The Role Of Mobile Operators And Banks

Published Date: 02 Nov 2017

This research paper is an attempt to study a new concept of Carrying money for payments in Mobiles. Researcher has focused on its easy use by very common person who do not have bank account but have mobile phones for their day to day transactions of shopping, Payments and money transfers. Thus it is an academic effort and attempt to understand the new concept in the light of M-Commerce.

Key Words: Mobile, Money, Banks, Poor, Shopping, payments, Transfer, MNO, Financial Service provider, Credit and Debit card.

1. Introduction: M-Wallet means carrying money in mobiles rather than carrying cash, Credit card or debit card in wallet. It is a bright new concept to understand in the light of M-Commerce.

1.1 Conceptual Framework: The term M-Commerce means carrying out transactions through Mobiles. As it is very easy to transact through mobiles people prefer its use over other option available. As science and development of new technology has developed various means of payment methods making it very easy to go shopping another ways for payments need.

1.2 Mobile Money: Mobile Money is an electronic wallet service that enables users to send and receive money from other mobile users, as well as withdraws cash and send money to people who do not have mobile phones through service provider designated agents. Customers can deposit money into their prepaid accounts at service centers or through agents. Mobile payment services are a large opportunity both for banks trying to extend their reach, and mobile operators trying to boost revenue, as it will help the both to boom.

2. Objectives of the study:

To study the role of Mobile Operators and Banks in providing services of Mobile Money.

To study the effects of its use.

To study the pros and cons of in the use of Mobile money.

3. Research Methodology for the study: The researchers have focused on secondary data such as Books, Journal, Articles and various data on websites of the topic and review of various literatures.

4. Review of Literature: Times of India network2, Handset maker Nokia is the latest to join the mobile money transfer bandwagon in India. The cell phone maker along with Union Bank of India launched a mobile-to-mobile cash transfer service called Union Bank Money, which would allow any mobile users on any network to shop, pay utility bills, top-up prepaid cards using only a mobile phone. Initially it was launched in Gurgoan, so rest of the country will have to wait to start suing such services. Digital India: the rush to mobile Money3 Mobile money promises to unleash a radical transformation of the financial and telecom sectors. While these developments are promising for India, they may not be a financial boon for telecom operators. However, mobile money can help reduce churn and provide other benefits to operators so that they have strong reasons to capture this opportunity.

5. Significance of the study: This research paper will create awareness about M-Wallet and will be helpful for people to use and reduce the burden of carrying Credit card, Debit card or a Wallet with cash.

6. Concept of M-Wallet Gaining ground: DhiruBhai Ambani the owner of Reliance telecommunications had a vision that every common Indians will have a mobile at least one in one home of remotest part of country which came to be very true because of cheap charges and various lucrative scheme of company. Due to such scheme even a common man walking on footpath may be able to fulfill his basic need or not but will surely have one mobile Phone such people does not have bank account too. As the science and technology had improved in vast multitude the use of mobile phones had also underwent vast use from just receiving and giving call to its multitasking use and one such use is Mobile Banking. To go further under the mine of use of mobile M-Wallet has emerged as new trend. This concept of Mobile Money is not so common in India yet but most useful in other foreign countries such as Nigeria and Kenya and it is gaining ground here. Looking at many advantages of this concept, a number of banks in India for example have tied with mobile operators to take mobile payment services to India's poor who do not have access to banks, but have mobile phone connections. The payment services have got a boost after the country's central bank, Reserve Bank of India, allowed banks to appoint "banking correspondents" in remote areas to open new accounts, dispense and accept cash from customers, and offer other services on behalf of the bank. Now a day’s Nokia have started shipping mobile phones in India that were preloaded with its banking application, based on the Obopay mobile payment platform. Such preloaded software help in making payments.

6. Credit cards, debit cards and Mobiles: There are various norms for issue of debit card and credit cards which on fulfilling, a bank consumer or sound consumer having good bank balance can get it. Such cards are use for various transactions including purchase, online payment and utility payments. Thus poor people who do not have bank account or sound financial positions cannot get credit card or debit card. Thus they are excluding from financial structure of the country. Even these people who do not have debit card, credit card or bank account with less earning capacity, they have at least one mobile in their home. They always try their best to keep their mobile alive by regularly making recharge. Thus mobile users are more than people having bank accounts or people having credit cards or debit card. Thus it has given mobile operators to explore this opportunity with the help of banks. In another report by Boston Consulting Group, it has been predicted that Mobile commerce and banking are set to "take off" in India. At present, there are over 500 million mobile subscribers in the country, compared with the 240 million people holding bank accounts, 20 million credit cards, 88000 bank branches and 70,000 cash points. It further points to the fact that though half of Indian households do not possess bank accounts, 42% of these have least one mobile handset, and 90% of these can be used for basic financial transactions. In Urban India, most of the people have bank accounts but they still go for cash for 90-95% of their petty needs. Altogether, there is an ample scope for mobile commerce.

6.1 Role of Mobile service provider and Banks in Emerging Trends as new mode of payments: As the need and demand of people is all time high, the service provider has shifted their focus from just providing value added services via mobile phones to an exclusive focus on mobile financial services. Various companies has successfully executed its vision of a future in which any person can use Mobile phones at any time to buy goods, receive remittances, pay bills, repay loans, and more. Its network enables banks, businesses and consumers—both banked and unbanked—to use mobile phones to conduct many of the financial transactions those are common place in the developed world. The major providers of mobile financial services have been the Mobile Network Operators (MNO’s), while banks and financial institutions have been given the responsibility of keeping the services accounts. The bank will adopt the financial inclusion in its corporate plan strategy as it strives to enhance the regulatory framework for mobile financial services. Thus MNO’s extend the services and awareness of Mobile Money among the masses and banks helps in framing the rules and regulations of it.

