Study on Mobile Payments

7/28/2019 Study on Mobile Payments

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Mobile Payments in IndiaNew frontiers of growth

Aprill 2011

www.deloitte.com/in


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2

India is pre-dominantly a cash economywith greater than 65% of all retail

transactions being conducted in cash.With the growing middle-class andtheir increasing disposable incomes, thispresents a huge opportunity fornon-cash methods of payment. All the

current non-cash payment modes viz.credit cards, debit cards, multiplemobile payment solutions, appeal toonly a small section of the ecosystem.

While the ubiquitous mobile is surelythe most promising channel, the needof the hour is to develop an innovativemobile payment system which iscustomized to the Indian ecosystem

requirements and has a mass appeal.


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Mobile Payments in India - New rontiers o growth 3

Contents

Message rom ASSOCHAM 4

Message rom Deloitte 5

Introduction 6

Non-Cash Retail Payments: Current Scenario 8

Non-Cash Retail Payments: Time or Innovation 11

The Road Ahead 16

Acknowledgements 18

Notes 19


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4

Message from ASSOCHAM

The Indian economy has been on a ast track o growth.

This rapid growth, besides the 8.5% GDP has seen other

interesting numbers as well. India has been the astest

growing mobile market with more than 720 million

subscribers. There is a rat race among the operators to

retain customers with innovative applications and Value

Added Services. The telecom players desperately want to

own the mobile wallet o the 300 million + middle class

who have the purchasing power.

Mobile money provides an opportunity or nancial

inclusion to the unbanked section which lies closer to the

base o the pyramid. Majority o the rural population and

a part o even the urban class who live in the inormal

nancial sector relies on cash to conduct all nancialtransactions. This ratio o cash transactions is as high as

65% o total transactions. As such they lack access to

credit, insurance and savings. On the other hand, cash

transactions are untraceable, unrecorded and lead to

parallel economy. Annually, GoI loses a lot o revenue

due to non tax payment. Mobile money is a transparent

mode o money transer and will help in reducing parallel

economy to a great extent, giving additional revenue to

the GoI.

This wave o mobile money momentum, i acilitated by

regulation and right business model, will revolutionize

the payment system, rom coke to railway tickets.

Japan has proved that smart phones are not necessarily

the only devices needed or mobile payment. Kenyas

mobile money system is another good case study. More

so because Kenyas 61% population is unbanked.

Mobile payment is a must or India to retain its growth,

where most do not have a bank account but have a

mobile phone.

ASSOCHAM also known as the countrys Knowledge

Chamber has always been at the oreront or

promotion o new technologies or benet o the

industry yet remaining technology neutral.

ASSOCHAM is committed to moving orward with such

rapid changes in technology and its uses, consistent with

our goal o Making Inclusive Transormation Happen.

ASSOCHAM rmly believes that digital inclusion could

take the path o high growth to all sections o the

society and it is the mobile that will empower the

common man in the hinterland and ar fung areas in the

country.

Mobile phones are certainly the solution or bridging the

digital divide and thereore, are the perect medium or

delivering a variety o services to the common man.

In this regard, ASSOCHAM has partnered with Deloitte in

bringing out a report on 'Mobile Payments in India' with

an objective o identiying key elements and parameters

that could acilitate an optimum ecosystem to support

entrepreneurship.

I am also pleased to inorm you that ASSOCHAM along

with Deloitte has brought out a comprehensive study

on Mobile Value Added Services (MVAS) - A Vehicle to

Usher in Inclusive Growth and Bridge the Digital Divide

or Telecom Regulatory Authority o India along with

inputs rom various concerned Ministries, Department

and the Industry, which was well received.

I would like to acknowledge the eorts made by

ASSOCHAM and the Deloitte team in making this report

more meaningul.

Sujata Dev,

Co-Chairperson (M&E),

ASSOCHAM

D. S. Rawat,

Secretary General,

ASSOCHAM


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Mobile Payments in India New rontiers o growth 5

Message from Deloitte

India, the second astest growing economy in the

world, has a large and growing middle class today. In

spite o this growth, cash continues to dominate our

retail transactions. Both the penetration and usage o

the non-cash modes viz. credit cards, debit cards, the

multiple mobile payment solutions, have been well short

o the potential posed by cash transactions in India.

