A colleague of mine recently travelled to Mumbai, India for the Mobile Money Southern Asia Conference & Expo, and returned to Singapore full of new insights into the subcontinent’s booming mobile payments market.
India is set to become the world’s most populous country in 2030. Currently second only to China in population – the South Asian nation grew by 18 million in the past decade alone. With 1.21 billion people, India’s population is now nearly equal to the combined populations of the United States, Indonesia, Brazil, Japan, Bangladesh, and Pakistan.
According to Boston Consulting Group, there are already 771 million mobile subscribers in India, with 548 million considered to be active, compared with the 240 million people holding bank accounts. Most of the people in urban India have bank accounts but 90-95% still mostly use cash for their day to day needs.
While mobile commerce might be still nascent in the country, there is a tremendous opportunity in servicing both urban elites and the large numbers of the un- and under-banked in rural India via the mobile channel.
BCG’s analysis suggested mobile payment and banking transactions would reach $350 billion by 2015, measured against approximately $235 billion of credit and debit card purchases at present. Peer-to-peer remittances are expected to deliver $70 billion by 2015, mostly as people in metropolitan hubs transferring funds to their families in rural areas.
Transaction volumes and fees might be small, but anticipated economies of scale have triggered a wave of notable alliances between banks and telco operators in India. (WARC noted the following recent partnerships: Bharti Airtel with the State Bank of India, Vodafone and ICICI Bank, Idea Cellular and Axis Bank.)
Another company that is keen to get a piece of the pie is Nokia. The handset manufacturer has started shipping mobile phones in India preloaded with its banking application, based on the Obopay mobile payment platform, in a deal with the Union Bank of India.
Considering India’s sheer seize as well as geographic and cultural diversity, it’s hard to imagine a national mobile payment scheme in India any time soon as we find in smaller countries like Austria today.
I would rather expect a number of payment ecosystems to co-exist for a significant period of time, until regional leaders emerge, possibly along historical and cultural fault lines.
It’ll be also interesting to see if any home grown players founded by India’s well educated and entrepreneurially minded IT community will be able to capture significant market share.
One thing is certain: As India cements its position as an economic powerhouse on the world stage, greater financial inclusion via the mobile channel will have a positive flow on effect on productivity, innovation and living standards.
Tarik Husain is business development director for mCommerce at Sybase 365. For more information go to http://blogs.sybase.com/mobilecommerce/