Mobile Payments: the Pathway to Inclusion in IndiaChristina Sommer |
India is a market that has always fascinated me—so large, so diverse, so educated, and yet so un-banked. According to the World Bank, only 35 percent of Indians have an account with a financial institution. At first I attributed this to the income disparities that exist within India. Recently, I was reviewing the results of the MasterCard Mobile Payments Readiness Index (MPRI), one of the most fascinating statistics was that 88 percent of Indian consumers claim to own at least one mobile phone – so there goes my income theory.
As I gave it further thought, I quickly realized that numbers like this do make sense. As of 2011, 69 percent of the Indian population lives in rural areas – the unbanked reality has more to do with how geographically dispersed India’s citizens are rather than it does with their finances. From a bank’s perspective I could certainly see why trying to reach and service these consumers could be daunting, not to mention expensive. Even still, I often think in this day and age we have millions of consumer carrying wads of cash around just in case they want to purchase something – there’s got to be a better way.
Well, perhaps mobile phones hold the answer. Mobile phones have proven to be a valuable tool in extending financial services to those that might not have easy access to the banking system. Kenya is a well-known example; mPesa has changed the game for millions of Kenyans by allowing payments via mobile phones. In the Philippines, only 26 percent of consumers over 15 years old own a bank account. Mobile money programs are showing positive signs of fostering inclusion in the Philippines as well. According to a report from the Consultative Group to Assist the Poor (CGAP) conducted by the mobile advocacy group GSMA and McKinsey & Co., one-half of active mobile money users in the Philippines are unbanked. Mobile payments programs are also underway in other parts of South East Asia as well as in Sub-Sahara Africa to provide access to financial services to those that might not otherwise have access to them.
My bet is that India will be one of these success stories in the not too distant future. In fact, according to MasterCard’s Mobile Payment Readiness Index (MPRI), India has invested significantly in its infrastructure, both physical and telecommunications, giving the market one of the highest ratings in the Index’s Infrastructure score. While Indian consumers will need some education on the benefits mobile payments can provide to make this a reality, with a population of well over 1 billion I would say it is well worth the investment.