Soon, Airtel users can shop up to Rs 5000 via mobiles

Source ; ET Bureau, Sep 16, 2010, 12.07pm IST



NEW DELHI: Bharti Airtel customers will soon be able to make virtual payments at retail outlets and restaurants using their cell phones.

The country's largest telco by both revenues and customers has got the nod from the Reserve Bank of India (RBI) to collect a maximum of `5,000 from customers, which can be converted to 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 slated to get the 'semi-closed wallet' licence over the next couple of months.

India has over 650 million mobile users and all telecom companies are looking at 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, Such concepts are already operational in Japan, South Korea, parts of China and certain markets in Europe.

Earlier this year, RBI in its annual monetary policy 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.

"Semi-closed wallet are 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," Bharti Airtel said in a statement. In fact, Bhutan Telecom has already introduced M-money or mobile money payment, 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 we are evaluating various options that this licence provides to find out how best we can create a value proposition for Airtel customers. It is imperative to design a safe & convenient deployment before we can take to the market," its statement added.

As per RBI guidelines, the pre-paid value that is being loaded will be distinct from talktime. 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 talktime. Bharti Airtel will also be mandated to deposit the money raised in a zero balance escrow account with a bank.

Analysts say that RBI's move to approve 'Semi closed wallet' will be the first step towards democratisation 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.