Take mobile payment to its potential

I f you wish to link ‘your mobile phone to any financial instrument of your choice, whether it is an existing bank account, credit card or a prepaid account,' thus turning your mobile phone into ‘a secure tool you can use anytime, anywhere,' the solutions are not too far to seek, assures Ajay Adiseshann, Founder and Managing Director, Paymate, Mumbai (http://bit.ly/F4TAjayA).

The potential for mobile payments covers everything from B2B applications, B2C payments, P2P money transfers and even G2C payments such as social payments, and subsidies, he adds, during a recent interaction with Business Line.

We continue our conversation over the email.

Excerpts from the interview.

First, an overview of the costs of the money transfer transaction across channels.

The costs involved in the mobile money transfer transaction are far lower than the costs involved in other channels, such as branch, cheque, and even Internet-based.

A research conducted by the Consultative Group to Assist the Poor (CGAP) published in May 2010 found that mobile banking is cheaper in comparison to formal banks, with mobile branchless banking services found to be 38 per cent cheaper.

In case of smaller transactions, it has been found that the lower the transaction value, the cheaper the mobile banking solution is in comparison with formal banks.

According to ‘Digital Insight,' for example, an average teller or phone transaction costs about $2.36 each, whereas an electronic transaction costs only about $0.10 each.

What are the challenges in using the mobile platform for money, and how have these been addressed?

The key to leveraging the mobile eco-system for payments is customer education.

Customers need to be shown how simple the use of this technology is and the convenience it adds to their lives.

The factors that will make mobile payments a popular tool are ubiquity, ease of use, handset- and operator-agnostic services.

But, to take mobile payment to its potential, a focused education programme conducted by banks is needed, since mobile payments in India are still closely tied with the banking system.

For any technology-based product, no matter how easy to use, the key to customer adoption is education, and in this case, this must take the form of a marketing and communication push from banks.The Reserve Bank of India has put in place clear guidelines for mobile banking, money transfer, and prepaid cards. These guidelines are adequate and encourage the use of mobile as a mode of payment. All limits that are prescribed are reasonable.

On the potential you see for mobile payments, and an example of effective deployment.

The potential for mobile payments is immense, and we are likely to see a massive democratisation of banking, thanks to the advent of mobile payments. We have launched one G2C project in the form of the Kisan Credit Card on Mobile. PayMate, along with NABARD, Indian Bank and Pallavan Grama Bank, recently set up India's first Mobile Money Credit Delivery solution with ‘Kisan Credit Card' (KCC) on Mobile, for farmers in Tamil Nadu.

This innovative system is specifically designed to help farmers in villages use their crop loan amounts in an easier and more efficient manner. This solution uses the mobile to provide a convenient credit delivery to farmers, by eliminating their need to travel long distances to encash their loan. It thus provides them access to funds anytime which can be used for purchasing goods and farming assets, and even allows them access to a home-delivery model for purchasing farming goods and equipment.

KCC on mobile is a simple and secure way of making and monitoring purchases using a mobile number and a secret PIN for security.

The current system offered to farmers is passbook-based, wherein the customer has to go to a bank, withdraw cash and then make the necessary purchases.

But, with the introduction of this new system, the customer is able to use his funds in a convenient way and also check his account balance and the status of his last transaction through a simple SMS, and eventually, even make cash deposits to his account at BC (Business Correspondent) locations.

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