Over the past five years, smartphone penetration in the country has gone up phenomenally. Coupled with the burgeoning data usage, this trend is transforming the way consumer businesses, financial service providers, e-commerce players, etc. are meeting customer needs. In order to stay relevant in the market,

companies are reinventing themselves by adopting the mobile phone as the primary medium of interaction with customers. According to a report by Deloitte, there are certain distinct advantages associated with the use of mobiles as a medium of commerce. These include an improved user experience, productivity gains and ubiquity. Given these advantages and the expanding user base of enabling devices, the trend towards mobile commerce (m-commerce) is likely to gain further traction.

In order to exploit the advantages offered by m-commerce, a number of start-ups have launched mobile-based virtual wallets, which allow customers to load a certain amount of money into their accounts and spend it at various online or offline merchant outlets. The appeal of mobile wallets can be gauged by the fact that the transaction volumes via m-wallets have increased more than three times in the past two years to over Rs 27 billion (according to estimates by CRISIL). Joining the long list of companies offering the mobile wallet facility are some of India’s largest telecom operators including Bharti Airtel, Vodafone India, Idea Cellular and Tata Communications. These players have the advantage of a large subscriber base, which they can readily tap to extend these services.

Operators offering mobile wallets

Airtel Money: Airtel was the first operator to start the mobile wallet service in the country. Launched in February 2012, Airtel Money is operated by Bharti Airtel’s wholly owned subsidiary Airtel M Commerce Services Limited. The company allows its users to load their wallets with a certain amount of money through their mobile devices and use it  to pay utility bills, recharge their prepaid mobile accounts, pay their post-paid bills, shop at over 7,000 merchant outlets, transact online, etc. Apart from serving as an alternative to cash and cards, Airtel Money offers a feature through which customers can transfer money from one Airtel wallet to another, and even to their bank accounts. The company currently offers two types of accounts on this platform, power and express. While a power account holder can store up to

Rs 100,000 at any given time and use up to Rs 50,000 per day, an express account holder can hold up to Rs 10,000 at any given time and use the same amount per month. Airtel launched its mobile wallet service when the smartphones had just started to gain a foothold in the Indian telecom market. With the smartphone ecosystem having matured significantly, the operator has launched a mobile application for Airtel Money.

Vodafone m-Pesa: While Vodafone started its m-Pesa service in India in April 2013, it launched the m-Pesa application for smartphones only in July 2015. The application is primarily targeted at offering online bill payment services and mobile recharges. Users can also load money onto their wallets through net banking or debit cards for later use. Users with m-Pesa mobile wallets can store up to Rs 10,000 at any given time. As an introductory offer, Vodafone has announced 5 per cent cashback (with a maximum cashback of Rs 50 per month) on payments made through the wallet. In addition, users can pay their utility bills and recharge their direct-to-home (DTH) connections using this wallet. Vodafone has tied up with ICICI Bank for its mobile wallet service. On registering for this service, users get a mobile wallet issued by Vodafone and a mobile money account with the bank. These two accounts are interoperable. However, since Vodafone has received in-principle approval from the Reserve Bank of India (RBI) to set up a payments bank, the need for a banking partner may cease to exist.

mRUPEE: Tata Teleservices Limited’s (TTSL) wholly owned subsidiary MMP Mobi Wallet Payment Systems Limited (MMPL) operates the company’s flagship product mRUPEE. MMPL was authorised by RBI to set up a semi-closed wallet, which is a prepaid payment instrument that is redeemable at select merchant outlets and establishments. Semi-closed wallets do not permit cash withdrawal or redemption by customers. TTSL’s mRUPEE allows users to transfer money from one mRUPEE account to another, pay bills online, do online shopping and pay for tickets. The operator has tied up with ICICI Bank for providing this service. While most operators are migrating from desktop sites to mobile-based applications, TTSL has forayed into e-commerce post the launch of its m-commerce platform. Its e-commerce website, also called mRUPEE, lists a wide range of products and offers the option of making payments through the mRUPEE wallet or through a debit/ credit card. In order to encourage customers to use the mRUPEE platform, MMPL has also partnered with Ratnakar Bank Limited and launched the PaySmart prepaid card that allows mRUPEE customers to withdraw money from VISA-licensed  ATM kiosks. Further, PaySmart card holders can make payments for various goods and services at all merchant establishments that accept VISA-powered debit and credit cards. The minimum and maximum value that a card can hold at any given time is Rs 200 and Rs 100,000 respectively. The card allows a user to carry out transactions and withdraw money without a bank account.

Idea Money: Idea Cellular launched its mobile wallet, Idea Money, in August 2014 through its subsidiary Idea Mobile Commerce Services. Idea Money is a semi-closed prepaid payment instrument that enables its users to recharge their prepaid mobile connections and DTH connections, pay utility bills and transfer money using their mobile devices. The company also plans to soon roll out additional services to facilitate payments for online shopping and online ticketing. Idea has partnered with Axis Bank to provide mobile wallet services and currently offers the service to customers with an Idea mobile connection. The service was initially launched only in Mumbai and was later extended to all the remaining circles in which Idea operates. The operator offers two types of accounts, Idea Money and Idea Money Plus, with the latter having a higher spending limit and access to a wider range of services.

Looking ahead

While m-commerce is gaining traction, its long-term success will depend on some critical factors. According to CRISIL, the positive response to mobile wallets can be attributed to the limited internet access and banking penetration in low-income households. However, the business has not yet turned profitable for telecom operators as operational expenses are still very high as comapared to the value of transactions, which remains small (Rs 200-Rs 400). Many operators are now going one step ahead and leveraging their experience in m-commerce to offer payments bank services. RBI recently granted in-principle approval to 11 entities to set up payments banks. These include Aditya Birla Nuvo Limited, Airtel M Commerce Service Limited, Reliance Industries Limited and Vodafone m-Pesa Limited. The approval will not only give a big boost to these companies but also help them access a huge amount of capital, which can be utilised to fuel further growth.