Working With Banks

Speaking at the IAMAI symposium on Financial Inclusion through mobile phones, Pallab Mitra, Head (Mobile Commerce) at Bharti Airtel repeated multiple times that the telecom operator is not interested in taking on the role of banks, rather, wants to work with banks. “We don’t have the wherewithal. A telecom operator will facilitate the ability for a common man to get a bank account with his expertise. We’re not trying to get into banking.”

Mitra said that telecom operators bring connectivity – the last mile – to the table. At the same time, “There are no free lunches. If we’re providing value…We’re validating a corridor for payment, and can also provide banks with useful information, for example, in the winter when the harvest is over, there are lots of calls from Punjab to Bihar. We’re not a dumb pipe.”

He stressed that banks need to have an average quarterly balance of more than Rs. 2500 from a consumer in an account for a bank to make money from it. “It is not commercially viable for a bank to service to service someone with Rs. 50 average balance. Everytime a customer walks into a bank, it costs the bank Rs. 80; Rs. 18-20 for using an ATM, and Rs. 15 per call for the call center. With the work that we’ve done to service the bottom of the pyramid, we will be able to provide them mobile banking services.”

Responding to MediaNama’s question on what telcos think of IT Secretary R Chandrashekar’s comments on a combination of mobile, UID and a payments ecosystem, without bank accounts (or banks), Mitra said that they would need to work with banks.

Lloyd Mathias, CMO, Tata Teleservices also suggested that telecom operators can provide the NREGA with biometric identification through mobile, as well as an e-wallet.

Lower Cost Of Infrastructure For Viability

Earlier in the day, Anil Pande, Head (Product Development Management), Reliance Communications said that the telecom operators have the infrastructure in place to deal with large amounts of transactions – telcos handle crores of voice calls in realtime, 80% of which are with other operators, with a large variety of plans. Settlements are processed with both consumers and other operators: the infrastructure is already in place, which is why the transaction cost is so low. “Cost of infrastructure, management and settlement has to be brought down to make the service viable.”

Interestingly, Pande said that in case of mobile bill payments, the amount of transactions for RCOM on mobile are half of those on the Internet. However, the repudiation on mobile is 1/10th of the Internet. Probir Roy, co-founder of Paymate added that for them, the chargeback rate is 15 basis points, as opposed to an industry average of 4-5%. He believes that rural consumers might adopts mobile payments faster than urban, because willingness to pay and convenience is higher. According to Paymates field trials, people are willing to pay if they see an immediate need being addressed. He suggested a payment process (image) during his presentation

Monopoly Services vs Others

Sunil Kulkarni, President (Corporate) for prepaid payments service Oxigen differentiated between services that the consumer pays for, as opposed to services that merchants pay for: “The reason for service fee for certain services is because in some cases, there is benefit (from e-Payments) for the service provider, and in some cases, for the consumer.”

“We have found that there is convenience for the customer in case of monopoly services, and benefit for the service provider in case of competitive services. Most monopoly service are prepaid (because you have a deposit). There is a need to move beyond monopoly services to convenience based services, wherein most of payment is used for service fulfillment, and hence there is no service charge.”

Related:

– Linking Mobile, UID & Payments, Without Bank Accounts – R. Chandrashekhar