Mobile Money in India

1. MOBILE MONEY SERVICES IN INDIAN
PERSPECTIVE
MANISH SAXENA,
Joint Advisor,
Telecom Regulatory Authority of India,
Regional Office, Jaipur

2. WHAT IS MOBILE MONEY
Mobile Money is a transformational service that uses
information and communication technologies (ICTs) and
non-bank retail channels to extend the delivery of
financial services to clients who can not be reached
profitably with traditional branch-based financial services.
Typical examples are e-wallets that are used to make
person-to-person (P2P) transfers and a range of
payments or to receive salary and government to person
payments (G2P)

3. KEY CHARACTERISTICS OF MOBILE MONEY
SERVICES
•Customers get money into and out of the service using a
network of transactional agents that operate outside
bank branches.
• Customers initiate transactions using an interface that
is available on mobile handsets.
•Mobile Money drives financial inclusion i.e. extends
financial services to the unbanked strata of the society

4. GLOBAL OVERVIEW OF THE MOBILE MONEY
SOURCE: GSMA STATE OF THE INDUSTRY REPORT MOBILE MONEY:2015
• Mobile Money has done more to extend the reach of financial services in
the last decade than traditional “bricks and mortar” banking has in the last
century.
• Mobile Money is now available in 93 countries via 271 services.
• There are 411 million mobile money accounts globally which have grown at
the rate of 31%. 134 million accounts were active in December 2015.
• In South Asia, the 19% growth (Y-o-Y) of OTC is dwarfed by the 47% growth in
registered accounts
• In 2015, 51 of 93 countries have an enabling regulatory framework.
• Mobile Money providers are processing an average of 33 million
transactions a day.
• At least 19 markets have more mobile money accounts than bank accounts.
• 37 markets have 10 times more registered agents than bank branches.
• 15 providers reported revenues of more than US$1m during the month of
June 2015.

5. WHY MOBILE MONEY WOULD SUCCEED IN INDIA
• India is a vast country with about 70% population living in villages. India has
more than 100,000 bank branches out of which only about 5% are in rural
areas. Sending money through banks becomes impossible for the millions of
villagers who migrate to big cities for work. The post office system is also
used a lot to transfer money, but is not considered entirely reliable. As a
result , most migrant workers send money home in cash through travelling
relatives or acquaintances-a method fraught with chance and risks.
• At the same time, government assistance schemes like JSY and
employment plans like MNREGA (Mahatma Gandhi National Rural
Employment Guarantee Act) have given rise to a new breed of middlemen.
This unscrupulous lot takes commissions to disburse money to the
beneficiaries, but don’t always deliver. And the cheated beneficiary is none
the wiser, largely due to ignorance and illiteracy. Plus there are the
inevitable delays due to red tape.

6. WHY MOBILE MONEY WOULD SUCCEED IN INDIA
• Financial inclusion is the need of the hour in a country like India and it has
been emphasized enough by government, companies and individuals. This
financial inclusion can not be achieved simply with the traditional banking
services. Most banks have been unable to scale mobile money services and
lack incentives to make necessary investments.
• It is a world wide phenomenon that MNOs can make financial inclusion
viable and sustainable because of the strong business case for mobile
money. India has enviable mobile penetration. It has about 1100 million
mobile subscribers as on 30th November, 2016 out of which about 461
million i.e. 42% are Rural Consumers (Source : TRAI Report). While a large majority
of the mobile services in India are based on 2G and 3G technology, the
country has seen adoption of 4G accelerate in recent months.
• Recent emphasis given by government of India on making India Digital and
a less cash society has promised a great future for Mobile Money in India.

7. INDIA ON THE GO
The Total value of all transactions done using electronic payment
systems in India in December 2016 was Rs.105 trillion according to
representative data released by the Reserve bank of India (RBI) on
17.1.17.

8. • Banking in India is witnessing the “WhatsApp moment” threatening to
disrupt the banking ecosystem in India as payments move to mobile and
lending to algorithms. ( As quoted by Nandan Nilekani)
• With the launch of UPI (unified payments interface), by National Payments
Corporation of India, India has crossed a significant milestone. Apart from
making payments easier, UPI enables micro credit.
• Smart Phones and increasing Internet penetration will help India’s digital
cause. Around 90% of all devices will be Internet Enabled by 2017, and the
number of Internet users will touch 650 million by 2020 from 300 million in
2015 (Prediction by 25the July 2016 report by Google and BCG).
• This Report further forecasts the size of the digital payments industry in
India to touch $500 billion by 2020, contributing 15% to India’s GDP.
• India currently ranks second in the world with more than one billion mobile
subscription . Of this around 240 million consumers use smartphones, and
this base is projected to increase to over 520 million by 2020.
• Smartphone subscriptions in the country will increase fourfold to 810
million by 2021, according to the India edition of the Ericsson Mobility
Report released in June 2016.
INDIA ON THE GO

