Mobile wallets to transform the facet of financial transaction
Friday, December 11th, 2015
Mobile Wallets to Transform the Facet of Financial Transaction
By Dr Swati Mujumdar and Dr Rajiv Padhye
Today we have real evidence of the mobile phone bringing down the cost of REMITTANCE and now there is access for everyone to every day much needed financial services.
Hong Kong based mobile Fin Tech company bux.com global limited (www.bux.com) has released the latest version of a mobile app, available on iTunes and Android, offering many financial services including SEND MONEY from anywhere in the world to 60 selected target beneficiary destinations.
The cost of SEND MONEY from Australia, the early launch pad, to India, Bangladesh and Pakistan, will have everyone talking. bux.com COO Christopher Webber, said, “The new SEND MONEY cost profile is possible because of the elimination of the role of retail and the 24/7 convenience of a billion cellphone connections in India combined with use of the mobile wallet and an intelligent progressive banking regime introduced by the Reserve Bank of India.
The business model of bux.com works on the basis that SEND MONEY should not be a cost to the customer, and revenue will come from customer use of all Value Added Services like bills pay, mobile top-up, voice calling, shopping on line.
bux.com has created BIG excitement around bux2bux FREE voice calling, from anywhere in the world to anywhere in the world call when you want and talk for as long as you like, NO cost of call, and this service will compete with SKYPE, What’s App and Viber, and bux.com will introduce video into its FREE voicebux service soon.
Various estimates today suggest that in India, every month, there is an addition of around six million new cellphones in usage. The smartphone has also become the preferred medium for money transactions. So tremendous has been its adoption that the mobile wallet market in India is expected to reach US USD 6.6 billion by 2020 as per the India Mobile Wallet Market Forecast and Opportunities, 2020.
Catalysts driving mobile wallet adoption More than 40 per cent of e-commerce transactions started happening via mobile phones in India with more than 52 per cent transactions through digital payments. The country is surely moving towards a cashless economy: IMPS transactions have overtaken money order, debit and credit cards in just four years, both in terms of volume and value. Money transfer, mobile recharge, bill payments and utility applications were some of the major areas that saw highest mobile wallet utilization in the country during the year 2014-2015, and has grown by 110 per cent since last year particularly by mobile wallet users based in Tier-I cities such as Delhi, Mumbai, Bengaluru and Chennai.
Future scope and impact of mobile wallets The Reserve Bank of India is responding positively to this explosion of mobile proliferation with a new licensing regime to allow participation of mobile network operators in providing services with a concentration on financial services.
India will soon get its first set of payments banks, after the Reserve Bank of India approved in-principle licenses for 11 applicants on August19. These applicants now have 18 months to fulfill a list of requirements laid down by the RBI, before they can be granted a full license. In all, 41 firms and individuals had applied.
These payments banks will be allowed to accept deposits (of up to Rs 1 lakh), provide payments and remittances services, and distribute thirdparty financial products. But unlike regular banks, they won’t be allowed to lend or issue credit cards, although they can provide debit cards and internet banking facilities.
The underlying objective is to use these new banks to push for greater financial inclusion. Here is a complete list of India’s new payments bank licence holders:
1. Aditya Birla Nuvo: A part of the $41 billion Aditya Birla group, a conglomerate controlled by billionaire Kumar Mangalam Birla, the firm already has a presence in financial and telecom services. The group’s telecom arm, Idea Cellular, already operates mobile wallet services. Last year, the firm had applied to the RBI for a banking license, but failed to get one.
2. Airtel M Commerce Services: Owned by telecom operator Bharti Airtel, Airtel M Commerce also operates a mobile wallet service. On Aug. 4, the firm acquired YTS Solutions, a mobile payments startup, to help expand its offerings.
3. Cholamandalam Distribution Services: The firm is a subsidiary of Cholamandalam Investment and Finance Company (Chola), the financial services arm of Chennaibased Murugappa Group. Chola is already present in the financial services sector, with over 534 branches providing financing and similar offerings across India.
4. Department of Posts: With one of the largest postal network in the world, India Post has incredible access to the hinterland: About 90% of the 1.4 lakh post offices are located in rural areas. This reach itself gives the postal department the biggest advantage over other players.
5. FinoPayTech: The business and banking technology platform provider operates India’s largest network of business correspondent. “Currently, 90% of transactions are in cash and are estimated to be of multiple trillions; we believe there is a huge opportunity for payments banks to power these transactions electronically,” Rishi Gupta, managing director and CEO of FinoPayTech told the Mint newspaper after the licenses were announced.
6. National Securities Depository Limited: NSDL is India’s first and largest depository, which handles most of the securities held and settled electronically in the country’s capital market. It is promoted by IDBI Bank, the Unit Trust of India and the National Stock Exchange.
7. Reliance Industries: Run by India’s richest man Mukesh Ambani, RIL has tied up with the State Bank of India—the country’s largest lender – to set up a payments bank. RIL will hold 70% in the joint venture.
8. Dilip Shantilal Shanghvi: Shanghvi, owner of Sun Pharma, had applied in his personal capacity. His personal investment firm, Dilip Shanghvi Family and Associates, is tying up with Telenor, the Norwegian telecom company and IDFC, a non-banking financial company that last year secured a full-service banking license
9. Vijay Shekhar Sharma: Sharma is the founder of India’s largest mobile payments company, Paytm. The firm – with investors including Chinese e-commerce giant Alibaba –had announced that it has crossed 100 million users in India, with some 75 million transactions every month.
10. Tech Mahindra: Tech Mahindra already owns a mobile payments platform, Mobo- Money, which operates a “tap and pay” system.
11. Vodafone M-Pesa: A little over two years after telecom major Vodafone launched mpesa, its money transfer service in India, it has now secured a payments bank license.