Is mobile wallet a distant dream in India?

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Aparajita Gupta | 28 Jul, 2014
Despite a huge unbanked population and 700 million cell phone connections, the concept of mobile wallet will take some time to become popular in India as people are still unaware of its larger benefits like financial inclusion, even as the standards to make it functional are yet to be in place, experts maintain.

"People do not understand the larger concept. Mobile wallet is a complex software, where multiple players can play," said technology evangelist Sam Pitroda, credited for India's telecom revolution in the late 1980s and1990s.

"I really wanted to create a leather wallet metaphor on mobile phone -- one that gives all the functionalities I get in leather wallet. It has four phases - mobile banking, mobile payment, mobile commerce and mobile transaction," Pitroda told agency.

His company C-Sam had developed a mobile money transaction platform in 2010, which he sold off to MasterCard later.

"The concept has not matured in India. It has huge potential but it will take another 10 years to pick up in India as the standards are not in place. There are complex issues of interoperability and security," Pitroda added.

The technology is used and present in some forms in some African nations as well as countries like Brazil, Bolivia, Costa Rica, and Singapore.

In India, telecom service providers like Vodafone India and Bharti Airtel have their individual mobile wallet platforms.

"This industry is still ascent and there continues to be innovations and experiments. Our current offering has been created post extensive research, customer insights from our pilots. However, given the scale of mobile users in India, mobile banking has the potential to emerge as a game changer in terms of costs, convenience and speed of reach," said Suresh Sethi, business head - M-Pesa, Vodafone India.

"While getting a bank account can be intimidating for the uninitiated and finding a bank branch might be challenging in rural areas, registering for an 'airtel money' (Bharti Airtel's mobile wallet platform) account on the phone is easy," a Bharti Airtel spokesperson said.

Mobile wallet is a virtual wallet on the cellphone -- one where cash is stored digitally and can be used to pay by the phone for various needs. It can be used for sending and receiving money, to pay for utility bills, buy rail and movie tickets, recharge of telecom and direct-to-home TV, as also move advanced uses like instant e- payments at shops, physical or online.

"It is an interesting arena and high demand is expected in this field in the future because there are large numbers of people in the country who are unbanked. Given the fact that mobile companies have good penetration, it is expected that they will be able to leverage their network to bring more people to use mobile wallet," said Mohammad Chowdhury, telecom leader, PwC India.

He added that there are a few restrictions to it. "Firstly there is the consumer preference issue. People in India have alternative money transfer channels like hundi. Here the channels not only give them a service, they also establish human relationship. Secondly, there are regulatory issues as well."

"Still people are unaware and lack understanding of the concept and the companies are yet to win mass consumer confidence in mobile wallet. Though it is a very easy thing, yet I have not seen many people using it. It has a high potential but it will take time to gather momentum," Chowdhury said.

India with 1.2 billion population has an impressive mobile tele-density of around 70 percent. With the rapid growth in the number of mobile phone subscribers, banks in collaboration with telecom companies are seeking to develop an alternate channel of delivery of banking services and financial inclusion.

Bharti Airtel said it has been investing substantially in airtel money to build a product that would be intuitive and user-friendly and cater to the need of the customer. "We have thus spent a great deal on creating a state-of-the-art technology platform, user experience, and training and in generating awareness and educating the masses. We have also establish a dedicated call centre that educates customers about the different aspects of airtel money," the spokesperson said.

"Our (Vodafone India) tie-up with ICICI Bank makes it possible for us to make financial inclusion possible in remote areas. It also helps us offer a full portfolio of financial services, including cash withdrawal," Sethi said.

Vodafone said the service is available across India with over 65,000 agents and more than 1.4 million registered customers.

Highlights of mobile wallet:

*To send money through mobile wallets, one needs to be registered with the mobile wallet companies

*Once registered with any one of the platforms, one is given a unique number

*One can send money or make payments through it by loading cash in his account and making payment against it

*The recipient may not be always registered with mobile wallet accounts

*After receiving the money, the recipient needs to go to the mobile wallet retailers with the message and after proving his or her identity can take payment against it

*Vodafone M-Pesa was launched in Kolkata in 2012 and began the roll out in April 2013

*Airtel Money was launched in February 2012