India is vastly dierent rom the West in terms o our

demographics, our retail industry (very distributed, large

% o unorganized retail, signicant presence in rural

India), our shopping / paying culture (low ticket, high

volume transactions), etc. We believe that the products

(credit cards, debit cards, etc.) which have done well in

the developed countries, appeal to a small section o

the ecosystem in India, hence may not be the complete

solution or a country like ours.

The mobile is arguably an ideal mode or capturing this

signicant gap. An innovative solution, which meets

the requirements o the ecosystem players - consumers,

merchants, banks, and has a mass appeal, has the

capability to capture the large USD 410 billion retail

market in India.

While it would be exciting to witness the changing

modes o payment in retail transactions in India in uture,

there is little doubt that the current payment modes in

our market-place leave a large void. Players, who work

towards lling this gap, keeping in mind the peculiarities

o the Indian market, could carve out a high-value

proposition or themselves and the ecosystem.

Sachin Sondhi

Senior Director and Leader,

Strategy & Operations

Consulting, Deloitte

The growth seen by the Indian mobile telephony sector

over the last decade has been truly phenomenal. Mobile,

as a device, has become pervasive in all the dimensions

o our day-to-day lie, even surpassing television that so

ar has been the king in terms o its reach and infuence

on the masses.

In a cash economy like India, where over 65% o all

retail transactions are conducted in cash, there is a huge

potential or transitioning towards eective non-cash

payment instruments. The uture o non-cash payments

in India is closely linked to the evolving regulatory

ramework and innovative payment solutions that

would come to the oreront. In a recent amendment

announced in November 2010, the Reserve Bank o

India allowed usage o semi-closed instruments or bill

payments, ticketing requirements as well as issuance o

semi-closed instruments by banks through key agents.

The real potential o non-cash transactions can be

unleashed only when key stakeholders involved in

the development o the mobile payments ecosystem

together take concerted steps in this direction. This

report presents our view on the current scenario o

non-cash payments in India and showcases how India

is a undamentally dierent market rom most other

developed and developing countries. Hence, the solution

needed or a unique nation such as ours also needs to be

one that is innovative, yet simple, sae and scalable.

Sandip Biswas

Director, Technology,

Media and

Telecommunications

Practice, Strategy &

Operations Consulting,

Deloitte


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6

Introduction

India: A growing, but cash economy; holds a

signifcant opportunity

The Indian economy has shown strong growth in

recent years, making it a USD 1.3 Trillion economy. It is

expected to grow at a rate o 8.9% in uture1, making

it the second astest growing economy in the world,

ater China. This growth has enabled India to create

a large middle class consisting about 62% o its total

households (Reer Figure 1). The large middle class base

in India is driving consumption, ueled by their increasing

disposable incomes.

However, India remains predominantly a cash

economy due to high prevalence o cash in day-to-day

transactions. The retail industry, which has transactions

up to USD 410 billion per year2 is predominantly

cash based. Cash continues to be the only mode o

transactions or the 40% unbanked population in the

country. Overall, 67% o transactions are carried out incash, while only 33% are done through electronic means

(Reer Figure 2).

Within electronic payments, while credit and debit cards

orm 57% o transactions by number, they transact

only 13% by value (Reer Figures 3 and 4). The largest

electronic payments by value are through electronic

unds transers (NEFT or RTGS) which are predominantly

peer-to-peer (P2P) transactions. These would not be

used or retail payments, and the same can be said or

Electronic Clearing System (ECS) payments. Hence, the

usage of electronic payments in retail transactions

(payments to retail outlets) is even lower, presentinga huge opportunity for players providing non-cash

payment alternatives for retail payments.

1 According to Q32010

estimates

2 ATK Global Retail study, 2010

Figure 1: Distribution o Indian households (based

on annual household incomes)

High income (>Rs 1.8 lakh p.a.)

Middle income (Rs 40,000 - 1.8 lakh p.a.)

