Mobile phones are
poised to become the platform that will launch mobile money as an everyday form
of currency in India, according to Boston Consulting Group (BCG).
The BCG study estimates that by 2015, $350 billion of
payments and banking transactions could flow through mobile phones including
government payments, POS and bill payments, banking transactions, remittances
and business payments.
This compares with
just over $235 billion of annual credit and debit card transactions in India
today, a figure dominated by around US$215 billion of cash withdrawals at
ATMs.
According to the
study, five primary categories of mobile payments and banking will emerge by
2015:
– Government
payments: $40 billion of mobile-based transactions including disbursements
under the Mahatma Gandhi National Rural Employment Guarantee Act
– Peer-to-peer
remittances: $70 billion of domestic and international money transfers between
migrant works and their families
– Bill payments
and point-of-sale purchases: $40 billion of payment transactions as the mobile
phone doubles up as both a payment instrument (like a debit card) and a point
of sale terminal to authenticate and receive the payment.
– Business
payments: $60 billion of payments by small and medium businesses to their
employees and business associates.
– Consumer
banking: $150 billion through a combination of banking the unbanked and
expanding convenient payment services to existing banked customers.
An earlier study by BCG, Digital India: The $100
billion prize, forecasted that the market for digital products and services
in India is poised to grow rapidly as consumers flock to new services like
social networking and mobile commerce among others.
“It is far less costly to offer banking and payments
services using mobiles technology than to build new branches. Mobile-enabled
business correspondents, who are authorized to conduct business on behalf of
banks, can service a customer for 8 to 15 cents per transaction – far below the
US$1 to US$1.5 cost at a branch,” said Neeraj Aggarwal, partner and
director, BCG India.
The rush of telecom, financial, and technology firms to
offer mobile banking services is promising for the nation. However, the
business case for telecom operators is not straightforward. Mobile money
will not be a large generator of fees for operators. The total fee pool of $4.5
billion will be split across several entities – banks, telecom operators,
device makers, and service providers.
While the blueprint for building a mobile payments and
banking business has not yet been written, the dynamics of the market are
clear. Success for operators will require large scale, tightly managed
operations and strong consumer-centric services.
“The mobile phone will be the instrument through
which many Indians conduct their first banking and electronic payments
transactions. More than half of Indian households – 110 million altogether – do
not have a bank account. Yet, of the households without a bank account
our primary research estimates over 42 percent have at least one mobile phone.
Even basic mobile phones can
usher in an electronic payments revolution in the country,” said Arvind
Subramanian, partner and director, BCG India.
By TelecomLead.com Team
editor@telecomlead.com
