A number of Indian mobile operators have been pilot-testing transferring money using mobile handsets. There are 160 million mobile subscribers in India far outnumbering the bank branches in the country (70,000). The service could potentially allow mobile users to transfer money electronically via the handset directly and instantaneously to another mobile subscriber in the country without having to use bank accounts. However, this service cannot be rolled out until the operators are given regulatory approval both from the banking regulators and telecom regulators. But a more restricted service which would still keep banks in the loop may have a higher chance of getting a quicker approval. Bharti (Airtel) is partnering with the State Bank of India (govt bank with widest coverage) for such a service.
Mobile banking is already quite widespread in Africa and also in the Philippines. In the Philippines, Smart Padala service also allows international money transfers which is a great boon to migrant workers to remit money to their families at a much lower cost than Western Union and with much less hassle. Considering the number of migrant workers within India and expatriate workers of Indian origin around the world who could benefit from such a service getting the regulatory approvals quickly will be desirable.
Mobile money transfer await Govt nod:
Hindu Businessline Feb 27, 2007
Regulation awaited [Extract]
Many of them have already developed and tested their money remittance applications, and now only need regulatory clearance for it.
“Banking regulations currently do not allow cash for exchange of another `unit’ such as `airtime’ in the case of mobiles,” said Mr Mahesh Prasad, President, Applications & Solutions Group, Reliance Communications; his company, he says, has readied and tested the application. “Only the banks and Indian Post (through money orders) are currently allowed such transfers.”
“We could do it by partnering a bank. But then the customer would have to have a bank account and go to that bank to get money. There is a multitude of issues,” said Mr Prasad. RCom is also looking at international remittance, as its Reliance India Call card has a network of distributors overseas.
In true mobile remittance, the receiver need not go to the bank but only to prepaid outlets or distributors of the mobile service provider for the cash.
Bharti Airtel recently tied up with State Bank of India for mobile remittance, and is pilot testing it at a few villages in India. “We need regulatory approvals, this is going to take some time,” said a spokesperson for the company.