Exciting future for payments

Had an interesting conversation over the weekend with the office caretaker- a young late 20’s chap who has his wife and kids back home in Nepal. He told me very excitedly how he managed to send across money to them in Nepal through a new option wherein the credit was showing in his Nepalese account the very next day.

Mobile wallet
Mobile Wallets are here

The few interesting things that really stood out were

  • He transferred all of Rs7000/- in one go. He didnt feel like testing the process as he was told about this option by a close friend. Referrals generate high sense of security and comfort
  • He was given a secure PIN and this gave him immense confidence about the process being secure. Though he had to ask his friend to SMS the same to his better half back in Nepal.
  • He was happy to pay a transaction fee of Rs100/- for an almost immediate confirmation of credit in the recipient account. Customers will pay decent amount as fees for specific features/benefits
  • He hasn’t heard about Western Union etc and went straight to this PNB branch in Connaught Place for his remittance.
  • He also talked about an option where money can be credited almost immediately (mobile based process) and was sure that this would be a great option to use during times of emergency. This gave him a lot of comfort knowing that his family would have access to immediate funds even when he is miles apart.

The above in my opinion is a clear indication of the kind of adoption payment instruments would see in the huge currently untapped market. While brand building will be a tough one, the player who invests early in training/educating users how to use this securely would see a huge advantage. I hope my friends in the Mobile Payments industry are listening and are as excited as I am.

Airtel gets RBI nod for the mwallet

Today’s announcement is big news for not only the mcommerce folks in the country but also for people in Telecom, Retail and Payments industry. This approval allows Airtel to act as a semi-closed loop operator for pre-paid transactions. The Customers can now deposit upto Rs5000/- with Airtel (not to be clubbed with talktime) and can then use this money to buy goods and services at Airtel partner stores.

While its too early to say how this would grow, its very clear that there are certain pockets which might show early adoption tendencies

– Customers without debit or credit cards & wishing to transact online

– Customers concerned about the security of carrying cash or plastic in the wallet

– Parents wanting to give some financial freedom to their kids but not comfortable with just cash or add-on cards

– Impulse purchases by consumers when they are not carrying enough cash or cards in their pockets. This will definitely be the preferred way to promote impulse buying in young spenders

The critical thing to note is that the RBI has not yet allowed peer-to-peer payments through this channel. While some say that the current mobile wallet is the first step in that direction, globally it has been seen that P2P mobile payments help increase the adoption. For the simple reason that P2P payments are inherently viral whereas C2B are not.

One more aspect is that aggregators are not allowed currently- or so I am told. Which means that a retailer who wants to accept mwallet payments from Airtel, Vodafone & Reliance customers would need to deal with 3 different players and systems. There will be no VISA or MasterCard equivalent (atleast for now) making their lives easier. When they allow this, its a space we would be very interested in.