Unfortunately, Peer-to-peer payments remain disabled, and there still isn’t adequate clarity on what exactly PayPal needs change in order to comply with the RBI regulations. Joseph also examines issues with Paypal’s transfers – looking into exchange rates and the commissions. Do read.

Last month, PayPal had controversially begun reversing disbursals to Indian banks, after the RBI stepped in, concerned that they were operating as an unregistered money transfer company in India. From March 3rd, business transfers have been enabled as long as businesses specify a ‘Purpose Code’, and make available relevant documents for scrutiny if required. According to the Paypal, around 170,000 Indians regularly receive or send money abroad via PayPal, of 1.6 million Indians who have signed up for the service.

Related:

– PayPal Payments In India Will Require ‘Purpose Code’; Still No P2P
– PayPal To Resume India Payments By 3rd March; Export Code Needed

Grameenphone has a base of 23 million telephone connections out of a total of 50 million telephone connections (wireless and fixed) in the country. Telenor owns 55.8 percent in the Bangladeshi telecom operator.

The service has been launched in collaboration with Computer Network Systems (CNS) Limited, the Bangladeshi equivalent of IRCTC, which took over the computerized reservation and ticketing system of Bangladesh Railway in 2007.

Mobile ticketing service will initially be offered for all Inter-city trains starting from Dhaka Kamlapur, Dhaka Airport and Chittagong stations, and gradually all other intercity trains will be included under this service. To book a ticket users will have to access a menu from his mobile phone and feed in the travelling information. After that the user can choose to either book the tickets for a stipulated time period or purchase immediately if the seats are available. A digital train ticket number will be sent to his mobile via SMS which can be used to obtain a paper-based ticket from the train station at the time of travel. A service fee of BDT 20 per seat will be charged along with the ticket cost.

According to The Daily Star, an average of about 53.8 million passengers avail railway service in a year in Bangladesh. Over 40,000 people travel to and from Dhaka through Kamalapur Railway Station each day.

Related:

–Budget 2010: IRCTC Charges Reduced; E-Ticket Vans; SMS
–130% Rise In Online Ticket Sales For IRCTC In 2008-2009

It says that it wants to expand it’s operator network, but I’m reminded of a deal announced two years ago, with 35 operators including India’s Bharti Airtel. Services were expected to be launched in the second quarter of 2008, but as far as we know, nothing happened. Recently, the State Bank of India tied up with Airtel and BSNL for mobile money transfer services.

No telecom operators have yet tied up with Western Union in India for Mobile Money Transfer, but the opportunity remains: Western Union is one of the largest money transfer companies in the world, and India is one of the largest receivers of money transfers. And once integrated, an operators customers will be be integrated with Western Union’s core transaction processing system, which covers a network of more than 350,000 Agent locations in over 200 countries and territories.

The certification is likely to offer these vendors an advantage in offering money transfer services to telecom operators that Western Union has signed up with. Comviva has significant operations Africa, and hence a larger playing field; they also have a mobile money transfer solution called mobiquity for cash deposit and disbursal, money transfer and mobile payments.

Related:

– SBI Partners With Airtel & BSNL For Mobile Money Transfers
– PayPal Payments In India Will Require ‘Purpose Code’; Still No P2P
– Nokia Partners YES Bank To Launch Nokia Money In India; Pilot Begins In Pune

So you can go ahead and pay the Indian mafia extortion money under Purpose Code “P1006″ (management services), and nobody will ever know? Perhaps not: Paypal does say that “based on the value of withdrawal and the purpose code in your declaration, your bank may require you to provide documentary proofs such as invoices / goods receipt forms as applicable to reconcile with your withdrawal.” Technoholik rightly points out that “the onus of verifying whether the services rendered fall into the categories listed, falls back on the financial/government agency that choses to investigate someone whose bank accounts are showing suspicious amounts of foreign money coming in via PayPal.”

Paypal expects the full amount of the original withdrawals to be restored in the accounts by the end of the week.