Low income (


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Indias cash economy presents signifcant

problems, such as:

FraudThenumberofcounterfeitnotesfound

in India are around 3 to 6 per million3. The actual

number o ake notes could be much higher in the

country. Such countereit currency is used to und

illegal activities, and adds to the black money circu-

lating in the economy

CosttotheeconomyThenumberofnotesin

circulation in the Indian economy is about 49 billion,

increasing at a rate o about 10% per year3. Printing

notes, distributing notes, destruction o old notes

and replacing them with new notes, carries a huge

cost to the economy

InconvenienceofcarryingcashCarryinglarge

amounts o cash is inconvenient and carries the risk

o being stolen

TenderingexactamountofcashProvidingthe

exact amount o change in any transaction is incon-

venient or the consumer and the merchant

Thus, increasing the percentage o non-cash mode o

payment, not only provides a signicant opportunity

rom a business perspective, but also holds signicant

benets to the country rom economic and social

perspectives.

In this paper, we attempt to explore the ways in which

this large opportunity can be tapped. In the ollowing

sections we identiy the current non-cash retail payment

methods, identiy the associated key challenges, and

dene potential ways to overcome these challenges.

3 RBI: Report o the High

Level Group on Systems andProcedures or Currency

Distribution, 2009


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With increasing adoption o technology by Indian

banks, electronic payment modes have started gaining

importance. Credit cards, debit cards and multiple

mobile payment products are the various modes o

non-cash retail payment system that exists today.

Credit and Debit Cards

Number o credit cards in circulation in India has started

to decline since 2008, while the number o debit cards

continues to rise. Though the usage o credit as well

as debit cards have increased in the past decade, card

penetration remains low, with debit cards at 13%

(about 173 million) and credit cards at 2% (about

23 million) (Reer Figure 5). Despite the presence o

non-cash payment modes, it is noteworthy that cash still

remains the king.

Indias eorts to move away rom cash-based

transactions have been greatly infuenced rom somedeveloped nations. For instance, the use o credit

card as a payment instrument originated and is very

popular in the United States. Use o a smart card that

corroborates the users identity or each transaction

began in France. Globally, cards remain the preerred

non-cash payment medium by volume; with over 40%

payments in most markets and close to 60% globally

being made by cards. India adopted these payment

methods rom such countries over the last three

decades. India, however, has seen extremely low debit

and credit card penetration.

We believe that India is undamentally a very dierentmarket rom the other countries where payment by

cards has been successul:

Our retail industry is widely distributed: Organized

retail penetration in India at about 5% in 2009

(Reer Figure 6), is signicantly low as compared to

other developed and developing markets. While it is

expected to grow with increasing urbanisation and

incomes, it would continue to be on the lower side

(Reer Figure 7)

Ticket size o our transactions is low: Due to the

widely distributed, pre-dominantly unorganized

retail industry, ticket size o the transactions in India

continues to be low Pre-dominantly rural populace: About 70% o

the Indian populace continues to live in rural India

Non-Cash Retail Payments:Current Scenario

200

150

100

50

0

17

50

23 23

75

28

102

137

173

25

Credit cards Debit cards

Source : Reserve Bank o India, IAMAI, Cellent

2006 2007 2008 2009 2010

Credit/Debitcardus

ers

(inmillions)

Figure 5: Credit and Debit Card Users in India

Source: PL research

2004 2009 2010 2015 P 2020 P

3%5% 7%

12%

21%

Figure 7: Organized retail penetration in India

Figure 6: Organized retail penetration across selectcountries (2009)

United States

Taiwan

Malaysia

Thailand

Indonesia

China

India 5%

20%

30%

40%

55%

81%

85%

Source: Technopak, PL research


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In the rural parts o the country, the distribution o

retail outlets is even wider, with the ticket size or the

transactions being even lower

The above characteristics o the Indian marketplace

make the card business or the ecosystem very costly

and dicult to sustain in India.

Comparison o the returns per PoS Terminal (Reer

Figures 9 and10), both by volume and value, show how

cumbersome it is or the Indian ecosystem to meet

the associated costs: cost o the PoS terminal, cost o

issuing the cards, etc. Value o payment transactions

at PoS terminals remains extremely low in India at INR

71 thousand crores as compared to INR 848 thousand

crores in Brazil and INR 4,522 thousand crores in China.

