What is the future of money?

What is the Future of Mobile Money in India?

• It would be interesting to understand What the future of Mobile Money is in India? - How effective the Indian market could be? - What are some of the challenges in the area? - Would be also interesting to know, are there already some companies working in the area? (Airtel Money, Mobile Payment gateway etc.)

• Answer:

  There is one fundamental difference between how mobile money is allowed to operate in India compared to say Africa. In India, mobile money is a semi-closed system. A user can cash-in (convert cash into electronic value at an agent) and make transfers, but they can not directly cash-out (convert electronic value into cash). They can only cash-out by making transfers to their bank account. See Airtel Money in India's description here: http://www.airtel.in/wps/wcm/connect/About Bharti Airtel/bharti+airtel/media+centre/bharti+airtel+news/mobile/now-use-airtel-money-to-make-payments-and-transfer-money-across-india. While India may be more banked than your average country in Africa, the restrictions to cash-out and linkage with the banks is going to limit how fast mobile money will grow in India. Poor people tend to be suspicious of banks and rightly so. You will be surprised that people have figured out other innovative uses for mobile money, but many of these hinge on their ability to cash-out. People use mobile money for security reasons, cash-in at one location, take a bus, cash-out at your destination. People use mobile money as a temporary store for their cash, cash-in your daily pay and cash-out when you need a portion of your money, and so on. A semi-closed loop system like that allowed in India will hinder users from appropriating mobile money for such unplanned use. One advantage for mobile money in India though is the fact that SIM registration is already mandatory. Users must provide personal details and ID before they are issued with a mobile number. This information can be used for mobile money, reducing the barrier to experience mobile money. All the operator needs to do is to entice users to try out the mobile money service since they have your personal details. In Africa, operators spend a decent amount of money registering mobile money users from scratch to ensure that they meet the regulator's KYC requirements. So while growth is not going to be as explosive in a short period of time compared to some countries in Africa, it is still a numbers game. When you compare the population of India to that of Kenya (with the most successful mobile money system), you can see that it is just a matter of time, but India's user base will eventually dwarf that of Kenya. The key is getting the Reserve Bank of India to allow some breathing room for innovation. Besides Airtel Money, the other indian player that fascinates me is Eko.