A colleague recently travelled to India for the Mobile Money Southern Asia Conference & Expo, and returned to Singapore full of new insights into the subcontinent’s booming mobile payments market.
India is already the world’s second most populated country after China. Its 1.21 billion citizens are almost equal to the combined populations of the US, Indonesia, Brazil, Japan, Bangladesh, and Pakistan.
According to Boston Consulting Group, there are 771 million mobile subscribers in India, with 548 million considered to be active, compared with 240 million holding bank accounts. Most of the people in urban India have bank accounts but 90% - 95% still mostly use cash for their day to day needs.
While mobile commerce might be still nascent in the country, there is a tremendous opportunity in servicing urban elites and the large numbers of the un- and under-banked in rural India via the mobile channel.
Boston Consulting’s analysis suggests mobile payment and banking transactions will reach $350 billion (€269 billion) by 2015, measured against approximately $235 billion of credit and debit card purchases at present. Peer-to-peer remittances are expected to deliver $70 billion by 2015, mostly through people in metropolitan hubs transferring funds to their families in rural areas.
Transaction volumes and fees might be small, but anticipated economies of scale have triggered a wave of notable alliances between banks and telco operators in India. Research firm Warc flags partnerships between Bharti Airtel and the State Bank of India, Vodafone and ICICI Bank, and Idea Cellular with Axis Bank.
Another company keen to get a piece of the pie is Nokia. The handset manufacturer has started shipping mobile phones preloaded with its banking application in India, based on the Obopay mobile payment platform, in a deal with the Union Bank of India.
Considering India’s sheer size as well as geographic and cultural diversity, it’s hard to imagine a national mobile payment scheme in India any time soon as we find in smaller countries like Austria today.
I would rather expect a number of payment ecosystems to co-exist for a significant period of time, until regional leaders emerge, possibly along historical and cultural fault lines. It’ll be also interesting to see if any home grown players founded by India’s well educated and entrepreneurially minded IT community will be able to capture significant market share.
One thing is certain: As India cements its position as an economic powerhouse on the world stage, greater financial inclusion via the mobile channel will have a positive flow-on effect on productivity, innovation and living standards.
Tarik Husain is business development director for mCommerce at Sybase 365. For more information visit http://blogs.sybase.com/mobilecommerce/