On an average, the debit and credit cards together

account or only two card transactions per day per PoS

terminal in India, which is close to hal as compared to

China and one-eighth as compared to UK.

This low easibility o the PoS terminals in India,

explains the abysmally low penetration o PoS terminals

(Reer Figure 8). The penetration o PoS terminals in

India remains low at 419 terminals per million inhabit-

ants in 2009, as compared to about 1,700 in China,

over 17,000 in United States and United Kingdom and

about 25,000 in Brazil.

Figure 8: Number o PoS terminals per

million inhabitants, 2009

Figure 9: Value o payment transactions

at PoS terminals located in the country

in 2009 (INR thousand crores)

Figure 10: Number o PoS transactions

per terminal located in the country in

2009

Brazil

United

Kingdom

United

States

Japan

China

India 419

1,707

13,515

17,020

19,083

24,611 Brazil

United

Kingdom

United

States

Japan

China

India

4,522

71

848

2,782

n/a n/a

n/an/a

Brazil

United

Kingdom

United

States

Japan

China

India 793

1,538

6,688

1,079

Source: Bank or International Settlements Source: Bank or International Settlements Source: Bank or International Settlements


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In addition, certain key concerns o the ecosystem with respect to usage o cards, urther inhibit rate o adoption o

credit /debit cards in India (Reer Table 1).

Table 1: Concerns in using Credit and Debit Cards

Concern Merchant Customer

Hidden costs Processingfeepertransactionchargedby

credit card companies, eroding merchants

prot marginSomecreditcardprocessingrmsalso

charge application ee, startup ee, activation

ee, statement ee, monthly minimum ee,

payment gateway ee, charge back ee and

termination ee rom the merchant

Late ee payment charges and high interest rates

levied by credit card companies

Limited usage Unreasonable pricing o cards acts as disincentive

or small and medium merchants with lesser

pricing power due to low volumes, to transition

to card based payment

Usage limited primarily to large vendors /

merchants that have PoS terminals installed and

accept debit and credit cards

Privacy and Security concerns Not applicable Needtorevealpersonal

inormation at multiple sites while using debit

or credit cards or online transactions

Lossofcardsthatarenotencryptedwitha

pin, leads to insecurity about card usage,

bringing down the adoption rate o credit and

debit cards by conservative users

National Payments Corporation o India (NPCI) has intro-

duced Rupay, Indias rst ind igenous payment gateway.

While introduction o the state-backed Rupay may take

care o some o the concerns listed above, the cost o

the PoS terminal, the cost o issuing the cards, consumer

security concerns, etc. may continue to be the road-blocks or mass penetration and usage.

Mobile payment instruments

Another mode o non-cash payments in India are the

mobile payment instruments. Various modes o mobile

wallets such as prepaid, direct debit, as well as postpaid

exist in the market today. Recent amendments to RBI

guidelines have allowed non-banks to issue mobile

based semi-closed instruments, while also extending

their usage to bill payments and ticketing. Most o these

mobile payments instruments have been trying to nd

traction, but concerns exist, inhibiting their widespread

adoption. Some key concerns are: Privacy:Mostofthesolutionsrequirephonenumber,

credit card or other personal inormation to be

shared. Some o them expose bank accounts as well

LimitedPenetration:Thepenetrationofexisting

pre-paid solutions is by and large restricted to ew

majorcitiesthesemiurbanandruralmarket

remains primarily untapped

ClosedEcosystems:Mostofthesolutionsrequirepurchase o pre-paid vouchers necessitating a distri-

bution network or loading the mobile wallet. Also,

in most solutions, the wallet can be used or only

specic type o payments

The non-cash retail payment modes in India ace

signifcant challenges and do not have a mass

appeal. Thereore, to reap the untapped potential

o non-cash payments ecosystem that exists today,

India needs a unique and innovative payment

solution one that is simple to adopt and is capable

o signifcantly bringing down the barriers or

uptake o non-cash retail payment in India.


