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Apple Is Sitting On a Timebomb In India With iTunes Payment Gateway: Microsoft Executive

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“Apple is sitting on a time bomb because Indian law insists on dual authentication”, Vineet Durani, Director, Windows Phone category at Microsoft, said about the iTunes payment gateway, while discussing payments on Windows Phone with MediaNama, at the launch of the Dhoom 3 mobile game last week.

Apple stores CVV of an Indian credit card and does not take one through the second step of authentication for every transaction, while Microsoft set up a payment gateway that follows RBI regulations in India for transactions made by Indians. Note that Google does the same for the Play Store, and it is an issue that MediaNama had raised last year. “We had an option to set up a payment gateway outside India, but we made a conscious decision to do it this way. The problem with Apple’s approach is that someone will wake up one day and ask why there is no two-step authentication and possibly cut them off. We wanted to avoid such a situation,” Durani said.

Microsoft had unified the payment system for PC, Mobile and Xbox platforms earlier this year, as part of which the company shifted from points system to currency for purchasing games. The company will now be rolling out cash cards, so that Indians without a credit card can still buy digital goods. Currently they are distributing promo cards along with Lumia 925 and 625, with plans to open up purchase of these store value cards to anyone who is interested.

Operator billing hassles

Microsoft is also working with operators on carrier billing since only a very small fraction of Windows Phone users have added a credit card to their account. With carrier billing Microsoft wants to continue the 80/20 revenue sharing model they have with the developers instead of letting the operators taking bulk of the revenue before it is handed over to the developers. They want operators to hand over 80 or 70% of the revenues to the developers and then take their share and taxes from the amount left. It will be difficult to get operators to shift to this model since many of them still have a VAS mindset. At the peak of VAS popularity, telecom operators used to ensure that no single VAS company grew too big, and played one against the other, to ensure their control over the ecosystem.

“The telecom sector in India is over regulated and in case of operator billing there are several third parties and operators themself. However, we are very clear that whatever amount they take shouldn’t be at the expense of developers,” Durani said.

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Among OEMs only Nokia seems to have got operator billing right and it seems Microsoft might be approaching them for help to get it working on Windows Store. For the time being, operator billing for Dhoom 3 game on Windows mobile, is being enabled through Fortumo, Rohit Bhat, MD of 99Games, told MediaNama.

Earlier this year, Microsoft had acquired Nokia’s Devices & Services business for €3.79 billion and licensed its patent portfolio for €1.65 billion. The deal included both Nokia’s Smart Devices business unit and its Mobile Phones business unit. Microsoft had also acquired the Asha brand and had licensed the Nokia brand for use with current Nokia mobile phone products. In India however, Microsoft might have to set it up operator billing on their own with a little help from Nokia as Delhi High Court has put an interim stay on Nokia India transferring the ownership rights for any of its immovable assets.

Do not forget Oxigen

It is strange that Microsoft is taking so long to get cash cards and store value cards out considering they have a 35% stake in Oxigen. Oxigen Services India was started in 2004 and had tied up with Nokia India last year to allow renewal of Nokia music subscription using its Oxicash system. Why is Microsoft trying to reinvent the wheel instead of using this existing system? In case they are using the same third-party to power these transactions, why should it take so long?

90% Of Windows Phones Are Connected To The Interent

Windows Phone currently has a marketshare of 5.5% in India according to Durani and has grown by 6 times in one year. However, the percentage of phones that are connected to the internet is 90% for Windows Phones as opposed to 50% in Android devices. He says that it gives developers an incentive to build for Windows devices.

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While Android has the marketshare, Microsoft wants to give developers the belief that users of Windows phones stand a higher chance of paying for their service. Having operator billing is key to this strategy which explains Microsoft’s push. Apart from mobile apps, these cards can also be used to download apps on Windows 8 PCs and Xbox games which gives them more reasons to get it working as soon as possible.

Note To RBI: Need A Level Playing Field In Online Billing In India
Fortumo Partners 4 Indian Telcos To Launch Direct Carrier Billing; Telco Rev Share Ratio

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I'm passionate about technology and gaming. You can follow me <a>@chupchap</a>

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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