Vodafone’s attempt to launch its mobile money transfer scheme in India have hit a roadblock with regulators insisting on tie-up with a licensed bank. The operator was looking to roll out its mobile money transfer service after it took off successfully in Kenya, where it was called the M-Pesa. Vodafone has also deployed the service in Afghanistan and Tanzania. In India, however, the operator claims to have been barred by regulators from launching the service on its own.

“Regulators won’t allow any mobile payment scheme. India has said you have to be a licensed bank,” Vodafone’s head of mobile payments Nick Hughes told AFP.

Vodafone has a global tie-up with Citibank for mobile remittance services and had announced that it planned to focus on Eastern European and Asian markets, such as Poland and India, after its pilot in Kenya, according to this 2007 press release.

Nikhil Adds: I find it hard to believe that  Vodafone would want to provide remittance sevices without tie-up with a bank or an Non Banking Financial Corporation. The telecom license fee in India is based on the gross revenue, and if money transfer takes place through Vodafone, the amount they pay to the government will increase. Mobile operators in India, therefore, have refrained from launching money transfer and payment services by themselves.

Other Operators

In 2007, Airtel tied up with money transfer service Western Union to launch m-banking services. Airtel had also tied up with State Bank of India, while Reliance Communications partnered with ICICI Bank.

Reliance Communications International, the US based subsidiary of Reliance Communications inked a deal with Times Financial Services to offer mobile remittance services. RCom also offers Reliance Global Calling services.

(Update: added link to Vodafone’s launch of M-Pesa in Afghanistan)