Feature Story

Indian Mobile Payment Market Poised for Massive Growth

by Mary Ann Azevedo

As an increasing number of Indian consumers obtain smartphones, experts are predicting more payments and money transfers will be made via mobile.

The mobile payment solutions industry in India has seen significant growth in recent years (see side panel) and observers believe that growth is only going to explode in the future with Indian consumers’ increased use of mobile phone and credit cards.

Numerous Indian companies serving the mobile payment market have emerged, attracting not only the attention of Indian consumers but also global investors.

One of those companies is Mumbai-based MoneyOnMobile. In April 2012, Dallas-based Calpian Inc. acquired a significant stake the startup, which offers a stored-value mobile payments service that gives consumers the ability to use their mobile phones to pay for goods and services or transfer funds from one cell phone to another using simple SMS text functionality.

Today, MoneyOnMobile has over 82.5 million unique phone number customers-to-date and over 186,000 retail partners offering the service in India. Many of the customers do not have bank accounts or access to traditional forms of credit, according to Shashank M. Joshi, founder and President of MoneyOnMobile. About 70 percent of India’s population lives in some 600,000 rural villages. Money-on-Mobile gives consumers who work in cities a way to send money to friends and family in more remote areas, Joshi said. It’s being dubbed by some as ‘the PayPal of India.’

#80: Indian Mobile Payment Market Poised For Explosive Growth In Coming Years by The Network Podcast

Joshi first founded the company in 2010 after having been involved in the payments business in the United States since 2004.

“Mobile phones saw exponential growth in India in 2007 and by 2008 had virtually become ubiquitous,” Joshi said. “I was wondering how could I use my experience to start payments business in India. I thought if I could facilitate financial transactions on the phone it would bring lot of convenience to the people and MoneyOnMobile was born.”

“Mobile phones saw exponential growth in India in 2007 and by 2008 had virtually become ubiquitous." -Shashank M. Joshi, founder MoneyOnMobile

IDC reports that in 2013, India ranked as the sixth largest smartphone market, after China, the U.S, the U.K., Japan and Brazil. It predicts that by 2017, India will become the world’s third fastest growing smart phone market with 459.7 percent growth between 2013 and 2017.

Such statistics are music to mobile payment solution providers’ ears. Investors are also taking notice.

In February 2014, Bangalore-based Ezetap Mobile Solutions raised $8 million in a funding round led by Helion Advisors and including Palo Alto-based Social + Capital Partnership and New York-based Berggruen Holdings.

And mobile point of sales (mPoS) payment firm Mswipe Technologies raised $7 million in 2013 from Matrix Partners India and Mumbai-based Mosambee raised $700,000 from SIDBI Venture Capital in April 2013.

Today, MoneyOnMobile employs about 235 people and posted revenue of about $150 million in 2013. Over a 30-month period, the company has gone from conducting 1,000 transactions per day to doing 400,000 transactions per day.

“Convenience is a big factor in India, where there are limited payment options. Especially with the majority of the people being outside of the banking network, meaning they don’t have access to banks and can only use cash,” Joshi said.

More than 80 million people have used MoneyOnMobile between 2011 and 2014 and Joshi predicts that number will reach 115 million by March 2015. The service works via a simple text message on a basic phone, via an Android App and also on the Web. It works by having merchants on one side of the platform and consumers on the other (both pre-registered) with the transactions taking place between the two parties. Consumers can do things like shop, pay utility bills and order pre-paid telephones using the platform.

“We are able to convert cash into an electronic format and make it available on the phone,” Joshi said.

Mark Mayad, vice president of investor relations for publicly-traded Calpian, said his firm has already invested about $11 million in MoneyOnMobile and plans to invest somewhere between $6 and $8 million in 2014

He said Calpian CEO Harold Montgomery was in London in 2011 speaking at a conference when he encountered Joshi and his team, who were at the time trying to raise money for the startup.

“At the time, Harold said, ‘Wow, this is the greatest thing I’ve seen in the payment space in the world.’ And if you ask him today, he will tell you the same thing.”

The service appeals to consumers because there are no fees to use it, it’s simple and secure, Mayad said.

To that point, Deloitte notes that large section of the migrant population in Indian cities still incur disproportionate charges while remitting money. They mostly use unsafe means and are looking for safe, convenient and low cost means of sending money home, according to Deloitte.

In general, Calpian believes the mobile payment sector in India will explode in coming years due to a variety of factors including: young demographics and rising incomes, rising smart phone penetration and mobile e-commerce growth. Deloitte analysts agree.

In their report, they wrote: “Although currently, the banking services available on mobile phones (in India) are fairly limited, there is tremendous potential to offer many more services on this channel for both the financially excluded, as well as, the banked population… With over 250 billion bill pay transactions, and less than 1 percent of these through electronic means, there is a large potential for mobile based bill payments, especially for the under-banked who do not have access to banking or other bill pay vendors’ services.”


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