Mobile service operator Loop Mobile has launched a mobile money service partnering with ZipCash, an online cash card and micro-payments company, reports Telecom Talk. The service, unlike Airtel Money, does not require a new SIM card and works by way of SMS commands. It is essentially a semi-closed mobile wallet, and can be activated by the customer at Loop Mobile’s outlets, where he can load cash onto his mobile number.

The challenge for ZipCash is that Loop has a tiny customer base across India – 1.33 million connections active as of June 2011, and it is unlikely that it will add substantively to its user base. Would a user sign up for Loop Mobile, just because of the mobile payments service?

ZipCash Card

In any case, ZipCash is among the smallest cash card services – it reported 3035 transactions for April 2011, worth Rs 3.36 lakh, but to its credit, it was – at that point in time – twice the size of Airtel Money.

Since ZipCash is a virtual cash card, it cannot be used for peer to peer money transfer and only allows customers to make payments in fixed denominations through mobile coupons. Payments can be used for prepaid recharges or post-paid mobile bill payments on Loop, as well as for electricity bills, insurance premiums, DTH recharges, coffee vouchers from Cafe Coffee Day, in addition to online shopping on sites such as Bookmyshow, eBay, HomeShop18, Thomas Cook and RedBus among others.

The service is available free of charge for Loop Mobile subscribers. For using mobile money on e-commerce websites, subscribers will need to submit KYC (Know Your Customer) documents such as a copy of Passport, Voter id, PAN Card or Driving License.

The Problem: Forfeiture Of Remaining Coupon Amount

Vouchers or coupons that are delivered via the service carry a validity of 6 months, and can be transferred to others, but the mobile money balance is non transferrable. The big problem with this service is that if there is a remnant amount after using the coupon, it gets forfeited. For example if a user orders coffee worth Rs 70 and presents coupons worth Rs 100, the balance Rs 30 is lost.

Although, there are no extra charges for using the service, we still don’t see many reasons for customers to choose mobile money over other cash cards. Keep in mind that other cash cards such as Itz Cash or Done Card can be bought or topped-up at a large number of service outlets. Also, isn’t remembering SMS commands rather cumbersome over a SIM toolkit based menu?

(with inputs from Nikhil Pahwa)