Saturday, July 12, 2008


I remember reading 8 years ago - when I was still at IIT and the 3G spectrum bidding was happening at crazy valuations in Europe - that mobile will one day replace credit cards as the preferred way to pay. That obviously hasn't happened. People still prefer their cards or cash.

Now, it seems that Indian mobile companies are trying to push something similar. Airtel is touting mobile bill pay and cash trasfer using Madhavan and Vidya Balan as brand ambassadors. Today I saw an ad for Oxicash on television - a mobile payment gateway. In a country like India where mobile penetration is trending much higher than card penetration, it can be one of the most lucrative business opportunities if developed properly.

And its not only about the revenues. It can also save a lot of costs for mobile companies. At 250 mn subs and Rs 300 ARPU today, mobile companies rake in $25bn each year today. If they pay 2% to card companies, banks, merchants etc to collect all the money, it is a $500 mn annual drain on the bottomline. When India reaches 800mn subs in the next 10-20 years, the drain will be much much more. Lets see how these experiments turn out to be.

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