Subject: In this post I attempt to estimate “critical mass” financial numbers for a mobile money to the unbanked (MMU) service to be sustainable.
Indian legislators should take a pragmatic look at the mobile money regulation. It will be up to consumers (ie Voters) to demand that the structures are in place to support a sound and fertile market for payment services. The economic growth and poverty imperatives greatly outweigh the justifications for RBI’s current approach.
The common win-win for both mature economies and underdeveloped appears to be Cash Replacement. Cash Replacement has been the subject of thousands of reports originating from: economists, bankers, academics, non-governmental organizations. The objective of this blog is to provide a market basis for investors and small companies attempting to “quantify” the opportunity in cash replacement, specifically e-Money and non-card based schemes.
Payments, banking and regulation may well evolve differently in emerging markets over the next 5 years as new services establish a unique ecosystem that serves 1 Billion consumers never “connected” to the world’s economy.
While I was consulting w/ regulators and banks in Malaysia, I asked about the penetration of cards. The response from a lead banker was “Cash is King”. This response is a great summary for the key issues facing MNOs, FSIs and Regulators attempting to improve electronic payment penetration in emerging markets.
Nokia’s selection of Obopay is very curious, given that Obopay is a hosted platform that currently requires online registration.. quite a difficult thing for an “unbanked” customer to do in rural India. We can safely assume that Obopay will invest resources to provide for service and beneficiary registration in a 100% SMS mode (or build a NokiaWallet embedded on the phone), but there are still many holes in the service that are left to be plugged and a big business challenge in incenting remote agents.