Mobile Money: All you need to know
Mobile Money has been striving to secure a firm and known ground, since a while now, but for many its familiarity is limited to ‘using mobile phone to pay up.’ But the question arises as to how and what exactly is being going around with mobile money, how it works and more importantly how would it benefit users? Talking precisely about India, mobile wallets are at a nascent stage, but knowing for a fact that mobile phone owners could possibly exceed in number than banking customers (also including the non-banking sector, which could afford a mobile phone), the popularity and subsequent usage could shoot up in a few years, if we may say so. We spoke to a few companies who have been contributing towards the shaping up of the mobile money market in India and will brief you about using mobile money.
What is Mobile Money?
The essential elements of mobile money are banking/non-banking firms, telecom providers, manufacturers (device supporting mobile money, if NFC is implemented) and developers (mobile money apps). Mobile phones are being used for banking purposes, like checking one's account balance, getting updates about our transactions and more. But here, we are talking about using one's mobile as an alternative to making transactions by the traditional methods, and even replacing credit cards, debit cards and so on. In India, mobile money has been introduced byAirtel, Obopay, Vodafone, Loop Mobile. One of the major entrants into mobile money had been Nokia Money. However, only recently, stopped the service as the company ‘supposedly’ wanted to concentrate on its core businesses in India. So, putting it down simply, instead of carrying cash or cards, you make your payments using your mobile phone.
How it works?
There are different methods of mobile payments, but clearly SMS seems to be the preferred one among mobile money players, considering it would make it simpler and easier to use. We’ve explained how Airtel Money, Loop’s M-Wallet and Obopay’s services work.
Mobile money players...
Loop Mobile offers its M-wallet service, powered by Zipcash, to pay utility bills like postpaid, prepaid bills and electricity bills, online shopping, and gift vouchers. To use the service, one needs to load their M-wallet. There is no constraint on the amount, as one can load the wallet with any amount. Zipcash has been using SMS to make and alert users about transactions. For example - You can pay any registered ZipCash merchant by SMSing: ZIP SEND (USERNAME/NUMBER) (AMOUNT) (PIN) to 56767. Click here for complete details. For online shopping, as you reach the payment option, you will find the Zipcash payment option. Every user will get a confidential pin that is required to process payments. This security pin will ensure no one uses your mobile wallet, even in case of theft or loss of the device. Zipcash allows transfer of money to other phones and bank accounts, however, you cannot withdraw cash from your M-wallet.
Airtel Money has caught attention, owing to its peppy mobile payment advertisements. Here, you register and create an account on your mobile. Then, you can load cash in that account by visiting an Airtel Gallery or one can also load money in their Airtel account via Netbanking. So,basically, there are two types of account that users can create with Airtel Money – Express Account and Power Account. The Express Account (maximum expenditure of Rs.10,000 per day) and is limited for recharges and bill payments, while the Power Account (maximum Rs.50,000 tranactions per day) gives a slew of options, like Utilities, travel, movies and money transfers. Airtel users need to type *400# and instantly access the Airtel Money Menu, click here to see USSD and SIM based demos. You currently cannot withdraw money from your Airtel account.
Stay connected...
Another mobile money service is Obopay, and it partners with Union Bank of India, and YES bank.The website also shows the Nokia Money option. The Obopay service offers Easy Send and Easy Pay options, allowing users to initiate payments via SMS, IVR, WAP, Java and FIRE. The user would require the mobile money application on their handset. Click here to know the list of handsets that support the mobile money application. Obopay tried to establish a mobile banking and payment service, which can be simply used via text messages.
Mobile Money Customer Awareness
As aforesaid, mobile money is at its nascent stage and so is the awareness of mobile money. It is being accepted in urban cities, but may still be a matter of concern for mini metros and rural areas. Several people are hesitant about payments made via other modes not involving cards or cash; it's time we gotten over our reservations of making online transactions, but the concern still bothers many. We asked the major mobile money companies what kind of response they have received so far. Users are concerned about security and the mobile money transfers come with security pins and also demand KYC documents.
Sriram Jagannathan, CEO, mCommerce, Bharti Airtel said, “airtel money has received a positive response from customers across the country. In a country like ours, where number literacy is high, customers have reacted positively to using a mobile phone to transact and send money. We hope to grow this further, going forward. airtel money offers a safe, secure, reliable and convenient way to transact, send and receive money. This is a strong value proposition for customers to start shifting from cash to mobile as a mode of payment. We are optimistic about its potential to bring about a sweeping change in the current economic scenario.”