For personal payments, though, transfers are still not kosher. Users will have to complete their withdrawals by cheque.

Purpose Codes:

Related

– Updated: eBay’s PayPal Disallows P2P Payments, Transfers To Local Banks
– PayPal To Resume India Payments By 3rd March; Export Code Needed

Update: (March 2nd): It appears that Paypal will no longer require an Export Code, but a ‘Purpose Code. Much easier, this way. Read the update here.

Earlier (Feb 27th): The Reserve Bank of India has allowed Paypal to continue local bank withdrawals for settlements for exports of goods and services, Paypal has announced. The online payment and wallet service expects that users involved in export of goods and services should be able to use their that bank withdrawal service by March 3rd, after it has complied with the Indian regulations. For personal remittances, it will have to apply for approvals, which are likely to take time. These developments are along expected lines.

Among the changes being made, is that users will have to enter an Export Code when a withdrawal is requested, which indicate that the transactions will be cross-border merchant transactions, and not P2P money transfer. Personal payments will be suspended until approvals are received. It’s unlikely that many Indian companies using Paypal have an Export Code, so a majority of individual developers and startups will not be able to withdraw money to their bank account from Paypal. More details are expected from Paypal by March 1st (a holiday in India on account of Holi).

Paypal is trying to put a positive spin on the limited approval it’s received: “With purpose codes for export transactions and FIRCs (Foreign Inward Remittance Certificates), you should now be able to get the export related benefits you seek.” Read a related post on the PayPal blog here.

For details of the case, read our earlier report:Updated: eBay’s PayPal Disallows P2P Payments, Transfers To Local Banks

The email sent to Paypal users:

We have been diligently working with the RBI and our business partners to resume Indian bank withdrawals for the thousands of Indian businesses who depend on PayPal to sell their goods or services in the global marketplace.

Today, we are happy to announce that the RBI has allowed us to continue local bank withdrawals for settlements for exports of goods and services. We are currently making changes to comply with Indian regulations for settlements for exports of goods and services, and we anticipate that, as of Wednesday, March 3rd, customers will be able to use our bank withdrawal service.

As part of the changes, you will be required to fill out a new field entitled ‘Export Code’ when you request a withdrawal. This information is required under the current laws of India in order to identify the nature of cross-border merchant transactions.

On Monday, March 1st, we will be back in touch with specific instructions on how you can move your money into your bank account.

Moving forward, the RBI has told us that PayPal needs specific approvals to allow personal remittances to India, which we currently do not have. Until we get these approvals, personal payments into India will remain suspended. However, if you are an exporter, you will continue to be able to use the PayPal service for payments of goods and services. In fact, with the changes we are making to our system, PayPal is now set to be a more powerful engine for exporters in India. With purpose codes for export transactions and FIRCs (Foreign Inward Remittance Certificates), you should now be able to get the export related benefits you seek.

MyToday Elite

MyToday Elite costs Rs 20 plus any SMS charges the network operator takes every time you subscribe for a SMS channel. What this Rs. 20 per month ensures is that you receive the latest updates first and are not in queue. To register, users have to first SMS ‘MYTODAY’ to 09223050606 after which they receive a password. With the password and phone number as id, users can log into their account and choose a method to credit MyToday Cash with various online payment options.

MyToday Dailies is the free SMS update service. The company claims that users can subscribe to 60 SMS channels including the common ABC (Astrology, Bollywood & Cricket) for free updates.  Netcore claims that it delivers 350 million text messages each month and has over 11 million subscriptions across 50 channels.

Also read: #MCS09: Interconnect Charge Worries Plague VAS Companies

MeeMo

MeeMo is a social network that allows individual users and businesses to share updates, profiles, SMSs and emails with friends, family and business networks. Users also get to own a personal webpage with a “.cc” domain name, which appears to be the country code of Cocos (Keeling) Islands off Australia!! Crazy, but if you are looking for a domain name via an SMS social network, you obviously do not care what you get. Somewhere else on the Internet, it says .cc is used as an alternate to .com for commercial websites. Really?