6.1.1 Guidelines Issued by RBI: Initially when such services were started any mobile can have maximum deposit of Rs.5000 only which now according to the new guidelines of RBI the limit has been extended to Rs. 50,000. Such improved limit will ultimately increase it utility on large scale even by business man and banked people for their multi use of payments instead of use of credit card and debit card.

6.2 Use and effect of M-Wallet: M-banking is generally used by people having bank account but M-wallet is generally used by people having mobile phones but do not have bank account. M-banking needs a people having high tech mobile phones as such I-phone and android with GPRS services activated but M-wallet need simple mobile phone without GPRS activation. At the core of the network sits services provider platform, acting as a clearinghouse for financial transactions conducted through mobile phones. M-wallet is a virtual, pre-paid account accessed using a mobile phone. This product targets individuals who do not currently have bank accounts and do not participate in traditional financial networks. M-wallet customers access the network via user-friendly interfaces, such as text messaging to remit money, pay utility bills, recharge mobile phone airtime, transfer and pay for goods. In addition, the m-wallet offers unbanked customers integration into formal financial networks. These services provide convenience, security, and efficiency, thus freeing up valuable time for income-generating activities while reducing the risks of cash transactions. M-wallets are issued by banks in association with MNOs. They can be purchased from correspondent-banking agents that Yellow Pepper engages and develops in the country of operation. Small businesses or "mom-and-pop shops," which make up a significant proportion of these agents, must undergo extensive background checks as well as financial rules and regulations compliance training before they are able to sell m-wallets. Customers open m-wallet accounts with correspondent banking agents by purchasing m-wallet kits and completing the necessary paperwork, providing their addresses and identification information. Initial cash deposits made with the agents are credited to the customers’ new m-wallets. They then receive text messages notifying them of their available balances. Thereafter, they can visit an agent to deposit additional cash or to withdraw cash by sending a text message request. This cash-in, cash-out services are vital for the m-wallet ecosystem to run smoothly, making the role of the small shop owners serving as agents very important. Thus it is a great attempt to increase the number of participants in financial transactions through M-Wallets and also to bring banking habit to unbanked people via mobile phones.

6.2.1 Airtel Mobile Money: Bharti Airtel mobile company was the first telecom operator to launch M-wallet in India with tie with ICICI bank. Airtel mWallet empowers any Airtel subscriber to load money on his or her mobile phone and use it to pay for purchases at retailers. Airtel mWallet is a convenient and safe payment instrument for Airtel subscribers who can spend up to Rs 5000/- every day without carrying any cash or credit cards. Existing Plutus retailers can easily process Airtel mWallet transactions, with minimal cashier training. To accept Airtel mWallet transactions, cashier simply selects Airtel mWallet as a payment type in the billing application and presses "Pay by Airtel money". Plutus completes the transaction and generates charge slip which can be kept for reconciliation. Initially the service was started in only in Gurgoan, at present it has been launched all over India.

6.3 Pros of M-Wallet:

Time Saving: It hardly takes 4 second to pay from mobile.

Instant SMS: People using M-Wallet, on using it for payment of deposit gets instant confirmation.

Easy to carry: As a person hardly forgets to carry mobiles so they do not have to carry wallet or any other means of payments.

Reduce burden of Retailer and consumer: People will get instant payment so no conditions of Realization problem as in case of ECS services.

Portable: Its one of the most portable way to make payments so people likes to use such facility.

Increased Banking habit: people will habit of savings and well defined purchase which will organize them in handling their finance.’

Safe and sound: As people get updated of their balances through SMS so they get safety and no worries of their balances.

Efficient way of payments: Due to its various advantages, unbanked people get a chance to be a part of financial network. They find it fascinated and its use will further increase as they are addicted to their Mobile phones.

6.4 Cons of M-Wallet:

Network Problem: Due lack of network at many places payment takes time.

Misuse: Sometimes mobile money in mobile may be used up by known people around us without our knowledge.

Crime rate: As such facility targets unbanked people crime rate in city like Mumbai may increase.

Lack of awareness: Many people are still unaware of such facility.

Breaking of Mobile phones: It is one of hurdle for such people who hardly hold cash for transactions and if break up their mobiles then they have to wait for reprimanded their mobile or for new one.

7. Conclusions of the study: M-Wallet is revolutionary concept which can be very beneficial for MNO, Banks and Unbanked people if its awareness gets increased among masses and consecutively it will benefit in economic terms to all in general. Mostly as it has targeted unbanked people so it is the highlight of this concept to go long way in solving the payment problems and they will get the entry in many financial transactions. It will further help to include people who were out of financial inclusions earlier. With the advent of use of mobile money, the dependency on physical currency will decrease. Despite of huge popularity of mobile commerce, it is yet in the initial stage and can be further expand in to all the fields, which affect the human life. The assumption of mobile commerce is not as young as it mushroomed so early from adopting this technology. The future of m-Commerce seems extremely bright because several experiments are going on to introduce the upgraded version of mobile likely to emerged with the evolution of 4G mobile technology But that certainly will need time and also telecom companies and bank have to drive this initiative beyond frontiers. Only then will mobile commerce be successful in India.

8. Suggestions: Banks will have to be participated in larger way to create awareness in remote areas through their amendments in regulation of such. MNO’s will have to penetrate more this concept with their prepaid customers and those postpaid consumers who often pay bills through cash through advertisement. MNO will further work on improvements in network for better facility to customers using M-Wallet.