Craete awareness..
“Loop Mobile’s M-WALLET service has received a promising response since its launch. We have received a good response from existing postpaid subscribers for M-WALLET. In addition, subscriber feedback has been positive on the dynamic services it brings forth,” said Surya Mahadevan.
Future of Mobile wallets in India
Mobile phones, today are no more confined to being available in the urban areas and have begun penetrating the rural areas, too. This major shift has been deemed possible owing to the awareness created by telecom providers and phone makers. There has been a tremendous increase in the number of mobile phone users, since and this number again has moved onto cover even those who're in the non-banking segment. This only goes on to add that mobile banking may sure be the next big thing in the mobile scheme of things. However, in order to introduce mobile banking in a big way, factors like consumer awareness and safety, while using a new medium of transaction would have to be taken care of. Another aspect will be the ignorance that still looms over NFC, as although most of us have been witness to mobile money modes, like SMS, IVR, among others, NFC hasn’t been even implemented, yet. NFC would require just a tap to facilitate the process, but this movement would require everyone including retailers and merchants to drift towards the mobile money options, just the same way as people are turning more comfortable towards online payments.
“The ability to replace cash with virtual money transferred via mobile phones is one of the ‘next big things’ in the mobile and banking industry. No matter where you live, you have probably always wished for an easier way to pay your bills, buy groceries or help your near and dear ones when in need - all this without the hassle over paper money. With flexible models of virtual money, mobile money has the power to appeal to the consumer. With 3 aspects to the product, mobilemoney offers consumers the ability to transfer money, buy products and services and make payments for utilities, etc. The low cost, real time transfers and full security of mobile money promises to revolutionize financial transactions and make life hassle free, " states Mr. Surya Mahadevan, Chief Operating Officer, Loop Mobile (India) Limited.
Will it turn into a trending mobile feature?
“While an estimated 240 million people across India hold bank accounts, more than 90% of the country’s population uses cash to pay for its daily needs. Additionally, a majority of customers continue to rely on traditional or time consuming methods like money orders and cheque remittances when it comes to transferring funds. On the other hand, the penetration of mobile telephony currently enriches the lives of over 900 million people in the country and can facilitate a paradigm shift in the way India transacts. We see the national roll-out of airtel money playing a pivotal role in accelerating mobile based commerce in India and look forward to further extending the availability of this service in deeper pockets of the country soon,” replied Sriram.
Mr. Neel Chowdhury, CMO & VP, Obopay Inc, said, “I believe that mobile banking has a bright future in India. Given that over the last few years, the Indian government has been focusing on financial inclusion and attempts have been made to ensure each Indian is a bank account holder. On the other hand, India’s mobile subscriber base stands at over 900 million as of February 2012 (Source: TRAI). Additionally, TRAI’s numbers for November 2011, show that over 70 per cent of the new connections were from the rural areas. Of the 2.97 million new subscribers added in November, around 2.13 million were from the rural areas, while only 0.84 million were urban customers. More recent TRAI’s numbers show that this trend continues well into 2012, with rural growth rates outpacing the urban segment (1.42% v/s 0.51% month on month for the period of January 2012 to February 2012). Going forward, mobile commerce will play a more important part to help achieve India’s ambitious goal of ‘One Bank Account per Indian’ by 2020. A large part of the ecosystem will include telecom service providers and banks shifting focus to include m-commerce as a part of their mainstay businesses. What players like Obopay can do in this scenario, is create an environment that makes banking and mobile usage profitable in these areas by bringing them together on one easy platform.”
Still at nascent stage...
Steps to improve mobile money services
We believe that the mobile money trend will catch up soon, but this again depends on a lot of factors. While mobile phone prices and numerous options in the mobile segment have ensured that some decent features can be bagged by even an entry-level user, mobile money needs much more than that. Another hindrance could be the small charge that telecom operators levy while facilitating mobile money transfers. Customer awareness, here is of utmost importance, as many people still don’t know what mobile money is or have information that is limited to merely knowing that it is a mode to transact money via mobile or check one's banking statuses via mobile. Then, merchants and retailers need to accept this new form of transaction, too. There have to be initiatives by more banking and non-banking segments to offer and encourage such services for users in India.