9. SOME OF THE MOST PROMINENT MOBILE WALLETS AND UPI
(UNIFIED PAYMENTS INTERFACE) PAYMENTS APPS IN INDIA
1. BHIM App
2. SBI Buddy
3. Paytm
4. Freecharge
5. Mobikwik
6. Airtel Money ( Largest MNO of India )
7. Vodafone M-Pesa ( 2nd Largest MNO of
India )
8. Axis Bank Lime
9. Chillr
10. IDEA Money (3rd Largest MNO of India )
11. Citrus Pay
12. ICICI Pockets
13. HDFC Pay Zapp
14. Ftcash
15. Oxigen Wallet
16. Mobicash
17. Trupay
18. Itzcash
19. PhonePe
20. Jio Money ( MNO)
Number of Mobile Wallet Users is three times the number of credit cards
issued in India (24 million in 2015-16) ( Google-BCG Report)

11. A typical Survey conducted by First Data on use
of Mobile Wallet in India

12. PAYMENTS BANKS IN INDIA

13. What Are Payment Banks

14. PAYMENTS BANKS IN INDIA
On 19 August 2015, the Reserve Bank of India gave "in-principle" licences to
eleven entities to launch payments banks to increase the scope of financial
inclusion to small savings account holders, low income households, small
businesses, unorganised sector entities and migrant labour force:
Aditya Birla Nuvo
Airtel M Commerce Services
Cholamandalam Distribution Services
Department of Posts
FINO PayTech
National Securities Depository
Reliance Industries
Sun Pharmaceuticals’ dilip sangvi
Paytm’s Vijay Shekhar Sharma
Tech Mahindra
Vodafone M-Pesa
Out of these, three have surrendered their licenses. ("Chalomandalam
Distribution Services", "Dilip Shanghvi ‘s Sun Pharmaceuticals" and "Tech
Mahindra“ )

15. PAYMENTS BANKS IN INDIA
• Payments Banks are important as they will magnify the potential of
financial inclusion in the economy. It will empower those citizens who
have only transacted in cash to head towards formal banking.
Traditional banks may be hesitant to open branches in every village due
to its uneconomic returns, but a simple mobile phone coverage is all
that is required now. Keeping in mind the government’s unwavered
digital drive target, customers can shift from cash transactions to
operating their accounts on their mobile phone and transact digitally.
• India also serves as a big remittance market and with money
transfers possible through mobile phones, workers and migrant
labourers could simply shift to Payments Bank and send their money
home. Payment banks can also play a crucial role in implementing the
government’s direct benefit transfer scheme, where subsidies on
healthcare, education and gas are paid directly to beneficiaries’
accounts.

16. PAYMENTS BANKS IN INDIA
• Airtel Payments Bank (APB), a joint venture between Bharti Airtel Ltd and Kotak
Mahindra Bank Ltd, has been launched on 12.1.17 said it will spend Rs 3,000
crore to develop a pan-India banking network and digital payments ecosystem.
Within a month of its launch, it has expanded its payment bank operations to 200
plus villages across Rajasthan, Telangana , Andhra Pradesh and Karnataka and
plans to expand its payment bank services to 5000 villages across the country.
Each of the retailer, Point of Presence of Airtel, the largest Telecom Service
Provider of India would be Banking Agent.
• India Post Payments Bank (IPPB) has also been launched by Department of
Posts, Government of India on 30.1.17 and plans to scale it up to 650 branches by
September. India Post has more than 155000 post offices through out the country
and after becoming payment bank would prove to be a game changer for financial
inclusion in the country.
• Paytm Payments Bank has also received final approval from RBI on 3.1.17 and
would launch its operations in February 2017.

18. WAY TO GO
To succeed it is imperative to have
• a healthy stage of digital inclusion that is connectivity for all and spread of ICT
networks.
• Awareness, education to people about the concept , advantage and convenience of
mobile money
• A mind shift to use Mobile Money as about 68% of transactions in India are still cash
based.
• A holistic approach to bring vendors, suppliers and the customer on mobile money
platform. In India most of the merchants still don’t want the infrastructure costs and
fees associated with e-payments whereas customers still find cash more convenient.
• Enabling regulatory reforms such as permitting cash-out (withdrawal) at third party
agents, harmonizing KYC requirements, improving Aadhar-based KYC procedures,
harmonizing transaction limits between mobile money accounts opened by non-bank
and accounts opened by banks, enabling mobile money providers to pay interest on
value stored in an e-wallet, removing the pre-approval requirement for wallet-to-
wallet interoperability etc.
• Confidence in the mind of customers that their money is safe and secure in the e-
form.

19. REFERENCES:
1. Mobile Money: the Opportunity for India; MMAI/GSMA position paper 13 November
2013
2. GSMA State of The Industry Report on Mobile Money 2015
3. www.businesstoday.in/magazine/case-study/case-study-vodafone-mpesa-mobile-
cash-transfer-service-future/story/211926.html
4. http://www.livemint.com/Politics/ODcuu2wmWqGWNUY6wHhmmJ/Indias-cash-
conundrum-how-ready-is-India-to-go-cashless.html
5. TRAI press release No.09/2017, Telecom Subscription Data as on 30th November,
2016
6. https://www.bcg.com/en-in/d/press/25July2016-digital-payments-2020-making-
500-billion-ecosystem-in-india-39417
7. https://www.ericsson.com/res/docs/2016/ericsson-mobility-report-2016.pdf

20. THANKS