Monday, August 31, 2009

Impact of Nokia Money on India's mobile commerce landscape

In light of the announcement of Nokia Money, I would like to analyze this development in the context of mobile commerce in India.

Nokia Money is an attempt by the world's largest mobile phone vendor to deploy mobile commerce commercially. Before we dive deep into this post, let's have a quick background on this topic. Nokia invested $70 million in Obopay (analysis). Leveraging their investment in Obopay and the infrastructure that Obopay offers, Nokia brings Nokia Money to market. Also, you may recall that Obopay powers MasterCard Mobile MoneySend (link).

I suspect that Nokia Money will be available on every Nokia mobile phone. Considering that the mobile operator does not subsidize handsets (and consequently control mobile phone configuration) in India, Nokia will be able to take its mobile payment product to market directly.

Financial regulations are a critical piece of any mobile payments puzzle. It is no different in India. RBI, India's financial regulator, unvieled their policy on mobile payments (link). They allowed a fund transfer limit of INR5000 (approx $100) and a daily transaction limit (for goods and services) of INR 10,000 (approx $200). Considering that the biggest sector in India's ecommerce is Online Travel (over 2/3 of ecommerce market), the mobile commerce industry was up in arms claiming that these limits were too constraining [to buy air tickets?].

mChek is the leader in mobile payments in India. Airtel, India's largest mobile service provider, is mChek's first partner. mChek has been used for bill payments, charging airtime (mobile topup)... mChek crossed a million subscribers in January 2009 (link). Airtel SIM cards have mChek on its menu. Other Indian telcos are following this trend.

Obopay does not seem to have crossed the critical 1 Million subscriber mark (otherwise we would have heard about it, right?). By that measure, Obopay / Nokia Money is the challenger. Other service providers in this space include PayMate, ITZCash and NGPay.

A study (June '09) commissioned by Paymate and AC Nielsen estimates the mobile commerce market in India at 5 million users, and is primarily urban and male-centric.

Now that you are updated on history, let us look at the future. How does Nokia Money change the landscape of mobile payments in India? Is the entry of Nokia Money going to change the dynamics of mobile commerce and create a thriving marketplace for small payments (similar to what Nokia did for mobile phones in India)? Are operators better positioned to offer mobile payments?

Will this competition create confusion? For example, to an Airtel subscriber using a Nokia phone, there will be two mobile payment choices and the user can't differentiate the subtle differences between a phone offering and an operator offering. How will the message be packaged in such cases? Will Nokia Money choose to go rural and Aitel/mChek focuses on urban audience? For all the promise of mobile payments in emerging countries, 5 million users in a userbase of over 350 million is dismal.

Who and where will the mobile commerce battles be fought in India? What are your thoughts?


  1. What about ngpay? Even they are leaders in the mobile commerce space, aren't they?

  2. Thanks for reading the blog. Yep, I agree that NGPay is also in the mobile commerce space in India.

  3. Currently, there are three models of m-payments in India: (a) the bank-driven model (ICICI, HDFC, Citi) with their own mobile presence for their customers;(b) the operator-partnered third party payment model (mChek's partnership with Airtel and Tata DoCoMo for a SIM-loaded application); and (c) the independent third party model that requires a separate registration of a customer's credit or debit card information. All use a PIN for 2d level authentication.

    Where does that leave Nokia with its N-Money initiative? In pretty good stead, actually. The company has the largest presence in Europe, Asia, Africa, and Latin America. In India, it has some 75-80% market share. With this overwhelming presence, it could sign up virtually all of the major banks to be their payments gateway. That would obviate the need for customers to register with other 3d party m-payments providers or to be on a particular operator network. Any bank holder would be asked to register and, when registered, be given a phone number to call. Transactions could happen via N-Money. Is this the path the company likely to pursue?

    What this would still leave out are users of phones who are not on the bank network, such as the ones MFIs are attempting to bridge.