Mobile money can be a gateway into a huge and largely untouched market, as it offers a dual promise of enabling financial inclusion and an emerging market business opportunity. Mobile money has become very relevant in the Indian market given the fact that internet penetration is still close to 16.5% in rural India and digital wallets don’t make an impact demographically. With the Unified Payment Interface (UPI) getting attention both from the public and the private sector, it’s the right time for mobile money to make an impact.
The technology not only enables payments (which is the perception, the masses have about mobile money) but can also open doors for digital finance and can create an impact on the ready market of more than 250 million Indian population (estimated to have a feature phone). The best technological advancement of UPI is in not having the internet as a barrier to accessing this digital finance world. With mobile money, a microfinance model can be created which is the real sense of financial inclusion on both sides of the balance sheet (deposits/lending).
The microfinance sector has been very prominent in the last decade in India and is growing rapidly, but even that sector needs technological advancement, and mobile money fits it well. The amount of data which mobile money is creating can in turn serve as an engine for credit evaluation of its users and will support the micro financiers to take informed and intelligent risks with their lending. While many players offer contactless methods of payment mechanism such as NFC and RFID, the new players have developed a technology that require no hardware modification and can be deployed easily with just a software push into the conventional framework while evading the requirement of internet connectivity on the merchant side for a successful transaction. Moreover, it is well in the capability of the new technology to make feature phone holders imbibe in this drive towards digital economy and this is where a contrasting difference from the present scenario can begin to evolve.
The scale of the opportunity is clearly understood; however, firms seeking to tap the mobile money opportunity are faced with a landscape of unknowns. How will the mobile money value chain work in practice? What do we know about consumer behaviour? Mobile money’s underpinning structure, with its combination of financial and telecom industry firms, and a heterogeneous regulatory landscape, is complex and unique. And there are few examples of firms that have achieved scale in other geographies.