Ronnie05's Blog

Semi Closed mWallets to be mainstream soon (Move over Debit cards!)

Posted in mWallets and mPayments by Manas Ganguly on May 7, 2011

Reserve Bank of India has increased the amount that users can store in their m-wallet (mobile wallet) to Rs 50,000 from current Rs 5000. It has also relaxed the daily transaction limit for this growing segment from Rs.1000 per day to Rs.5000 per day. This brings semi closed m-wallets on par with the other semi-closed prepaid instruments.A semi closed prepaid wallet allows loading of money into a payment instrument, but cannot be used to withdraw money.Semi-closed wallet are prepaid payment instruments that are redeemable at a group of clearly-identified merchant locations/ establishments which contract specifically with the issuer to accept the payment instrument. These instruments do not permit cash withdrawal or redemption by the holder. Essentially, what this implies is that operator subscribers cannot use the ‘currency’ to buy talk time (RBI has mandated that the prepaid currency needs to be kept separate from talk time currency).

The move has come after intense lobbying from banks and other stakeholders like mobile operators, who argued that Rs 5,000 transaction limit is too little to let the m-wallet system grow.Through a notification, RBI has announced the move attributing it to “the potential of such mobile-based prepaid instruments for promoting non-cash based transactions and the interest evinced by non-bank (like Mobile operators) entities in promoting these products”. With this change, the mobile based prepaid payment instruments are being brought on par with other prepaid services, like Itz Cash, Done Card, Beam, Oxigen etc.

RBI, however has set two conditions,on the Mobile wallet transactions:
– These wallets cannot be purchased or reloaded against airtime/talktime. However, they can be used to buy recharges
– These wallets can only be used to allow purchase of goods and services, not person to person transfer of value.

The success of the m-wallet system in the country can be judged by the fact that of the 39 banks, that were granted approval for mobile banking, 34 banks have launched the mobile banking services.On an average, 6.8 lakh transactions amounting to 61 crore in a month are settled through this channel (data point for the month of February 2011 courtesy The Mobile Indian).

As the number of cell phone users is many times more than the number of bank accounts, m-wallets can serve the purpose of enhancing the reach of banking to large sections of the country. M-wallets can also facilitate payment of utility bills including water, electricity, telephone, insurance premiums, cooking gas, etc. But the biggest advantage of mobile banking is that it cuts down on cost of providing banking related services to the customers. For telecom companies as well as banks, mobile banking is the surest way to achieve growth.

Leading mobile operators Bharti Airtel, Vodafone and Idea have tied up with SBI, ICICI Bank and Axis Bank respectively to offer such facilities to their subscribers.

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