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Mobile: The Right Vehicle

In a country o over one billion people, there is no doubt that the mobile phone has touched the highest number

o lives in India to date. Within a ew years, mobile phones have grown rom a very small base to overtake even TV

viewership in India (Reer Figure 11). Even the penetration o PCs has been mainly restricted to urban India, making

the installed base very miniscule at 95 million (Reer Figure 12). Currently the number o mobile phones subscribers

stands at 600 million+, growing at a CAGR o 60% (Reer Figure 13). The mobile phone penetration stands to touch

100% by the year 2015 (Reer Figure 14).

Non-Cash Retail Payments:Time for Innovation

A combination o nearly 100% mobile penetra-

tion in India and spiralling mobile customer base

makes mobile phones the perect medium to enable

non-cash retail transactions in India.

Critical Success Factors

Any mobile phone solution or non-cash retail trans-

actions needs to have certain basic characteristics to

succeed, such as:

MassReach:Thesolutionmustbeadoptedbysmall

traders, delivery agents etc. or whom transactionvolumes or values are low or supporting credit card

and similar non-cash payment mechanisms

Secure:MustbecompliantwithRBIguidelinesfor

end-to-end encryption, raud protection, etc.

ServiceProviderAgnostic:Solutionmustnotbe

linked to a particular service provider

Convenient/Easy:Paymentthroughmobilephones

must be convenient, easy, and aster compared to

cash and other non-cash payment mechanisms

Lowset-upcosts&time:Effortrequiredandthecost

o set-up has to be much lower compared to

traditional PoS

No/littlerequirementofadditionalinfrastructure:Ecosystem required should be primarily set-up based

on the existing wireless telecom inrastructure and

Source:TRAI

Figure 14: Mobile phone penetration in India

2010

584730

888999

1093125049%

60%72%

80%86%

97%

2011 E 2012 E 2013 E 2014 E 2015 E

Figure 11: Number o TVViewers in India

Figure 12: Number o PCusers in India

Figure 13: Number o mobile phonesubscribers in India

Note: India had approximately 670 million mobile phone subscribers in August 10

Source: TAM, IAMAI Report, Economic Times, TRAI, IAMAI-IMRB Survey

Number o TV Viewers

in India (million)

Number o PC Users

in India (million)

Number o Mobile Phone

Subscribers in India (million)

CAGR = 4% CAGR = 17% CAGR = 60%

600

500

400

300

200

100

0

415

2005 2006 2007 2008 2009 2010

431444 466 480

500600

500

400

300

200

100

042

2005 2006 2007 2008 2009 2010

50 63 7387

95

600

500

400

300

200

100

0

52

2005 2006 2007 2008 2009 2010

90165

261

392

584


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12

the current mobile phones used by customers and

merchants

Competitivepricingwithexistingmethods:Pricing

needs to be competitive with other non-cash

payment mechanisms

Given the specic conditions and critical success actors

required or the success o mobile payments in India,

there is a need or a customized mobile payment

solution which does not just ape the West or is

extremely infuenced rom any other country based on

its intial success outside India.

Multiple models o mobile payments that can be

adopted are prepaid instruments where the balance is

credited beore the purchase by a top-up transaction,

direct debit where the bank account is directly debited

or the purchase, and the post-paid wallet where it is

either linked to a credit card or a mobile account and

the cutomer has to pay or the purchase at the time o

settlement with the credit provider.

A comparison o these three mobile payment modes

indicates that the prepaid option is the best suited or

Indian conditions (Reer Table 2)

A solution which meets the above critical success actors

has the potential or succeeding as an eective mobile

payment instrument in India.

Prepaid Direct Debit Postpaid

Description Pre-loaded with desired

amount

Linked to bank a/c or real-

time debit

Linked to credit card or mobile a/c

Benets + Avoids exposure o bank

a/c or credit card inormation

+ Credit check etc not

required

+ No recharge activity

required

+ No recharge activity required

Drawbacks Rechargeactivityrequired Exposureoffullbanka/c Creditriskbornebybank/

operator

Table 2: Comparison o dierent modes o mobile payments


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IMPS A Public Sector Initiative

The Interbank Mobile Payment System (IMPS) has been

developed by the National Payments Corporation o

India (NPCI) to expand the scope o mobile payments

to all sectors o the population. IMPS oers an instant,

24X7, interbank electronic und transer service through

mobile phones.

