Idea Cellular has applied for a semi-closed prepaid payments license (essentially a Mobile wallet license), which will allow the company to offer mobile payment services, the company’s MD Himanshu Kampania said on its earnings conference call. A semi closed prepaid payment license allows a business to create stored-value cards (physical or digital), which can be used to purchase products from multiple vendors. However, it doesn’t allow withdrawal of money once added, for which telecom operators need a banking partner. On its part, Idea Cellular already has a partnership with Axis Bank (as does Airtel) for mobile money transfer services, so if and when it does get the license, a bank partnership would already be in place.

At present, Bharti Airtel and Vodafone are only telecom operators with a prepaid payments license in India. Airtel Money*, run by Airtel M Commerce Services Ltd, is live in 27 states in India. Vodafone has a license through its subsidiary Mobile Commerce Solutions Ltd, and has partnered with ICICI Bank for M-Pesa, and is slowly being rolled out.

Kampania did not mention how long it has been since Idea applied for the license, but pointed towards opportunities in machine-to-machine (M2M) services, Mobile Banking and mobile money tranfer as growth areas for the company. “There is potential for new applications, and there are a lot of growth opportunities in newer applications like M2M services, mobile banking, money transfer and the company is geared. We have already announced that we have formed a separate company for mobile commerce, and there is a team which is working hard to build this business. We have a tie-up with Axis Bank, and are currently operating mobile banking in four circles. We have applied for a license with RBI for a semi-closed wallet and hopefully, in the near future we should get the license, and we are getting ready to launch services on that front,” he said on the call. 

There are four types of Pre-paid Wallet instruments:

1. Closed System Payment Instruments, which are not reloadable with cash and do not permit cash withdrawal (for example: phone calling, prepaid voucher and gift vouchers)
2. Semi-Closed System Payment Instruments, used at merchant locations, and which can be reloaded, but do not allow cash withdrawal (for example: cash cards and smart cards)
3. Semi-Open System Payment Instruments: these can be reloadable or non-reloadable, and can be used at any point-of-sale terminal, but they do not allow cash withdrawal. For example: gift cards issued by banks
4. Open System Payment Instruments: these can be re-loadable or non-reloadable, but most importantly, they permit cash withdrawal at ATMs. Examples of such cards are the Payroll cards and travel cards

* Note to Airtel Money: try simplifying your categories / category structure please. Not very user-friendly, this –

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