Newsletter August 2012 - KAIM India School of Management

expected to exceed $300B globally by
2013.cashless payment service that works by
converting the cell phone into a smart card. M‐
wallets serve as a handy tool for multiple
functions—as bank cards, credit cards, house
keys, and swipe cards to enter premises,
electronic cash, train tickets and much more.
In Japan and Hong Kong, these phones come
with embedded contact‐less chips that
commuters often use to buy local train tickets.
In Kenya, Safaricom, a Vodafone affiliate,
enables its 150,000 subscribers to deposit
cash with agents and use SMS to pay for
purchases. In Congo and Zambia also, mobile
phones are used to transfer funds and pay for
goods and bills. In South Africa, a mobile bank,
Wizzit, provides bank accounts that may be
accessed through a cell phone. While the local
retailers use their phones as a point of sale
terminal, customers pay for their purchases
through their Wizzit accounts.
M­wallet scheme in Indian context
In developing countries mobile payment
solutions have been deployed as a means of
extending financial services to the community
known as the unbanked or under banked,
which is estimated to be as much as 50% of
the world's adult population, according to
Financial Access' 2009 Report "Half the World
is Unbanked" In India, paying for ringtones
and downloads using a pre‐paid mobile
connection could be called a limited form of
m‐wallet payment. Bank of Punjab was one of
the earliest to launch an m‐wallet in 2002.
Reliance Communications and HDFC Bank
recently launched the mPay virtual credit
card. This can be used at any merchant
establishment that accepts payment via mPay.
The bank authenticates the information with
RCom, and will authorize all payments using
the customer’s mobile phone.
Airtel too has launched mChek for bill
payments through tie‐ups with the State Bank
of India, ICICI, HDFC and C My Mobile
Payments Ltd launched the m‐wallet
service Money‐on‐Mobile
to make
payments on mobile phones for purchase of
goods and services through an SMS.
M‐wallet will allow consumers to load their
phones with cash of different denominations
(minimum Rs 20) at various retail touch
points. This can be used to
pay postpaid mobile bills, electricity and gas
bills, purchase airline, bus and movie tickets.
It can also help to recharge mobile and DTH
services.
The payment system is independent of the
consumer’s bank and mobile operator which
allows mobile subscribers to avail themselves
of services through an SMS without any
premium charges to it. The money recharged
gets saved in the escrow accounts with the
RBI.
These services can be obtained when both the
customer and the merchant are registered
with the company’s service. The transaction
limit is Rs 50,000 per month with maximum of
Rs 5,000 per transaction.
Money‐on‐mobile was launched for B2B
market in India in 2010. At present, it has
82,000 retail merchant base pan‐India.
The mobile payments service provider
received funding of $29.7 million
(approximately Rs 166 crore) from US‐based
Calpian Inc
Problem of accepting M­Wallet scheme in
India
In India, the challenge is one of successfully
handling large volumes.
The low average revenue of the Indian cell
phone user is another issue. Today, almost