When one of the country’s largest private sector banks and private mobile service providers collaborate on a new service it definitely calls for attention. The recent tie-up between Bharti, ICICI Bank and VISA to launch “mChq” ?? a credit card on a mobile ?? is one such instance.
The tie-up is strategic. Bharti and ICICI have strong brand recognition and a sizeable customer base in their respective areas of operation. While ICICI can bring key credit risk management skills to the table, Bharti can provide a medium for the bank to provide credit card facilities with low transaction costs. It already has the necessary infrastructure in place.
mChq
Launched as a mobile-to-mobile payment option, mChq allows Bharti customers and ICICI Bank VISA cardholders to pay for their purchases via their mobile phones.
The transaction involves a retailer sending an SMS stating the amount to be charged to the customer’s mobile phone. On receiving the SMS, the customer can enter a personalised PIN number and send an SMS back to the retailer confirming payment. After the transaction is processed, both parties receive SMSs stating the same.
The fact that every transaction is preapproved by the customer with the input of a PIN number ensures a secure transaction. In fact, the services are vetted for security and standard compliance by the Institute for Development and Research in Banking Technology and are certified by VISA.
Subscribers of Bharti who opt for this service will be issued a new SIM card. ICICI Bank credit cardholders will receive an add-on card on the basis of their existing ICICI Bank VISA credit card. All payment transactions will be reflected in the customer’s monthly credit card bill.
The service will cost Rs 10, and will be charged as a monthly fee on the customer’s credit card bill. Customers will pay normal SMS charges for each transaction although there is a fee waiver for the first three months.
Impact
According to Akhil Gupta, joint managing director, Bharti Tele Ventures Limited: “With the launch of this new service, mobile phones will now turn into virtual wallets and there is a chance that the entire concept of payment may change.” This is because the new service will allow “anytime, anywhere payments” with no special infrastructure requirements.
Gupta says the product “is a boon for customers, financial service providers, retailers as well as mobile service providers”. This is because it will eliminate the need for customers to carry cash for making purchases.
Usually, customers use cash for lowvalue transactions and instruments like cheques and demand drafts for higher value payments. It is the micro transactions ?? such as buying a pizza, paying for fuel or for a taxi ?? that Bharti is hoping to cash in on through mChq.
The launch of the new service marks an important step for m-commerce in India. M-commerce allows customers to use their mobile phones as an authentication device or as a transaction device to execute a payment for goods and services.
The fact that mobile phones are now a ubiquitous device throws up new business opportunities. Also, technological developments in recent years have allowed mobile phones to become increasingly secure instruments, thus expanding their scope of use.
Bharti has an added advantage. It has prior experience with such transactions through its Easy Charge services on offer. According to the company, 125,000 retailers transact business worth Rs 60 million daily through this facility. The scheme allows retailers to recharge customer phones by sending an SMS to them. Thus, it is using its huge distribution network to facilitate this service.
A number of merchant categories have been identified for this project. These include restaurants and motels; department stores, pharmacies and apparel stores; motion pictures, theatres and music galleries; and book, card and souvenir shops.
Initially, the service will be available in Delhi, the National Capital Region and Mumbai across 100 outlets. These will include malls like Sahara and Metropolitan; restaurants like Pizza Hut and Café Coffee Day; and bookshops like Om Book Store.
During phase one of the rollout, the service will be expanded to 500-plus outlets in these cities. In phase two, it will be rolled out to the top 10 cities in the country and subsequently to other markets.
How popular the service will be remains to be seen. What is quite clear is that, like in the past, Bharti will continue to innovate and experiment with new products and services.
