Mobile phones in India to stream $350 billion by 2015

Mobile phones will usher in a new form of payment in India mobile money,according to a study by Boston Consulting Group.

The study titled The rush to mobile money: Madness or master stroke,estimates that by 2015,$350 billion (Rs 15,75,000 crore) in payments and banking transactions could flow through mobile phones. This would include government payments,points of sale and bill payments,banking transactions,remittances and business payments. About $235 billion (Rs 10,57,500 crore) of annual credit and debit card transactions happen in India today,out of which $215 billion (Rs 9,67,500 crore) accounted for cash withdrawals at ATMs. As of May 2011,there were 1.1 crore mobile payment users in India as compared to only 400 last year with the value of the transaction estimated to be Rs 1.6 crore.

Several banks are seeking to enter this space and have announced tie-ups with telecom companies. State Bank of India has tied up with Bharti Airtel,ICICI Bank with Vodafone and Axis Bank with Idea Cellular. Nokia has teamed up with Union Bank of India and Obopay to offer mobile banking.

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More than half of Indian households 110 million altogether do not have a bank account. Yet,of the households without a bank account our primary research estimates over 42 percent have at least one mobile phone. Even basic mobile phones can usher in an electronic payments revolution in the country, Arvind Subramanian,Partner & Director,BCG India said.

It is less expensive to offer banking and payments services using mobile technology than build new branches. Mobile-enabled business correspondents,who are authorised to conduct business on behalf of banks,can service a customer for 8 to 15 cents per transaction far below the $1 (Rs 45) to $1.5 (Rs 67.5) cost at a branch, Neeraj Aggarwal,partner and director,BCG India,said.

The study says that mobile money will not be a large generator of fees for operators. The total fee pool of $4.5 billion (Rs 20,250 crore) will be split across several entities banks,telecom operators,device makers,and service providers. Experience of successful mobile money offers indicates that these indirect benefits can account for as much as 50 per cent of the gross profits for operators.

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