TIt's paradoxical that
the number of Indians who have access to toilets and banking services
are fewer than those who use cell phones. On the flip side, it
translates to a big business opportunity for those who can provide
access to financial services through mobile phones.
To help the corporates tap this, the RBI issued licences a few months ago to seven entities for offering semi-closed mobile wallets. Subsequently, Bharti Airtel's subsidiary Airtel Money has launched a pilot initiative in Gurgaon, near Delhi, with the aim of expanding it later. It has tied up with a few coffee shops, restaurants and cinemas in the suburb. More companies are expected to launch their 'wallets' shortly.
Why are they called semiclosed mobile wallets? Because once you load money into your cell phone from a licenced semi-closed mobile wallet provider, you can make payments with it, but can't use it to withdraw money. People without bank accounts will be able to pay most of their utility bills and make over-the-counter transactions using cell phones. This will make the mobile wallets equally appealing to the unbanked as well as the well-heeled; while India has more than 700 million mobile phone connections, only 50,000 of its six lakh villages have bank branches.
Says an RBI spokesperson: "Semi-closed instruments have been a popular mode for 'non-face to face' payments such as the Internet channels for booking railway tickets, utility payments, etc. However, access to the Internet (in India) is limited." While the penetration of cell phones is more than 60%, it's less than 9% for the Internet.
In the case of Airtel's Gurgaon pilot plan, the registration fee is 50. You can register by submitting relevant documents at a company's retail outlet and your SIM card will be upgraded-one SIM card is removed and another inserted. You can then activate your Airtel Money account by choosing an MPIN (mobile pin number) and load cash into your mobile phone. You are now ready to make payments through the phone.
If you don't have an Airtel connection, you will have to get one to avail of the Airtel Money services. Firms such as ItzCash Cards, which are already working with most telecom companies for their prepaid top-ups and post-paid bill payments, are expected to follow a procedure similar to Airtel's. For making payments, some firms have developed a syntax for specific payments.
As of now, the Reserve Bank of India permits a one-time maximum transaction of 5,000 through these wallets, the logic being that it would cover all payments with minimum amount at risk. The cap could be raised after successful implementation.
The RBI spokesperson notes that with the development of Near Field Communication (NFC)- based technology-which enables communication between devices when brought close to each other semi-closed mobile wallets "would become a potent channel for OTC payments, helping in the migration of cash-based payments to non-cash based payments". While Airtel is optimistic about their use to pay merchants like chemists and kirana stores, Naveen Surya, managing director, ItzCash Cards, says this will be possible only at a later stage.
To help the corporates tap this, the RBI issued licences a few months ago to seven entities for offering semi-closed mobile wallets. Subsequently, Bharti Airtel's subsidiary Airtel Money has launched a pilot initiative in Gurgaon, near Delhi, with the aim of expanding it later. It has tied up with a few coffee shops, restaurants and cinemas in the suburb. More companies are expected to launch their 'wallets' shortly.
Why are they called semiclosed mobile wallets? Because once you load money into your cell phone from a licenced semi-closed mobile wallet provider, you can make payments with it, but can't use it to withdraw money. People without bank accounts will be able to pay most of their utility bills and make over-the-counter transactions using cell phones. This will make the mobile wallets equally appealing to the unbanked as well as the well-heeled; while India has more than 700 million mobile phone connections, only 50,000 of its six lakh villages have bank branches.
Says an RBI spokesperson: "Semi-closed instruments have been a popular mode for 'non-face to face' payments such as the Internet channels for booking railway tickets, utility payments, etc. However, access to the Internet (in India) is limited." While the penetration of cell phones is more than 60%, it's less than 9% for the Internet.
In the case of Airtel's Gurgaon pilot plan, the registration fee is 50. You can register by submitting relevant documents at a company's retail outlet and your SIM card will be upgraded-one SIM card is removed and another inserted. You can then activate your Airtel Money account by choosing an MPIN (mobile pin number) and load cash into your mobile phone. You are now ready to make payments through the phone.
If you don't have an Airtel connection, you will have to get one to avail of the Airtel Money services. Firms such as ItzCash Cards, which are already working with most telecom companies for their prepaid top-ups and post-paid bill payments, are expected to follow a procedure similar to Airtel's. For making payments, some firms have developed a syntax for specific payments.
As of now, the Reserve Bank of India permits a one-time maximum transaction of 5,000 through these wallets, the logic being that it would cover all payments with minimum amount at risk. The cap could be raised after successful implementation.
The RBI spokesperson notes that with the development of Near Field Communication (NFC)- based technology-which enables communication between devices when brought close to each other semi-closed mobile wallets "would become a potent channel for OTC payments, helping in the migration of cash-based payments to non-cash based payments". While Airtel is optimistic about their use to pay merchants like chemists and kirana stores, Naveen Surya, managing director, ItzCash Cards, says this will be possible only at a later stage.
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