Following its earlier tie-up with the State Bank of India for a joint venture, Airtel is now the first telecom operator to allow you to use your phone to make payments directly. It’s a small launch – right now only in Gurgaon, but Airtel has tied up with merchants, including coffee shops and restaurants, who will accept payments via Airtel Money. The service will be next launched in Delhi, and then in other Indian cities.
However, the service still requires a person to visit an Airtel retail outlet and fill in cash before he/she can use it, with a minimum of Rs 10, and a maximum of Rs 5,000, and a monthly limit of Rs 50,000. This means that only individual shoppers are likely to find much use for the system. On the other hand, this isn’t the first time that such services have been contemplated. However, while earlier the problem was lack of permissions by the RBI, that hurdle has been cleared by Airtel.
The idea is not new, though, and one of the biggest hurdles in the way will be the scale of the service. If there are no places to spend the money using the service, can it really catch on? The service can be used to pay bills like electricity bills, shop over the counter at the chemist and small retail outlets, or buying movie tickets from home.
Two issues with the service are that it is not operator agnostic – only Airtel users can use the new service, and there is no option to link it to a debit card, removing the step of having to go to a retail merchant who will load money into your Airtel money account in exchange for cash. The cash incidentally will reside on your phone with no term limit, however, if there are no transactions for 12 months, then the account will be closed, along with any money in it.
The company will charge Rs 5 per month and Rs 5 per transaction, which might not sound like much, but the fact is that while the service is being launched in Gurgaon, if it gains widespread adoption, it will have to be in places where you don’t have a large network of ATMs, and where you don’t have people with credit cards.
The most successful examples of mobile payments have been not in the developed countries but in Africa, where the service adds a level of convenience and security to transactions in areas that are otherwise not easy to access.