India has the potential to be one of the largest markets for mobile payments globally. Last week, there was plenty of evidence to support that claim, but also some cause for concern that mobile payments will not be simple for providers to offer.
We recently took a look at China's potential to be a leading territory for mobile payments. In China, the government owned clearing house UnionPay is doing a lot of work to help facilitate and grow mobile payment technologies. In comparison, it's quite the opposite in India. Government bodies are creating barriers rather than removing them for the adoption of mobile payments. The Reserve Bank of India's (RBI) new regulations are making it harder for existing mobile operating networks to offer mobile payments and banking.
The RBI have prohibited mobile operators from using their existing national retail networks to offer mobile payments. Operators are required to set up new channels and networks for a mobile payment offering. Of course this increases the investment and capital needed to set up such an offer and could therefore dissuade many operators. The likes of Bharti Airtel and Vodafone have already had difficulty getting their mobile wallets off the ground because of the strict regulations in India, and these new ones offer little hope the path to market is becoming easier.
Which is such a shame, because India could be such a strong market for mobile payments. The introduction of cheaper Android One phones earlier in the year was very encouraging and some of the latest statistics emerging from India hinted at real potential.
For example, the Vice President of Amazon India, Amit Agarwal, told PTI:
"In India, the mobile internet traffic now outweighs personal computer traffic. With increasing penetration of smartphones, India is all set to be a massive market for m-commerce."
It's not just Amazon India that is seeing huge growth in the use of mobile on its services in India. The Co-founder of Snapdeal, Kunal Bahl predicted that "within the next 12 months over 75 per cent of our orders will be on mobile," while Mausam Bhatt, Senior Marketing Director of Flipkart, asserted:
"I think the way e-commerce industry is evolving it is becoming more of a mobile-commerce industry. If you look at Flipkart a year ago, less than 10 per cent of our orders, transactions and visits used to come from mobile commerce. Now those numbers are greater than 50 per cent for us."
It seems the demand is there from the bottom up for mobile banking and payments systems in India, it will just be a matter of how quickly and easily government institutions let such technologies develop.
By Matthew Taylor 8th December 2014
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