Bharti Airtel has become the first telecom operator to launch prepaid cash cards in India India; the Airtel Money service, according to a statement from the company, is live in Gurgaon, and Airtel plans to launch it across the country, in a phased manner. The service is being pitched to customers as an alternative to cash transactions, allowing them to use their mobile phones to make payments. The service allows users to pay bills and recharge their mobile phone, and they can also shop and make payments. Note that it’s available for Airtel customers only, and unlike other prepaid payment cards, it is not carrier agnostic; it’s targeting Airtel’s connection base of 149 million (at last count, though a small percentage of that base might be inactive). Airtel is one of the 17 companies to be given a prepaid payment instrument license by the RBI.

Customers will have to, as per RBI guidelines, submit KYC documents (2 photocopies of proof-of-identity, 1 copy of proof-of-address and a passport size photograph), following which the Airtel SIM will be upgraded to a 64 K SIM. What’s notable is that any loading of money in the Airtel Money account will be separate from a prepaid mobile calling recharge – you can’t use your prepaid mobile calling balance to make a payment.

Cities Launched, Merchant Network

Airtel says they’ve only launched in Gurgaon and are targeting a base of 3000 merchants in the city, before a rollout in Delhi-NCR. However, their website indicates that they have tied up with merchants (Chemists) in Faridabad as well. Their website also mentions Chennai, but there are no details available. Search for merchants here.

Building a Merchant Network will be key Airtel has a few things already in place, which other prepaid card companies would have had to spend on – it has a retail network. However, in order to encourage use of the card beyond just bill payments and phone recharge, Airtel will have to establish a merchant network – essentially businesses who will accept payments from Airtel Money. Remember that several shops use Prepaid Cash Cards cards for making online payments, especially booking flight and train tickets. Airtel will need to build an online merchant network as well. Apart from food outlets, chemists, hospitals etc, merchants mention on their website include BookMyShow, CarNation, as well as BSES Rajdhani, BSES Yamuna and NDPL for Electricity Bill Payment.

Charges & Transaction Limits

There’s a monthly subscription fee of Rs. 5 for Airtel Money, and utility bills – for telecom, electricity, water and gas – are also charged at Rs. 5 per payment. Why is Airtel charging a fee for people using it to making telecom payments?Additionally, for several other services, the merchant might decide to charge a transaction fee.

There are daily and monthly transaction limits as well:
– Loading Cash: Minimum is Rs. 10, Maximum daily limit is Rs. 5000, and monthly limit is Rs. 50,000
– Payment limits: Minimum payment is Rs. 5, Maximum daily limit is Rs. 5000, and Monthly limit is Rs. 50,000

Note that the transaction limits mean, that Airtel Money will probably not be used by merchants for buying online, because there’s a monthly limit of Rs. 50,000, and a daily limit of Rs. 5000.

Expiry Limit

Airtel says that the account has no pre-set expiry, but if the service isn’t used for 6 months, the account will be deactivated, and the balance in the account will be forfeited.

It’s NOT an Open Wallet

A wallet – rather, an Open System Wallet, typically allows you to put cash in, and withdraw it. This is a prepaid payment system which allows you load money on your mobile and use it to make payments, but you can’t really use it to withdraw cash, in the same way you can’t withdraw cash from other prepaid cards like Itz Cash or Done Card. It’s being called a Semi Closed Wallet, but our take on this is – if you can’t convert it into cash, then it isn’t a wallet.

M-Commerce Opportunity For Service Providers

– SIM Toolkit: The power of default, being on board the SIM card, cannot be ignored. Airtel will load the Airtel Money app on each new SIM, on the SIM Toolkit, which will make it easy for every customer to access the service.

– Mobile Services: Airtel can integrate the service with their WAP Deck, for enabling payment for movie tickets, booking flights. This could eventually give a boost to an m-commerce business for Airtel, because of a tighter integration, and no requirement for a credit card or debit card for payments.

Airtel Money Vs Other Prepaid Payment Cards

Airtel will grow the market, but maybe not at the cost of other prepaid service providers: Even though it is available for Airtel customers only, and limited to a few merchants, Airtel will certainly grow the market for prepaid cards and mobile commerce by bringing new customers on board. At least for that market segment, it’s likely that Airtel’s distribution reach will make it difficult for other to compete, and its marketing muscle will allow Airtel to initially offer discounts to attract customers, who can shift to Airtel from others like, say, Itz Cash, Done Card, or even Oxigen and Beam. However, stores that were servicing customers by booking tickets for them will not switch, due to transaction limits, unless Airtel rolls out a separate retailer plan for Airtel Money.

Airtel had also recently announced a JV with State Bank of India, for a banking correspondent service for opening no-frills accounts.

Note: Some details of Airtel Money have been gleaned from here (image)