Over the weekend, Vodafone announced the launch of its m-paisa service nationally, operating essentially as a business correspondent of HDFC Bank, thus allowing the company to leverage its retail network to operatoe as bank sub-agents, and facilitating banking transactions. Vodafone’s m-Paisa, though, will have a slightly more stringent procedure, with an HDFC Bank MobileBank Account having to be opened, in order to allow customers to deposit and withdraw cash, and transfer money. The company claims that over 2200 retailers across 320 villages and 54 towns are already operational in Rajasthan.
Money Transfer is the key service here. This is essentially the formalization of a practice already in place – so we’ve heard – where a customer would purchase a recharge card in one part of the country, inform a retailer in another part of the country of the prepaid recharge card details, and the retailer would give cash to the recipient in exchange for a small fee. A few things:
1. Not Prepaid: The difference between m-paisa and Vodafone’s ad nauseum quoted m-pesa initiative in Kenya is that this is not a prepaid wallet based payment system, and is essentially bank linked. This is largely due to how strict the Reserve Bank of India has been regarding telecom operators launching mobile payments – they want KYC norms to be adhered to, and have made policies that ensure that mobile banking in India is bank led rather than telco led. P.s.: see our interactive chart on prepaid payments.
2. Bank Led: We don’t know what happened to Vodafone’s prepaid wallet application with the RBI, but Airtel has its own service Airtel Money, which is making a push for adoption, but from whatever data we got from the Reserve Bank of India earlier this year, it wasn’t very successful. The RBI has since refused to disclose updated data to us.
3. Multiple Banks? What happened to Vodafone’s partnership with ICICI Bank, with which it also had a banking correspondent partnership. Vodafone will probably have to tie up with multiple banks, and allow interbank transfers.
But isn’t it getting confusing – you have several prepaid payment cards, nokia pushing mobile money with NFC, each bank having its mobile money service, banking correspondents, and then you have your IMPS based mobile payments service. What should a customer choose?