1. an initiative Vol-1 / Issue-3 / Oct-2012
Mobile Payments : Developing a Customer Centric Model
Mobile phone has arguably achieved availability of cheap feature-rich mobile Financial Institutions, Third Party players Operator
permanent share of pocket, a place next to phones, strong distribution network of play different roles in the value chain and Centric
the wallet and keys. It is most likely to be existing MNOs and pressure on banking aim to maximize their individual profits or
constantly with the consumer, at least in the industry for serving wider spectrum of returns. Like in other countries, different
foreseeable future. The dictionary meaning population at lower costs, to name a few. models in the value chain co-exist in India.
of what activities constitute a mobile Based on the level of financial inclusion and Here also, all the key entities are trying to
payment does not exist. Broadly, it includes mobile penetration, any of the four maximize their standalone profits. Such an
use of the mobile phone in prevalent business models for payments approach has resulted in different revenue Bank
Government
initiating, ordering exists in a country, as depicted in the models, lack of standardization and further, Centric
s
and doing transaction illustrative on the right side of the page. lower acceptability of mobile payments in
MNO
for purchase of any
good or service. The role played by these stakeholders
ks
A number of an t varies across these established
B an Peer
stakeholders are ch business models. Every business
er
M to
involved in the complex model has a success story to boast. The
mobile payment ecosystem astonishing success of M-PESA in Kenya is Peer
including regulatory bodies, the most talked about case of an
merchants, mobile network Operator centric mobile payment business the country. This has added fuel to the
operators, handset manufacturers, model. Successes in Peer-to-Peer rising skepticism about mobile payments in
technology providers, financial institutions business m o d e l revo l ve a ro u n d the minds of consumers.
and customers. achievement of independent players like Collabration
Paypal, Obopay, mChek, etc. The real world There is a need for better coordination
Key drivers for mobile payments in india roll out of SK Telecom Moneta is an between different stakeholders to develop
include large un-banked population, high illustration of a Collaborative Model. a scalable and sustainable intergrated
m o b i l e n e t wo r k p e n e t rat i o n a n d Different stakeholders like MNOs, mobile payments business model.
Pg. 2

2. from Pg. 1 Some of the customer Customers need to be assured that Attraction and future of mobile payments is assist in building trusts about mobile
expectations that need to be addressed mobile payments and transactions unquestionable. A scalable business model payments. If this business model sustains
include ease of access, real time transfer offer advantages over cash or cards with focus on customer is need of the hour. over longer period, it shall pave the way
status, trust, security, interoperability, and standards need to be put in Such an acceptable model should serve for revenues and corresponding profits.
traceability, low usage costs and ubiquity. place to provide a seamless experience. as proof of concept to the customer and
- Apoorv Bhatt
Is it really the end of CA H era?
Alternative modes of transactions are evolving and changing the way we handle cash. M-commerce, the new kid on the block, has taken the world by storm and
Today the binary codes are fast replacing the currency notes and coins. Introduction of is here to stay. The advent of NFC technology and Starbucks' recent
plastic money (smart cards) saw the dependence on carrying cash decrease investment in mobile payments service provider, Square, set the
substantially. It would be an exercise in futility to think of a product which doomsayers abuzz and it was heralded as the beginning of
cannot be bought by smart card. Now mobile phones and computer the end of cash. Although it is fair to concede that cash may no longer
systems have taken charge and are the most preferred be king, it would be presumptuous to assume that m-commerce
medium for making all kind of payments and transactions. could spell the death knell for the cash era.
Banks, network service providers and mobile manufacturers
have joined hands and are providing financial services to While we may be in the
the customers. Banks are also encouraging and educating midst of a mobile boom, there are a few harsh realities that reduce
their customers to use internet and mobile banking for doing the sheen off m-commerce. Garnering customer trust for alternative means of
their regular transactions. payment and changing the apprehensive mindset is a challenge, as e-commerce
has learnt the hard way over the last decade. Last mile merchant acceptance will ensure
The acceptance from a consumer's point of view has increased cash remains relevant unless the regulatory and technology infrastructure support
over time. The number of transactions carried over the internet are increasing steadily greater penetration than the existing limited market for such value added services.
and the 'cash' transactions are losing ground. Many companies have based their business Apple's snub of NFC in the recently-launched iPhone 5 suggests that even in the
model around on-line shopping and it has emerged as one of the most profitable one evolved economy of USA, mobile payments have neither gained widespread customer
for the companies. It allows them to offer customized solutions to their customers and acceptance yet nor have merchants embraced the technology on account of the costs involved.
things can be purchased on a click of the mouse. Moreover, socio-political pressures shall ensure that cashless societies remain a distant
dream if we consider the 'parallel' economies and lower income groups that survive on
Technologies like PayPal Mobile and Google Wallet have led to people shifting towards cash, in both developed as well as emerging countries.
'cash less wallet'. The personalized services provided by these applications will draw
more and more people in using them and ultimately reduce the actual cash spending. The obituaries can wait. Cash is not going to fade into the sunset anytime soon.
- Saurabh Wagh - Eklavya Malhotra

3. In a candid discussion, Rajan S. Mathews, Director General, Cellular Operators Association of India, voices his thoughts on mobile payments in India.
Where does India stand in the mobile payments market worldwide?
Mobile phone has high potential of becoming the “channel of choice” for delivery of banking services. It provides benefits of higher coverage and significantly lower costs than any other available
channel. Mobile platform can deliver these services:
Mobile Payments : Services like airtime transfer are offered by MNOs. Other services like remittances are offered by banks, with MNOs acting as Business Correspondents.
Mobile Banking : Services like shopping and ticketing are catching up in India. Retail transactions are allowed when mobile phones are allowed to act as “prepaid instruments” at selected retail outlets.
Mobile Finance : These services can be realized in India only after issues of security, trust and business model are streamlined and proven by adoption of mobile payments and mobile banking services.
Is the industry likely to structurally change in near future?
Banking penetration in India, especially in the low income and rural areas is extremely low, at about 5-7%. Mobile platform, with its wide reach and low cost, is suited to meet
the unmet banking needs. Presently, India has seen limited adoption of mobile payments and mobile banking. As these models mature the model will shift to mobile finance.
What are the critical success factors for the players in the Indian mobile payments industry?
a. Accessibility: Services need to be made easily accessible to end user through wide distribution and retail network.
b. Interoperability: Customer should be allowed to transfer funds across mobile prepaid instruments irrespective of the serving MNO and Bank.
c. Affordability: Price should be low enough to facilitate adoption, but reasonable enough to enable banks and MNOs to design a sustainable business model.
d. Assurance: Security levels should be adequate as well as easy to use.
e. Awareness: Proper marketing and customer experience delivery is extremely important for adoption of these services.
What are the experiences on mobile payments from other countries for Indian players to emulate?
International experience of developing and developed economies in the area of mobile money has been very different. In developed economies, population is well served by the banking industry and e-
banking is also adopted. M-banking/payments/finance is thus seen as 'just another channel' to serve them. Developing countries with low banking penetration but well entrenched mobile
communications systems are more akin to the rural and low income markets of India. Here services like cash deposits & withdrawals, money transfers, remittances, payments like bills, loans etc. add
value to customer and thus help in adoption of services.
Who is likely to take lead in growth of this industry in India – telcos or banks?
There are different models with associated pros and cons. A partnership between telcos and banks, where each entity realizes the value the partner brings to the table and has an incentive to promote
adoption is a more workable model and should see greater success.
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