Passing bucks over phone

“Hey, what’s the score? Tendulkar has hit a century. What a superb square drive!  Another mail for sales report and that too is sent when I’m totally boozed off at the club!”  “Are you afraid of pick pockets nowadays?” “Arre nah! I don’t even carry a wallet. Come on, this is the era of smart phone.” Yes, mobile has smartened up to pay your bills, and this is called mobile payment.

 

With the launch of smart phone, powered by 2G and 3G, and in near future 4G, mobile payment or mobile wallet is going to raise ruckus in payment services. There’s an interesting bond between retail and telecom progress in India. Both the sectors are growing with rapid induction of international practices in the system. The smart phones are here now and this means another boost up for the retail industry where this payment channel will actually hook the customers as they’re mostly hooked on mobile phones.

 

Since RBI’s mobile banking guidelines came out in October, 2008, more than 30 banks have been given clearance for some form of mobile banking or payment service to be offered to their customer base. National Payment Corporation of India (NPCI) has introduced Inter Bank Mobile Payment Service (IBMPS) in November 2010 and presently 22 banks are availing this service. However, as per the data released by NPCI, 10,837,000 Mobile Money Identification Numbers (MMID) were registered in April 2011 with 2793 number of Inter Bank transactions, which amounts to a total value of Rs 1,33,77,086.87. There were 1172 Intra Bank transactions for an amount totaling up to Rs 22,08,087.28 in April. In total, IMPS facilitated 3965 transactions of amount Rs 1,55,85,174.15.

 

PayMate is one of the leading mobile payment solution providers which has tied up with banks for Inter Bank Mobile Payment Service (IBMPS). Commenting on the working procedure of mobile payment, Ajay Adiseshann, Founder and Managing Director, PayMate says, “PayMate’s mobile payment solutions link one’s mobile phone to any financial instrument of his or her choice, whether it’s an existing bank account, credit card or a prepaid account, turning  the mobile phone into a secure payment tool to be used anytime, anywhere. PayMate’s hybrid SMS and interactive voice-based transaction platform offers unparalleled simplicity, making it usable on even the most basic handsets and across all telecom operators.”

 

The role in retail development

Mchek is another leading mobile payment application developer. On talking about how mobile payment can add momentum to retail growth, Gautam Shiknis, Chief Executive Officer of Mchek comments, “The application is a growth booster for retail in India, encompassing both the organised and unorganised retail sectors. This mode of payment will facilitate remote payment. The better integration of telecom and banking industries will make the entire payment procedure easier, while customers will enjoy buying and availing utility services.” Adiseshann informs that PayMate powers the phone to send and receive money instantly, pay for retail purchases, monthly utility bills, flight and movie tickets and so much more. “Mobile payments can boost the retail industry by providing easier payment methods to small merchants, more efficient collections management for retailers of all sizes and even broadening the scope of home delivery by reducing dependencies on cash,” he adds.

 

PayMate’s eco-system comprised of over 15,000 online and physical retail merchants, covering categories such as Travel, Movies, Electronics, Consumer Goods, Jobs, Matrimony, NGOs, etc, and in the retail space, Restaurants, Pubs, Groceries, Apparel, Pharmacy, etc. The company also provides access to utilities such as Electricity, Mobile Recharge, Landline and Mobile Bills, Insurance, Cable, Broadband, etc.

 

Growth Prospect

“If you look at the credit card penetration story, it took over two decades and still only stands at about 3 per cent of the population, or about 30 million people. In case of mobile payments, a service such as Inter Bank Mobile Payments Service saw around 10 million customers register for the service in April 2011 alone. Mobile payments will grow at an exponential pace purely due to the penetration and proliferation of mobile phones in India with over 820 million mobile users in the country,” comments Adiseshann. Shiknis views that it will take another two years to pick up.

 

The efforts to popularise

PayMate works closely with all its banking partners in order to inform and educate customers of the advantages of mobile payments. “Banks need to incentivise the behaviour they want to see, which means they need to spend more effort on getting a larger part of their customer base registered and transacting. In addition, sustained advertising and communication of consumer education and awareness programmes should be put in place to drive registration and transactions as well as increase mindshare, reduce resistance and generate word-of-mouth,” opines Adiseshann. “SMSes play a major role in the marketing initiative by Mchek,” reveals Shiknis.

 

The security concern

How safe is using card-based payment on mobile? On speaking about the measures taken for eliminating credit card or debit card fraud, Shiknis confirms that MMID and PIN are unique and encrypted numbers. Thus, there’s no doubt about its safe use. Adiseshann elaborates, “PayMate’s hybrid SMS and IVR based transaction platform along with its BREW and j2ME application suite offers unparalleled simplicity making it usable on even the most basic handsets, across all telecom operators. PayMate’s list of security certifications includes compliances such as PCI DSS 1.2, PA-DSS 1.2 and Govt. Of India’s Cert-In, certifying its systems, processes and infrastructure with banking grade security.”

 

Some measures to drive the growth

The major challenge lies in educating the customers. The banks are really sloth when it comes to promoting this facility. Neither there is any considerable promotional initiative taken by NPCI.

 

Customers too are confused by too many mobile banking applications. For example, ICICI Bank requires iMobile app for mobile payment, on the other hand HDCF customers have to download NGPay app to avail the service. Instead of making the process complex, the service providers should come up with a single platform for mobile payment. 

 

The mobile payment service also involves too many numbers to memorise. The user has to remember IPIN, PIN and now MMID and MPIN. It’s the number game that’s actually hassling customers. Solution providers should think about single unique identification number to avail all these services. The procedure needs to get rid of complexity in order to target a mass market.

 

“The factors that will make mobile payments a popular tool are ease of use, handset and operator agnostic services, and since mobile payments in India is still closely tied with the banking system, there should be full fledged customer education by banks,” opines Adiseshann.  Technology development and new applications are redefining the progress of retail. No matter how much time mobile payment takes to be a routine practice, this is imminent to happen and India is all set to experience it.   

 

QUICK FACTS

  • Retail market is a $410 billion market
  • 100% mobile penetration by 2015
  • 300 million middle class people with disposable income
  • 720 million mobile subscribers
  • 67% retail transactions in cash
  • India has 173 million debit cards
  • 23 million credit cards in use
  • 419 POS terminals per 1 million inhabitants
  • 5% of total retail market is organised retail
  • 95 million personal computers in India

Data by Assocham

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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