It is seven in the evening. Harish Veesamshetty’s small Airtel outlet in Kattedan, on the outskirts of Hyderabad, bustles with activity. Migrant workers from Rajasthan and Bihar wait in queue with their daily wages. With the click of a button on his mobile phone, Veesamshetty remits money to each worker’s family back home. The money is sent into a bank account or another mobile phone in the worker’s hometown.

Miles away in the country’s financial capital, Mumbai, autorickshaw driver Bharat Gupta makes an extra buck as an Airtel Money retailer. He pays the electricity and gas bills of passengers as well as friends and other clients, when he is not plying his auto. From recharging mobiles to transferring money and paying bills, he undertakes five to six transactions a day, worth over ₹1,000.

When Azim Ansari, a small shopkeeper in Harola (Noida), Uttar Pradesh, had to send his family in Madhya Pradesh money for a medical emergency, he used mRupee, the mobile banking service of Tata Teleservices. Minutes later, his father withdrew the money he had sent from the bank back home.

Mobile banking and payments are slowly, but surely, proving to be life-changing for the poor. Telecom operators have stepped in to do what banks couldn’t on their own — take banking to the unbanked. Millions of Indians don’t have a savings account, and bank branches are scarce in many parts of the country.

Telecom operators, on the other hand, have over 15 lakh retail outlets across the country, including many in remote areas. Banking and payment services can fetch them more revenue, but it is early days still.

“While volumes are low, I see this as a future revenue stream, where we are developing the market right now... if we don’t do it now, the revenues will get postponed,” says Ambrish Jain, deputy MD at Idea Cellular.

Operators have invested in the technology and the marketing of these services. They also pay a commission of 1.5 to 2.5 per cent to retailers and distributors. That leaves them with almost nothing now. But as volumes increase, revenues will too.

“Right now it is a retailer-assisted model, which means a major chunk is given back to the channel (partners). Today, we are creating an ecosystem for what will be a big opportunity later,” says Pradeep Kumar Sampath, COO of MMP Mobi Wallet Payment Systems (MMPL), a subsidiary of Tata Teleservices (TTSL).

The response has been good in remote and rural areas that have no formal banking services. TTSL’s mRupee, launched in March 2013, is nearing the million-transaction mark. It records around 2.5 lakh transactions a month, with an average amount at ₹3,500.

Airtel Money has 14 lakh users. The transaction value increased ten times — ₹654 crore in the quarter that ended on September 30, 2013, from ₹69 crore a year ago — although the company may not be making much money from it. So far, no security issues have been reported. Also, since the transaction size is small, it's an unattractive proposition for hackers.

Mobile payment has seen limited growth owing to RBI guidelines, which cap remittances at ₹5,000 per transaction and a maximum of ₹25,000 per month. “For volumes to grow, policy changes are required,” says Sampath. RBI is reportedly thinking of raising the limit.

While the ₹25,000 limit might seem low, it is adequate for migrant workers who earlier depended on middlemen to transfer the money. In Bihar’s Teliahat village, near Saharsa, a middle-aged woman, Shanti Devi, learnt to sign her name to be able to operate the Axis Bank account opened for her by Idea Cellular. Earlier she used to pay a commission to receive the money deposited by her son in Delhi, in the account of a shopkeeper in the village. Her son now sends money directly to her account through Idea.

Rajiv Anand, President (Retail Banking) at Axis Bank says 82,000 accounts have been opened after the tie-up with Idea in 2011. “And 28 per cent of these accounts are in the unbanked and under-banked areas of Uttar Pradesh and Bihar,” he adds.

Increase in bank transaction charges and limited branch operating hours will push more businesses to opt for the convenience of m-banking and m-payments. As Sampath points out, after migrant blue-collared workers, the service is increasingly popular among small and medium enterprises. After all, one can now send money even in the dead of the night to clinch a valuable deal.

HOW IT WORKS

Users can visit a telecom retailer and pay cash for transfer through a mobile phone. This includes payment of utility bills, railway and movie ticket bookings, phone and DTH recharge, and other online transactions. This money on mobile can also be instantly transferred to any other mobile or bank account. The recipient can withdraw this money from the bank or convert the mobile money into cash at an operator’s outlet near them.

TOP USERS

Migrant labourers remitting money home to their families

COST

₹20 to remit ₹1,000; charges vary for other transactions

WHO EARNS WHAT

Of the ₹20 charged from the customer, ₹15-16 go to the distributors and retailers, while ₹4 is split between the bank and the operator.

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