Technology and Mobile Service Providers Landscape in India

Summary

This section gives the overview of the non banking ecosystem in the Indian space. It describes the evolution of the ecosystem, the key participants and the roles they play, which includes the technology developers, technology service providers, application developers, the mobile wallet companies, and the MNOs (Mobile network operators). The market dynamics is covered from the non banking perspective. Some key companies have been profiled in detail. The section also covers the merchants’ scenario in India with respect to mobile and explains their opinion about the market. The Indian mobile payment market has been compared with some other developed and developing countries across the world. Finally section includes mobile payment case studies.

The survey methodology includes in-depth survey based discussion with the non banking stakeholders in the Indian market. The survey respondents include end to end mobile financial solution providers, mobile wallet developers, telecom operators, POS solution developers and mobile payment application developers. One-on-one discussions were conducted with senior level management in these companies to understand the development of the non banking ecosystem, and to obtain their viewpoint on several aspects of the mobile payment market.

The Non Banking Ecosystem

Chart 1 Indian mobile payment ecosystem

Mobile Payment Stakeholders

Consumer Facing •MNOs •Banks •Retailers •Ecommerce Companies

Technology Providers •End to end solution providers •Application Developers •Wallet Technology Providers • POS Solution Developers • Payment Network Companies

Source: Group IBI Analysis

Technology and Service Providers in Indian Mobile Payment market

The main categories of participants in the technology payment landscape in India is summarised in the figure below.

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Chart 2 Mobile Payment Technology Landscape

Atom Technologies, ITZCash, Konylabs, iKaaz, NGPay Oxigen and FSS

Technology Players

Oxicash, Alpha , MobiKwik, Loop Ezetap, PayMate, mSwipe

Source: Group IBI Analysis

Mobile Wallet Scenario in India

A mobile wallet allows subscribers to convert their cell phones into virtual wallets, for utility services such as electricity bill payments, prepaid recharges, digital TV recharge, online shopping, buying movie tickets, etc. The advantage here is that to access the mobile wallet, the phone need not be internet enabled. Some of the mobile wallet types are defined below.

Table 1 Mobile wallet types

Wallet Type Description

It focuses on controlling commerce on the phone and Gatekeeper Wallet allows a consumer to simply wave a mobile device in front of a reader to authorize payment.

Allows retailers to leverage coupons and discounts, and move from a broad mass marketing strategy to Retailer Wallet focus on individual customers. Permits attracting new customers through referrals from delivery of great service.

Allows the usage of mobile banking app as a Banking Wallet payment tool. It is the next evolutionary step in banking after ATMS, online and mobile banking.

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Moves online payment systems into the physical Ecommerce Wallet world. PayPal, Amazon, and Apple iTunes are examples of popular payment tools.

Source: Group IBI Analysis

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Market Scenario

The mobile wallet scenario is gradually heating up in India. There are several players who are trying to cash in on this promising market. Some of the key players in the market include Airtel, PayMate, Oxicash, Money on Mobile, MobiKwik, Alpha Mobile Money, Loop Mobile, etc.

Most industry players feel that mobile wallet will very soon become a part of life for most consumers. The product is expected to evolve as a lifestyle product assisting the urban customer with shopping, dining, etc and the rural consumer with easy fund transfers. Experts feel that the cash in our wallet will be replaced by Mobile Money in the coming years.

Chart 3 Mobile wallet products in the Indian market

Mobile Wallets in

India

Source: Group IBI Analysis

Bharti Airtel was the first to launch Airtel Money with much fanfare. Airtel uses Infosys's Finacle banking technology and USSD (unstructured supplementary service data) protocol for the customer's

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Merchants – Insights and Opinions

Merchants or retailers are a key consumer facing stakeholder in the mobile payment ecosystem. However it has been observed that most merchants in our country are not very eager to adopt mobile payment as a mode of transaction. There can be several reasons behind it.

. Overall reluctance in using mobile as a payment mode . Lack of volume of transactions . No right kind of push for smaller merchants

. Low market acceptance . Change in attitude of the merchant – reluctance to keep a record . Cash as a competitor . Issue with MDR (Merchant Discount Rate) . Mindset of customers

. Payment gateways in India a problem . Lack of initiatives from banks

Challenges

Drivers Challenges

MPayment provides instant and real time Non availability of cheaper smartphones for cost service sensitive market like India.

Long adoption time for customers – Indian Convenience and ease of use drives customer still used to getting a receipt for usage payments, habits need time to change.

Extremely robust and thorough system in Unclear and not well defined roles for non place banking players.

Increased speed of connectivity via 3G No clear value proposition for merchants.

Lack of effective communication from banks for Growth boosting market regulations promoting mobile payments.

Source: Group IBI Analysis

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Competitive Landscape

A candid admission from one of the leading technology company in the Indian mobile payment market.

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