Abstract India has been toying with the idea of mobile money transfer for years now. Unfortunately, none of the attempts made by private enterprises or publicly owned enterprises has succeeded in meeting the M-Pesa threshold, which is renowned the world over as the prototype of how mobile money transfer should work. This paper identified Loop Mobile as an Indian organization, which although modest in size, can establish the concept of mobile money transfer successfully. The paper notes that India shares similar demographics with Kenya (the East African country that launched the first mobile money transfer successfully), and although the latter’s success in mobile money transfer was partly because of the lack of retail banking infrastructure, the clamour for mobile money in the former is evidence that Indians would embrace the concept despite their country’s fairly well established retail banking system.
IntroductionIndia has been weighing the idea of mobile money transfer for years now. Evidence from online sources indicates that some of the companies that have tried the mobile money transfer concept include ‘My Mobile Payments Ltd’ (Gulati, 2012); ICICI Bank Limited (Mobile Money Africa, 2012); the Department of Posts (DoP) (PTI, 2011); and Nokia (Reuters, 2012) among others.
In all the identified companies, none has successfully managed to replicate the success that a similar platform operating in Kenya, and dubbed M-Pesa, has recorded since its inception in 2007. Some like Nokia have even given up and closed shop arguing that money transfer was not one of its core businesses (Reuters, 2012). But why should one expect mobile money to succeed in India? After all, the retail banking infrastructure is fairly well established hence meaning that people can receive, and transfer money with relative ease.
Well, to start with, because Indians, especially those in the retail business would benefit from the flexibility that mobile money transfer would bring about; secondly, India, just like Kenya has a significant population working in urban areas and needing to send money to their families in the rural areas; and third, because a great percentage of Indians, just like the case in Kenya, have embraced mobile telephony. Instead of the mobile phone being a communication gadget only, there is potential that companies can design and deliver the mobile money transfer service to augment the functions of the mobile handset.
Loop Mobile has been selected as the model company for this exercise because in addition to being among the first major mobile companies in India, competition from other mobile service providers has limited its growth. A new service modelled alongside the M-Pesa prototype would therefore give it a competitive edge over the others. Further, Loop Mobile was chosen because the M-Pesa experience has proved that a mobile service company is better placed to handle and implement the mobile money concept, as opposed to other aligned companies such as phone manufacturers, banks or other third party organisations like the department of posts as identified above.
Before furthering this discussion however, one needs to understand Loop Mobile as a company and M-Pesa as the prototype used for this exercise. The latter is necessary because not everything about M-Pesa would work out in India owing to the social, economic, political and even cultural differences between the Asian country and Kenya.