Changing Trends in India - Growth of mCommerce

Changing Trends in India - Growth of Telecom

The low Internet and high Mobile penetration in India makes it a lucrative market for the growth of mCommerce. According to reports, the projected fee-based revenue from mCommerce could exceed Rs. 22,500 Cr by 2015 in India. This revenue would be shared by banks, mobile service providers and device manufacturers.

Up until today mCommerce activities consisted mostly of messaging, mobile entertainment (ring tones, videos, wallpapers, and games) and various Value Added Services (VAS) such as news, sports, and stock quote updates etc. Now with the introduction of Mobile Banking and Mobile Wallets, the perception of mCommerce activities has changed.

Mobile Banking offers the customers the option to avail the accounting and brokerage services which are transaction based and information services which are non-transaction based like Balance enquiries. According to NPCI (National Payment Corporation of India), this can reduce the load on ATMs, as around 1.5 million balance enquiry transactions are carried out daily through third party ATMs. These transactions are free for the customer if it is within the five transactions a month limit but the bank has to pay Rs 5 to Rs 8 per query and mobile banking could help save save banks crores of rupees every year. Also approximately 41% of the population in India is unbanked and the mobile phone, which is becoming ubiquitous in the country, offers an excellent platform to take banking to them. This could be a game changer in the banking industry.

Eko, a mobile banking technology provider, has tied up with SBI and ICICI banks. It helps people create a bank account and perform basic transactions at local Kirana shops. Idea Cellular has a similar partnership with Axis Bank. Subscribers would be able to open ‘No-frills savings bank accounts’ at Idea’s retail outlets and avail basic banking services such as cash deposit, withdrawal and transfer. There are similar services from Vodafone and Bharti Airtel as well.

Mobile wallets allows customers to use their mobile phones to make payments – without the hassle of carrying cash or change. It is an efficient alternative to cash transactions. The ubiquitous mobile platform gives it an additional advantage over credit/debit cards especially in the rural areas. With the rising tele-density there is good potential for business. Airtel Money, a mobile wallet service launched by Bharti Airtel is a fine example of this.

Near field communication (NFC) is also gaining popularity across the world and is set to revolutionise mCommerce. It is a technology in which the mobile phone communicates with a device in the bus and the amount is debited from your bank account or mobile wallet. Though NFC is still in the budding stages in India, it may hold the key to the popularity of mCommerce in the country.

A major bottle-neck in mCommerce in rural areas lies in meeting the Know-your-customer (KYC) norms. Kenya’s National ID system, eliminated the need for KYC norms and played a key role in M-PESA’s success. That is precisely the role India’s Aadhar project is planning to play.

If it succeeds, mobile commerce would get a big boost and in the coming year we could see a major revamp in the way money is transacted in the market. This all strengthens the role of Telecoms in refashioning the perception of India as a country on the global map.

Changing Trends in India - Growth of Telecom

The past decade has been instrumental in refashioning the perception of India as a country on the global map. There are many reasons for the same and the growth of Telecom industry is one of the most important one.

With tremendous growth in the last few years, India has come to be regarded as the world's most competitive and one of the fastest growing telecom market. Competition has caused prices to drop and calls across India are one of the cheapest in the world. This has led to a huge impact on the outlook of the society.

In September 2004, the number of mobile phone connections crossed the number of fixed-line connections and presently dwarfs the wireline segment by a ratio of around 20:1. The mobile subscriber base has grown by a factor of over a hundred and thirty, from 5 million subscribers in 2001 to over 851 million subscribers as of June 2011 making it the world's second-largest country in terms of mobile phone users. It is also the world's third-largest country in terms of Internet users with over 100 million of them as of December 2010.

The total revenue in the telecom service sector was Rs. 71,674 Cr in 2004-2005 which is expected to be over Rs 2,00,000 Cr in 2011-2012. A teledensity of 84% of the population is also being targetted by 2012. Himachal Pradesh has become the first and only state in India to achieve 100 per cent tele-density. The state has almost seven million mobile customers.

Although, the growth in Mobile telephony has been stupendous in India over past 5-6 years, same cannot be said about broadband. The growth in broadband subscribers has been at snail’s pace. Mobile telephony spread across length and breadth of India, thanks to cheap handsets and even cheaper call rates. Unfortunately, broadband could not reach the masses due to higher prices, lower speeds, infrastructural issues among other reasons.

Hence even though India has the world's third-largest Internet users, the internet penetration is one of the lowest in the world at 8.4% of the population. The penetration of broadband connectivity is much worse. 60-70% of the people use Internet via moble phones.

This limitation had a major contribution in changing the perception of mobile phones. Many big players in the telcom industry have forayed into mCommerce in hope to capture this huge potential market.
The change in the perception and usage of mobile phones has been explained here in the continued post.