To enable the transer o money, both the sender and

the receiver o payment have to link their bank accounts

with their phone numbers through their respective

banks. The sender has to register or mobile banking

service with her/his bank. Upon registration, the bank

will provide a link to the mobile banking sotware which

needs to be installed in the mobile phone to enable

payments. Both the sender and the receiver will receive

a Mobile Money Identier (MMID) while the sender will

also receive a Mobile PIN (MPIN) or authentication o

transactions.

While transacting, the sender has to input the MPIN,

receivers mobile number and MMID, and the amount

o unds to transer. IMPS will authenticate the sender,

check the receivers mobile number and MMID, and

transer the unds to the receivers account in real-time.

Both the sender and the receiver receive messages

notiying them about the success or ailure o the trans-

action. Another mode o payment that can be used is

via the SMS.

2. S/w download and

activation

IMPS

Sender Receiver

4. Sent to IMPS, sender's a/c

debited, receivers a/c credited.

Conrmation msg sent

5. Receives

conrmation

message o unds

credited

1b. Request or

registration,

receives MMID

1a. Request or

registration, receives

MMID and MPIN

3. Enters Amount, MPIN,

receivers mobile number

and MMID

6. Delivery o goods

Figure 15: Steps o the IMPS solution

While IMPS is currently ocused on Person-to-person payments and money transer, it can be extended to retail

payments.


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14

A Sample Solution rom the Private Sector

eMudhra, a rm based out o Bangalore, has come up

with one such solution, which meets the current chal-

lenges o the ecosystem, at least at a conceptual level.

This prepaid solution is modelled on the credit card

model, eaturing the lead bank, the acquirer bank, and

the issuer bank. The lead bank will be the entity running

the payment eco-system and solution platorm. The lead

bank also controls customers and merchants inorma-

tion; and manages the enrollment o other consortium

membersissuerbanks,andacquirerbanks.Theissuer

bank will market the product to the customers and

approve their enrollment. The acquirer bank will market

the product to merchants and also enroll them, sign

legal contracts, and provide current account acilities.

2. S/w download and

activation via SMS

Payment Platorm Provider

CustomerRetail Physical Shop/

Delivery personnel

7a. Conrmation o debit

& new balance sent via

Secure SMS

6. Barcode data

(Amount, ID etc)

sent as secure

SMS/ GPRS

7b. Approval

Conrmation o

payment via GPRS/

Secure SMS

1. Request or registration:

Mobile #, limit

3. Enters Amount.

Dynamic Barcode

generated in mobile

phone

8. Delivery o goods

4. Shows barcode

5. Scans using mobile and

s/w authenticates barcode

Figure 16: Steps o a model solution rom the private sector

The three bank types are actually roles that any entitycan play. For example, a lead bank can also take the role

o an issuer bank which means it can also market the

product to its customers. Or any single bank can take

all the three roles, maintaining a tight control over the

whole ecosystem.

This prepaid solution will enable customers to do

top-ups, similar to mobile talk-time recharges and to

credit money to their mobile wallets. This amount can

be as high or as low as the customer desires, based onhis or her purchasing behaviour, and risk perception in

case o loss o the mobile phone. This solution helps

avoid exposing the customers entire bank account

limiting the damage caused in case o thet o the

mobile phone. Also it gives the customer ull control

over the balance in his mobile payment account, which

can be kept zero i the account is not going to be used

or long periods o time.


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Registration Payment Recharge

This will be a one time activity

and needs to be done by both the

customer and the merchant. Ater

presenting a registration request

to their banks, and authenticating

themselves, a link will be sent

containing the mobile application

to be installed on their devices.

