Update: The license has been given to Airtel M Commerce Services Ltd, New Delhi. It’s a one year license that was granted on the 30th of July 2010. A list here.
Earlier: Bharti Airtel will now be able to offer cash-card like services to its mobile customers. The company was granted a license to offer a ‘Semi Closed Wallet’ by the Reserve Bank of India this quarter. This means that customers can pay cash to load their wallet from a retail outlet, and use it to make payments, but cannot use it to withdraw money.
The payments can only be made at clearly identified merchant locations. The limit, according to Airtel, appears to be for payments less than Rs. 5000. So flight tickets might be out.
Airtel says that they are currently evaluating options before launching anything, and there’s no indication of how soon we might see a launch.
A few points to note:
– This is probably the first instance of a mobile operator in India being granted a cash-card license. We know that Vodafone had applied for the same, looking to emulate the success of mPesa in Africa.
– Airtel’s cash card, if and when it does launch, might provide and alternative to bank-led mobile payments in India. Bank’s haven’t been successful with mobile payments, and the ownership of the customer was a bone of contention between the two entities. Note that mPesa also tied up with a bank at the back end.
– We’re not sure of how this cash will be stored: if stored on Airtel’s books, it could impact license fee payments made to the Indian government, on the basis of the Adjusted Gross Revenue. A separate company might have to hold the cash float.
– The mobile cash card model is effectively the institutionalization of a practice already taking place – wherein consumers were using it to transfer money across the country.