[Editorial notes: India's central bank recently said that telecom operators cannot launch mobile wallets on their own unless they partner with banks. Recently, the central retail payments corporation extended interbank mobile payment service to merchant services. The first bit will complicate operations and the second bit is already complicated. Mobile micro payments in the country have a long way to go and will work only with the support of telecom operators argues guest author Subrat Kar.]
Mobile micropayments can solve the problems of online payment in India if it is launched properly with the tie ups with Telecom Carriers only. People buy books, virtual goods , game credits on a daily basis. Deals, coupons, Ebook, ticketing, using services like redBus etc will become much easier if BOKU or any new Indian company launches its service in India with proper telecom support.
Most Indians are afraid to share credit card information online while purchasing any digital or physical goods. However, they may be more willing to share their mobile numbers to pay online.
There are many companies working across the globe on Micropayment concepts using telecom carrier as mode of payment processing. Of these, Boku is popular service.
For those who don’t know what is Boku, here is a little introduction. Boku.com is an online mobile payment company that enables consumers to pay online for virtual & digital goods using a mobile phone. No credit card or bank account is required for this payment, the amount is simply added to consumers mobile postpaid bill at the end of month. Boku partners with a mobile operator or carrier company and ensures a safe and secure transaction ;its a great tool for making Micro Payments.
Within 2 years of its establishment, Boku has expanded in 66 countries and has become the largest global mobile payments network with a carrier network of 240 which connected to merchants like EA, Zynga , Facebook and Disney.
Why Boku failed in India?
Back in 2009, Boku tried to launch itself in India and partnered with Airtel as the carrier network. A lot of buzz was created that Airtel will provide its users an application through which they could make online payments using their mobile phones. Airtel later clarified that it is not associated with Boku in anyway.
Following are some major reasons for its failure in India:
- High transaction fees (around 25-45%) charged by Boku+Telecom carrier to the merchants. If you compare with any online payment gateway companies, they charge around 2.5 to 7% to the merchants. So why a merchant will sign up with Boku if the TDR is very high?
- 10% extra was charged on the post paid bill to the customers as a service charge which was so ridiculous. Suppose a customer paid Rs.50 by his mobile, but at the end of month he would have to pay Rs.55.
- Boku takes around 60 days to transfer funds to the merchant’s account while all the online payment gateway companies take maximum 2-10 days to transfer the fund. Telecom companies demand a very high duration of credit period before they release payments which affects the merchant liquidity.
- Money recovery and fraud complaints were other issues that lead to the failure of this system. It was also uncertain if credit card holders who are already paying 10% extra charge for their credit cards will switch to BOKU and add more tax to their already heavy bills. The services offered by Boku were not up to the mark and the customer support never replied back.
The Present Ecosystem
As per RBI guidelines, telecom companies have to tie up with banks for the m-commerce. Mobile operators will not be allowed to retain the money of customers that comes from mobile phone transactions and have to mandatory tie up with a bank, because telecom operator may collect the money from customers and can generate revenues by lending this money to others. The mobile payment norms by Finance Ministry only supports for the banking point of view not the telecom prospective.
Though there is such restriction in India, Facebook launched its telecom operator billing in India, in partnership with Airtel, Loop and Uninor so that anyone can purchase Facebook credits through mobile phone.
Changes to be made
- The mobile payment norms should be drafted after discussions between the regulators – the RBI and the Telecom Regulatory Authority of India. Regulatory should think once that mobile phone penetration is more than that of banking penetration, even a vegetable vendor in road side has a mobile phone in his pocket but not a bank account.
- If RBI thinks that telecom operator may use the transacted money of pre paid customers, then the ministry should form short time limit for telecom carriers to transfer the money to the micropayment service providers account.
- If RBI thinks that the prepaid idea will not work in India, then the Government should permit to the micropayement service providers to launch this kind of service with a telcom operator for the mobile post paid users only.
- RBI should also give same preference to non bank led model which are mainly provided by mobile service providers. The Indian market is more ready for the non bank model than the bank model.
- Telecom operators should not charge high to the micropayment service providers, if they charge less (around1-1.5% per transaction) then the concept like mobile micropayment will become more success. This revenue should go as extra value added income for telecom operators, they should not focus it as primary income.
If such things happen then the concept of making micro-payments using mobile will surely become very convenient and popular,in country like India. This will bring a new kind of revolution like Financial Inclusion.
What are your thoughts?