MeeMo users are issued an email address, a group SMS and an e-mail to sms service. Business users get five email addresses.

The MeeMo basic service cost Rs. 300 with 1500 free SMS and Rs 50 with 250 free SMS per month for individuals and businesses business and individual users respectively. The premium service cost Rs 500 with 3000 SMS free for business users and individual users are charged Rs 100 and get 650 SMS free per month.

TRAI reported that India has 545.05 million mobile connections at the end of January 2010. In the month of January alone there were 19.90 million new wireless connections. Mobile internet is still not as popular as SMS among a large chunk of 500 million people that use mobile phones. Netcore seems to have understood the logistics. Competitors in the space include SMS GupShup, 160by2 and Way2SMS.

Related:
–SinglePoint Buys M2Junction; Auction Based SMS Advertising
–You’ll Have To Wait For 5-8 Years For Mobile Advertising In India To Mature: Ravi Kiran, Starcom
–Mauj Mobile Partners Mobixell For Mob Advertising

–Content Vs Carriage: Vodafone India Blocks MyToday Shortcode

– Netcores Comments On TRAIs Draft Recommendations On Mobile VAS

SBI’s money transfer service will be SMS-based and will utilise a unique code for authorising a transaction. SBI has already conducted a pilot with BSNL in Chandigarh, according to WirelessFederation, and is awaiting approval from RBI to launch it in other cities. How exactly the operators are involved is not clear, but the benefit is clear.

SBI currently offers an SMS or GPRS m-banking service called SBI FreedoM. According to a company presentation, SBI has previously launched Kiosk Banking through the Business Correspondent model. Under this model, a bank can appoint intermediaries such as Post Offices, NGOs etc to disburse/collect deposits and sell banking products to citizens.

SBI has also partnered with India Post, 3i Infotech Foundation, Zero MASS Foundations, Kalanjiam Dev. Fin. Services, Drishtee Foundation, Grameen Pragati, FINO Fintech Foundation, ITC Limited and EKO Aspire Foundation. In Maharashtra, it met with a success and the bank issued 38,900 smart cards via India Post by September 2009.

Download: SBI Presentation.

It has also rolled out Tiny Cards on POS device in 21 states, covering 109 districts. It notes that 67.28% (8213) of its total branches (12,207) are present in the rural and semi urban areas and it plans to launch 1,200 biometric ATMs in rural areas, of which 300 will be solar powered.

Key Mobile Banking & Commerce Initiatives

Dec 24, 2009: RBI modifies mobile banking operating guidelines (read)
Dec 7, 2009: RBI Deputy Governor KC Chakrabarty criticized lack of mobile banking uptake (read)
Dec 1, 2009: RBI Allows PCOs, Grocery Shops To Offer Banking Services, But Not Telcos (read)
Nov 24, 2009: Payment Settlement Guidelines for Payment Gateway service providers (read)
Nov 12, 2009: Payment Systems in India – Vision 2009-12 (read)
Feb 18, 2009: Indian E-Commerce Braces For Changes In Credit Card Verification Norms (read)
Nov 21, 2008: RBI Finally Takes Up The Issue Of Internet Wallets And Cash Cards In India (read)
Oct 13, 2008: RBI Updates Mobile Banking Guidelines: Txn Limit Increased, Debit & Credit Cards Not Mandatory (read)
Sept 22, 2008: M-Banking Guidelines For India Issued; Ridiculous Transaction Limit (read)

Related:

–RBI Authorises Banks To Convert ECommerce And MCommerce Accounts Within 3 Months
–Does Nokia’s Investment In Obopay Impact India’s Mobile Payments Market?
–RBI’s Vision For Mobile & E-payments, Major Projects
–M-Banking: Obopay & Yes Bank To Launch Pay Anyone; Paymate – MobileStore
–One97 Communications Launches Payment Platform PayTM
–RCOM Picks Atom As M-Commerce Partner, Services
–MTS Ties-Up With Utiba For eTop-Up And M-Commerce Platforms

PayPal will also power payment options for Facebook Credits, which users use to buy virtual goods like gifts on Facebook. PayPal appears to be currently only available to a small subset of Facebook users.

