The RBI (Reserve Bank of India) in October 2008 announced the guidelines for mobile banking in India which has resulted in the potential growth of M-Commerce - a segment of the mobile value added services (MVAS) in India. The M-Commerce segment – broadly divided into M-Banking and M-Payment services, has since then resulted in a number of service deals and tie-ups, reflected in the two tie-ups announced last year; Tata Teleservices tie-up with ICICI Bank and Dish TV’s tie-up with Atom technologies.
Brief details of these deals are as follows; Tata Teleservices, one of India’s leading telecom operator company owned by the Tata Group partnered with ICICI Bank, to offer mobile banking services to Tata Indicom subscribers. The partnership offers a range of services and includes transferring funds to any bank account, bill payment, prepaid mobile recharge, view account balances and credit card payment due date amongst other services. In the other deal, Dish TV, an Indian DTH provider, entered into an agreement with Atom Technologies, a provider of mobile payment solutions, to offer mobile payment services to Dish TV’s subscribers e.g. recharging payments, additional service payments.
Since its introduction in India over a decade ago, the cellular industry in the country has been on a constant growth trajectory. This potential has attracted a number of cellular operators (international and national) to the Indian market. The new entrants have increased competition and also affected the industry player’s average revenue per user (ARPU) and profitability. Thus, as an additional profitable revenue stream mobile operators in India have realised the importance of MVAS (mobile value-added services) over the past five years. According to IMAI (Internet & Mobile Association of India), MVAS which was approximately nine percent of mobile operator’s revenue in 2008 is estimated to increase to 12 percent by June 2010. In value terms, the MVAS industry in India is expected to garner revenue worth INR 16,520 crore by June 2010 from INR 5, 780 crore in 2008. Amongst the triggers forecasted to boost the MVAS segment’s growth is M-Commerce services. (e.g. purchasing a movie ticket using a mobile phone or transferring funds between banks.)
Currently, M-Commerce in India is at a nascent stage and a minor percentage of the mobile users are aware of the availability of these services in the country. Despite the low awareness, M-Commerce is highest amongst all MVAS with regards to practical utility due to the advent of mobile technology. The increasing mobile penetration and technology developments have lead to a number of Indian companies and banks offering a plethora of services fostering the growth in M-Commerce. Segment-wise the saturated Indian urban segment is expected to adapt to M-Commerce sooner due to the higher penetration of bank accounts, credit cards as compared to the rural segment. This is reiterated by a recent survey, commissioned by Paymate and conducted by The Nielsen Company, which that 64 percent of respondents utilising M-payment had registered for an M-commerce service within the previous six months, an indication of rising consumer confidence since the RBI issued the guidelines. Besides, low confidence and low awareness a major barrier in adoption of M -Commerce is the aspect of security, user friendliness and pricing of the services. Indian consumers being price-sensitive pricing will be another key for proliferation of mobile banking in the country. Despite the challenges M-Commerce services provide an opportunity to consumer’s convenience and cellular operators a revenue option which will lead to the segment becoming a large growth driver in the next 2-3 years time.
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