For last couple of days have been doing lot of research on M-Commerce Models in India and lot of people have come to my rescue in making me understand perils imposed by government regulations restricting growth of e-commerce in india through mobile medium.
Best to my understanding all the existing M-Commerce model been adopted by players like M-Check, Obopay, Paymate etc require user to map a banking instrument like credit card, debit card, bank account etc to their mobile phone account and via an application installed on phone or through the provider concentrate on making payment instrument mobile enabled.
Although its a big leap from security point of you enabling people to start paying via the mobile phone WAP,SMS medium for various merchant services available though still such services have not reached a critical stage due to lot of factors like non-tie up with all the banks or people still not comfortable sharing credit/debit card account information etc.
Trying to understand with such stringent norms coming through TRAI guidelines making its mandatory to identify customers which are as stringent as required to open an saving account and get a debit card, it made me wonder telecom companies with their access and reach are in the best for forward integration into becoming a bank then other way around. If today i using my mobile phone account could start paying at merchants like credit cards or using pre-paid cards start buying stuff like vegetables etc, my bank usage for daily transaction would reduce significantly.
I am sure it may make you think why are people at telecom companies doing same though biggest barrier understood from various experts is the TRAI license fees calculation system which is approx 6% of annual gross revenue. So until unless you register as VAS provider with operator and clearly revenue parted is shown in books it will be still counted as net reciept revenue making the commerce business unviable as merchants wont be ready to pay for transactions around 7-8% where banks are charging between 2-4%.
Compliance to RBI banking norms is much simpler task for such telecom companies for handling banking, fraud transactions but the biggest barrier imposed by TRAI in terms of license fees need to be cleared.
The way around for now is to build MVAS application which can be charged to user account on service or tangible asset delivered for consumption on mobile device then its workable. The TRAI Guideline paper(linked) actually doesn’t restrict telecom companies to use their platform to accept payments as when you clearly read 2.1.3(iv) it clearly states in case of M-commerce one needs to adhere to RBI guidelines where ever necessary and if you goto RBI guidelines(linked) it states clearly that these guidelines are for “BANKS” for dealing with customers via mobile as a medium, this still doesnt govern the telecom companies.
I am talking to lot of telecom’s to get their views on same and will do a follow up post if see some success.