Bharti Airtel has all the plans to facilitate its customers with its new service which will enable them to make virtual payments at retail outlets and restaurants using their cell phones.
Airtel has got the nod from the Reserve Bank of India (RBI) to collect a maximum of 5,000 from customers, which can be converted into virtual money stored on mobile phones, and can be used at outlets that have a tie-up with Airtel.
All leading mobile phone companies are also lined up to get the ‘semi-closed wallet license over the next couple of months.
India has over 650 million mobile users and all telecom companies are observing offering a range of financial services, including the electronic version of the leather wallet, which can be used to make secure payments across a wide spectrum of goods and services covering all sectors. These concepts are already operational in Japan, South Korea, parts of China and certain markets in Europe.
In the recent past , RBI in its annual monetary policy had said that it was looking to use mobile phones as a medium for taking banking facilities to the remote and far-flung areas while also adding that banks and cellular operators must cooperate, rather than compete with each other for this initiative.
According to Bharti Airtel, semi-closed wallets are the 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. In fact, Bhutan Telecom has already introduced M-money, which is a one-stop shop for making payments of all utility bills including telephone, electricity and water bills. Bharti Airtel did not give any timeframe for the launch of services on this platform. Currently the company is evaluating various options that this license provides to find out how best they can create a value proposition for Airtel customers. It is imperative to design a safe & convenient deployment before the company can take to the market.
As per the RBI guidelines, the pre-paid value that is being loaded will be distinct from talk-time. In other words, the telecom operator will not be able to create money. For the consumer, this implies, they will not be able to exchange this money for talk-time. Bharti Airtel will also be ordered to deposit the money raised in a zero balance escrow account with a bank.
According to the analysts RBI’s move to approve ‘Semi closed wallet’ will be the first step towards democratization of mobile commerce in the country. It is estimated that only 1% (8 million) of the country’s 650 million cell phone users avail mobile commerce services. This is expected to go up to 50 million by 2012.