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Mobile Banking/ Mobile Payments / M-commerce

Ecosystem in India

Nimesh Bhandari
VP – Strategic Alliances
ValueFirst Messaging

(The views expressed are solely those of the author and

do not reflect the views of industry gurus and public
at large)
1. Terminologies
Mobile Banking is a broad terminology which includes three specific use cases broadly:-

1. M-Commerce: Buying of goods/services over mobile phone. This may or may

not use mobile as the payment authentication device (ex. Paypal can be used on
wap enabled website)
2. M-Payments: Using mobile as the authenticating medium for payments while
goods/services can be bought over internet/ mobile / retail stores.
3. M-Banking: Using mobile to perform certain banking transactions like transfer
funds/check balance / issue DD etc. Depending on the technology used it might
require use of physical infrastructure along with the mobile handset.

Very often these terms are used inter-changeably because one may lead to another and
companies operating in one area have plans to enter into the other areas of the mobile
banking eco-system.

2. Segmentation

Debit card Non-banking customers


Credit card Banking customers


Mobile phone

Internet users
While I did not dig deep into the numbers, broadly, there are distinct consumer segments
to which different mobile banking companies are trying to address.

1. Non-banking consumers: Typically people at the bottom of pyramid. But the

new found fancies of mobile phones have seen even these people owning mobile
phones. Companies like are trying to address this market by helping
these consumers accessing banking facilities through mobile.

2. Credit-card holders: These consumers typically use credit-cards either for

contact-less transactions (internet) or POS transactions. Companies like m-check
are trying to contact-less transactions space by making the payments more secure
and hassle free. Companies like obopay are trying to address the POS transactions
space by addressing to needs of those consumers who do not own a credit card but
would want a cash-less transactions

3. Debit-card holders: Direct-to-bank transfers is a space where security is of

paramount importance and mobile banking companies like Tyfone, Obopay and
paymate are trying to work on a model which addresses the need of this space.

3. Transaction Pie
The diagram below depicts the various kinds of transactions done in India. The cash
transaction pie is very large and companies like Obopay, Tyfone are trying to address
this market while companies like paymate, m-check are trying to cater to credit-card
and debit card transactions

Transaction Pie
Debit card transactions
POS Credit card

Contact-less Credit
card transactions

Cash Transactions

*Not to scale
4. Mobile Banking companies in India
Following companies have been covered for the purpose of analysis:-
1. m-check
2. Obopay
3. paymate
4. Tyfone
5. C-Sam
6. Ngpay
7. Eko

1. m-check

m-check is focusing on contact-less credit card transactions as of now but they have
plans to enter into other areas. The market m-check is focusing in small but growing
a rapid pace, thanks to movie ticketing and airline ticketing. Given that the fraud
percentage on credit card transactions is very high, m-check has a story specially it
makes the credit card transactions really hassle-free if you are registered on it. It uses
USSD as the underlying protocol for authenticating PIN and therefore will have to
aggregate all operators. Right now it works only on Airtel.

m-check has a major hurdle to pass of convincing all operators which is very difficult
given their walled-garden approach. Also, not sure what is the share of transaction pie
operators are taking and whether banks would be willing to give that to the operator.

From security point of view, risk which I see in m-check is what if steal somebody
else’s credit card number and attach it with my mobile number in m-check ??

2. Obopay

Obopay focus clearly is cash transaction pie as of now but focusing on micro-
payments. Given the limited spread of credit cards in India and huge amount of
transactions taken place everyday in cash, there is a huge addressable market. The
terminology used by Obopay is P2P mobile transactions which are typically initiated
by the sender and validated/authenticated by the receiver. Only sender needs to have
on Obopay account and if receiver is not registered he will receive instructions for the
same on his mobile number. Obopay is validating the PIN via IVRS which seems to
be secure.

For Obopay to work seamlessly they will have to aggregate large number of banks
which will then have to attach mobile numbers with the bank account. So for it to
actually pick up, they will have to do tie-up with large number of banks. How soon,
will it be used by taxi walla and petrol pump guy needs to be seen. Apart from that
use cases like restaurant bill splitting etc., the uses cases are limited. Also, the amount
banks/obopay will also be the deciding factor.
3. Paymate

Paymate is targeting the Contact-less Debit card/ Credit-card transaction pie where the
issuing banks would authenticate the mobile number against the credit-card/ debit-card.
Once that is done, everything (even the authentication) will be done over SMS.

Paymate claims to have large number of portals already signed-up but there are inherent
issues with the service. First, it uses SMS to authenticate where the delivery ratio can be
bad at times. Second, PIN remains in the sent items. I hope, they have built in some
restriction on amount of transaction as Debit-card transaction with a loose authentication
mechanism like this can be very risk.

Paymate will have to aggregate large number of banks to work, but unlike obopay which
is targeting P2P it does not need to aggregate all of them to enable seamless P2P
transactions but will have to aggregate merchants.

In the contact-less space m-check model seems to be better than paymate because of
USSD and credit-card only transactions.

4. Tyfone

Tyfone is targeting the cash pie like Obopay but the focus is on merchant POS
transactions rather than P2P transactions as of now. In this case, merchant needs to have
an application installed on his mobile phone to initiate a transaction and receiver receives
an SMS on his mobile phone to authenticate the transaction. Tyfone model requires it to
aggregate banks and retailers to work.

Tyfone model does not necessitate users to download mobile application on their phone
to pay the money. Only the merchant needs to have application on the phone. This
removes atleast one hurdle of application working on all phones. What needs to be seen is
how secure Tyfone model is for authentication of PIN. Tyfone model has great potential
for high cash transactions POS like super-markets and petrol pumps. Petrol pumps can be
the ideal target as non-availability of cash is a issue number of times and also credit-card
transactions entails a wait-time of 5 minutes at the petrol pump. Going forward, large
number of small retailers can start using it as they would not have to invest in POS
machines for credit-card transactions.

Second market Tyfone is targeting is Near field communication where the bank issues a
memory card with embedded RFID Tag and debit card/ credit card on the memory card.
The mobile phone can be used for payment with any RFID reader. The limited number of
RFID reader installations makes it a technology which is little early in India. Also, the
uses cases of real contact-less POS transactions are more pre-paid in nature (metro
stations, bus tickets etc.) where the amount to be paid is fixed and automatically deducted
from the pre-paid card by swiping the mobile phone (no need of authentication).
5. C-sam

C-sam is targeting the m-commerce space where it believes that people would use mobile
as a medium to buy goods/services. Given the huge mobile penetration and limited
internet penetration the market and the need is there but the perennial problem of
application not working on all phones and poor user experience given the limited screen
size remains.

Given the increase in movie ticket booking/ airline booking / railway booking which one
might want to book while on the move, there is a great potential. But one really needs to
make a very user friendly UI that works on all phones for this. Also, for these companies
to be have a share in the transaction pie, they need to either tie-up with the existing
payment gateways (m-check, payal, visa etc.) or create its own payment gateway.

6. Ngpay

Ngpay seems to be following a similar model as C-sam and it needs to be seen how the
make the application will work on all phones. It did not work on my phone ? 

7. Eko

Eko is trying to build its niche in mobile banking space targeting non-banking customers
who are at the bottom of pyramid. The focus is clearly to build a sustainable micro-
financing/lending/banking model. Eko is using mobile as the authentication channel but
requires a physical person to be present to help you bank. In essence Eko is creating a
model for outsourcing banking services albeit for people who do not have a bank account
as of now. Eko is targeting a very unique and different space and given the RBI
stipulation of providing services to all categories of people, it seems to have a good story.