The Hindu Business Line : Mobile money transfer hits regulatory hurdle

New Delhi March 13 GSM-based cellular operators' initiative to launch mobile money transfer services in the country seems to have hit a minor bump, with the industry fearing that the Government may start counting the money transferred through mobile networks for the purpose of calculating annual licence fee.

The service, announced in Barcelona during the 3GSM World Congress, will allow subscribers to transfer money from anywhere in the world by sending an SMS from their handsets.

The service is particularly relevant for India, not only because it is the largest recipient of international remittances worldwide ($22 billion in 2005) but also because it will be equally useful for funds transfer within the country.

However, the operators have now asked the Department of Telecom (DoT) to come clear on the accounting policy before the service can be introduced.

Senior Government officials said that the DoT has received representation from private cellular operators on how the monies transferred through mobile phones will be considered for the purpose of calculation of licence fees.

Operators currently pay 6-10 per cent of their annual revenues to the Government as licence fees.

If the funds transferred through the new service are counted as revenue of the operators, then the net outgo for the company will increase substantially.

The operators have told the DoT that they would only play the role of facilitator, as the funds are merely transferred from one person to another.

"These money transfers fully satisfy the requirement of pass-through revenues that are deducted by the Government for assessing licence fees," said a cellular operator.

"However, if the operators levy any service charge for providing the facility, it will form part of the annual revenue for the purpose of calculating licence fee."

The mobile money transfer project will ride on Mastercard's global infrastructure, which already provides connectivity to 25,000 banks.

In India, Bharti Airtel and SBI are conducting the pilot of the service.

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