Once this is installed, a mobile

account will be created, and they

will be asked to choose a PIN

to restrict access to the mobile

application

When the user wants to pay, he or

she will access the mobile payment

application by entering the PIN and

the required amount to be paid. The

customers device will then generate

a unique bar-code which can be read

by the merchants mobile phone

through its camera. The code will

have details about the customer, the

amount to be transerred, time o

transer, place, etc. These details will

be sent by the merchants mobile

phone in an encrypted ashion to a

central server rom where the unds

will be debited rom the customers

prepaid account and credited to the

merchants account. Conrmation

messages will be sent to both the

customer and the merchant

Customers can credit their prepaid

account by transerring unds rom

a bank account, or through their

credit/ debit cards. This process can

be done online rom any internet

enabled terminal, or by visiting any o

the bank branches or ATMs

This mobile payment process is divided into three distinct modes which are outlined below:

We believe the above solutions overcome many o the inadequacies currently encountered in other non-cash

payment systems. Such solutions need a tightly knit vast ecosystem to ensure large penetration and usage.


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The Road Ahead

16

Given that mobile payments is the uture o non-cash payment mechanisms in India, adequate steps need to be

taken to tap this vast opportunity. This wave o mobile money momentum, i acilitated by regulation and right

business model, has the potential to revolutionize the payment system. Stakeholders involved in the development

o the mobile payments ecosystem are the regulatory authorities (RBI), network operators, nancial institutions, and

technology providers.

RBI has already taken multiple steps in this regard by issuing guidelines or pre-paid instruments in the country (Reer

Figure 17). The regulator has allowed non-banks to issue mobile payment instruments to the end users. The daily

limits set or mobile transactions have also been increased in the latest amendment to the guidelines.

A plethora o technologies or mobile payments are available in the market rom domestic and oreign players. With

the growing support o the regulator and availability o technology, it is advisable or other stakeholders to ocus on

innovating mobile payment solutions, which are customized to the Indian market and have a mass appeal.

Nov 2008 Jan 2009 Apr 2009 Aug 2009 Nov 2010

Approachpaperissued

Draftguidelinesreleased

Guidelines on prepaidinstruments issued

Amendment 1

Other Persons (non-

banks/NBFCs) permitted

to issue m- based semi-

closed instruments s.t .

Cap at `5K

No purchase/loadingagainst airtime

No P2P value transfer

Authorization from RBI

needed

Semi -closed instruments

usage allowed for bill

payments and ticketing

Banks permitted to issue

semi -closed instruments through

agents

Cap for sale/reload by cashset at `5K

Limit for ticketing and billpayments would be `10K

Issue of co- branded

instruments allowed

Amendment 2

Can be used for

purchase of goods &

services

Only banks offering

m-banking can launch

m-based instruments

Cap for issue/reload set

at `50K per customer

Comments received from

Figure 17: RBI guidelines on pre-paid instruments

banks, existing issuers


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Title o publication Focus area o publication 17Mobile Payments in India New rontiers o growth 17

Players who identify this opportunity,and leverage available technologies and

regulations to carve out mobile retailpayment solutions that are suitable tothe Indian marketplace are set toemerge leaders in this space, leavingothers behind.


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18

Acknowledgements

Sachin Sondhi

Senior Director and Leader

Strategy & Operations Consulting

Mobile: +91 96195 98972

Email: [email protected]

Sandip Biswas

Director


Mobile: +91 99300 09225


Shantanu Upadhyay

Senior Manager


Mobile: +91 85270 03666


Kakul Sinha

Manager


Mobile: +91-99205-22778


Gunjan Gupta

Manager


Mobile: +91 99200 31190


Anupriya Nayyar

Senior Consultant


Mobile: +91 98208 25275


Sachin Shirwalkar

Consultant


Mobile: +91 88986 54623


During the course o writing the paper, requent discussions were conducted with eMudhra Consumer Services Ltd,

a technology enabled consumer solutions provider. We would like to thank them or their inputs and knowledgeshared with us on this subject.

ASSOCHAM contacts

D.S. Rawat

Secretary General

ASSOCHAM

Tel: 011-46550555


Ajay Sharma

Director

ASSOCHAM

Tel: 011-46550555



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Notes


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Documents

Study on Mobile Payments