only set to boom.

In the following session on ‘New Services and Growth Drivers for M-Payment in India’, Puneet Asthana, DGM – New Product Development, RCom set the tone by saying that a shared ecosystem built on security and trust, with telcos as the main driver is the road ahead for m-payments in India.

Continuing on that note and speaking about the role of UIDAI in online authentication with biometric reading, financial inclusion and inter-bank transfer, Sumnesh Joshi, assistant director general, UIDAI added that on the mobile platform, what is required are apps for transferring money, so that all retailers become business correspondents to banks, and literacy is not a requirement. He also reiterated that convergence is the need of the hour.

Speaking next about why m-payments will work in India, Lokesh Singh, sales manager – Asia Mobile Financial Services, Gemalto said that high mobile penetration, high unbanked population, a retail market size of $ 400 bn, a cash-based economy, and high momentum on the subject amongst banks, telcos, and key stakeholders, make a good case for m-payments to be successful in India. Speaker Christina Tubb, head, Corporate Development, eServGlobal, added that a multi-tier distribution system is needed for mobile money on the retail side to prevent congestion.
Challenges in m-payments include the lack of possibility for higher payments, government policies, a wide range of vendors in rural areas, differing apps on different devices, government policies for m-payment, and lack of strong encryption and secure gateways, with the ability to validate all inputs from customers,” said Suhas Desai, senior consultant, Aujas Networks.

However, these challenges can be overcome if the banks, telcos and government work together, and m-payments could also be a golden opportunity for telcos to boost their falling ARPUs.

Providing the closing remarks on this note, Kasturi Bhattacharjee, director – Infocomm Consulting, PwC said, Telcos today are struggling to incentivize and monetize their services with vendors.” M-payments can give them a much-needed boost. The gross valuation of m-payments in India is set to rise to $7.6 billion by 2014, while m-commerce is projected to be a $940 billion market in 2011.

 By Beryl M