PayPal has 81 million accounts in 190 markets and 24 countries , Facebook has more than 400 million users with 70 percent outside the US, so the opportunities for both are immense. According to the site, currently only credit cards and co-branded debit cards (VISA or MasterCard and American Express, Discover or JCB for certain currencies) are the accepted method of payment. For buying Facebook credits, there is an additional option besides credit cards of buying credits through your mobile phone powered by mobile payment provider Zong.

PayPal due to restrictions by RBI on online wallets had to abruptly stop its P2P payments and withdrawal from Indian banks  for users attempting to send money from and to India. Will Facebook choose another online payment firm for India?

Related:
–Updated: eBay’s PayPal Disallows P2P Payments, Transfers To Local Banks
–TimesOfMoney Plans Prepaid Payment Card, IVR Shop; On DirecPay
–RBI Finally Takes Up The Issue Of Internet Wallets And Cash Cards In India
–Nokia Partners YES Bank To Launch Nokia Money In India; Pilot Begins In Pune

According to Nokia Money, the service will allow users to check their balance, manage expenses and payments, recharge prepaid (mobile) account, and pay utility bills. Cashless payments to merchants have not been launched yet. The uptake of mobile banking in India has been muted, at best, so much so that Dr. K.C. Chakrabarty, Deputy Governor of the RBI, had severely criticized banks and telecom operators for not sorting out their issues.

Last March, Obopay and Yes Bank had announced they would launch a mobile payment solution to be called “Pay Anyone”. Nokia invested an undisclosed amount in Obopay last year, speculated to be around $70 million, so Obopay obviously gets a look-in with Nokia Money.

According to IDC, Nokia has a major share of 56.8 percent in the handsets market as of June 2009.  We expect Nokia to launch handsets with built-in Obopay apps for the financial transaction.

Related:

–RBI Authorises Banks To Convert ECommerce And MCommerce Accounts Within 3 Months
–Does Nokia’s Investment In Obopay Impact India’s Mobile Payments Market?
–RBI’s Vision For Mobile & E-payments, Major Projects
–M-Banking: Obopay & Yes Bank To Launch Pay Anyone; Paymate – MobileStore
–One97 Communications Launches Payment Platform PayTM
–RCOM Picks Atom As M-Commerce Partner, Services
–MTS Ties-Up With Utiba For eTop-Up And M-Commerce Platforms

“With financial inclusion and mobile banking becoming a key part of the banks focus, it’s the right time for someone to come in and take it to the next level. It’s been four years and I want to take some time off.” Prior to joining mChek as its CEO, Swamy ran Ketera India, another startup, and spent around 12 years in the Silicon Valley.

Competition has been rife in the mobile payments space, though how any of them have been performing is not explicitly known. MChek competes with other funded companies such as Paymate (Kleiner Perkins Caufield & Byers, the Mayfield Fund, and Sherpalo Ventures), Obopay (Nokia has invested a reported $70 million in it, other backers include Qualcomm, Redpoint ventures, Essar Telecom USA and AllianceBernstein). VAS company One97 Communications (Intel Capital) had also launched it’s service PayTM. Mobile payments can also be facilitated using prepaid instruments like Itz Cash, and it is believed that a mobile operator has also applied for launching an MPesa like prepaid instrument in India.

Apart from Airtel and DoCoMo, MChek has partnered banks like SBI, ICICI Bank, HDFC Bank, Standard Chartered, Visa. The company has raised finding from Venture Capitalists Nexus India Capital (in 2009) and Draper Fisher Jurvetsen (in 2006).