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Nokia’s Recommendations For Growing Mobile Payments Business In India

In a presentation sharing its recommendations with the Indian government on mobile payments businesses in India, Nokia India has said that in its current form, the ecosystem "cannot yet sustain a profitable stand alone pre-paid (payments) business". The Department of Information Technology (DIT) for India had sought suggestions on a framework for introducing a mobile based model for delivery of basic financial services; essentially, "banking the unbanked" using mobiles. Nokia had made the presentation in December 2009. The DIT has recently published the suggestions made by various entities, here. Nokia indicates that, in its current form, the cost of providing payment services is prohibitive, and among them, that the need to do a Know Your Customer (KYC) verification introduces a cost of Rs. 200 per customer. For a pure pre-paid mobile ecosystem, depositing cash (cash-in) costs 150 basis points (bps), while telecom operators (for airtime top-up) incur a cost of 300 to 700 bps. To put it simply, the transaction costs are just too high. What Nokia Wants -- No-KYC Prepaid Instruments: Nokia has recommended the introduction of prepaid instruments that enable withdrawal of cash without a KYC. This means that the prepaid instrument will act as virtual currency, and cash can be withdrawn from it without knowing where the money went. We think this is wishful thinking and risky, and it's likely that the Reserve Bank of India will shoot it down. As expected, Nokia wants handset companies and telecom operators to be allowed to distribute these pre-paid instruments.…

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

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