Emergic: Rajesh Jain's Blog

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A Micropayments Infrastructure for India: Part 5

January 22nd, 2010 · 6 Comments

My cousin in the US wrote an iPhone app on a weekend. He put it out there. It now makes him $1,500 a month. Those are the kinds of stories that will drive creation at a large scale in India. That is what this idea of leveraging the mobile cash balance for third-party payments can do.

The story for Indian digital entrepreneurs has been one of disappointment. Poor data infrastructure (both wireline and wireless) coupled with a low user base has limited opportunities and investment in this market.

What is needed is a government intervention to change the game for India’s entrepreneurs. Nothing that I have described here increases any kind of risk in the system. Value creation will be additive. If we can even imagine India’s top 20% (10 crore) mobile users spending Rs 50 a month on new services, it creates a new annual market of Rs 6,000 crore ($1.3+ billion).

More importantly, it will create interest in computers, software and the Internet amongst the youth, and out of that we could see the emergence of India’s Tencents and Googles.  A decade ago, many in India were fired up with the potential of the Internet only to be disappointed by the market. This time around, the potential of the market can delight many in India.

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6 responses so far ↓

  • 1 Nilesh // Jan 22, 2010 at 11:43 am

    i agree. four months back when i returned back to India, those were the opportunities i seen to explore, unfortunately there is bottleneck everywhere starting from 1) wireless provider’s greedy approach to charge every cent 2) RBI’s restriction on financial transaction and movement without proper permissions in this license raj, 3) pocket full, non-technical high end customer’s limitations to learn and pay something worthwhile 4) lack of enthusiastic and good quality software developers , ready to work in early start up with low wages and high expectation like silicon valley and most important 5) venture capitalist mindset and fund shortage

    what can be done in silicon valley can not be replicated in India easily for so many reasons other then needs and opportunities of the market with start up mindset and without strong VC backing.

  • 2 Sangeeta // Jan 22, 2010 at 1:55 pm

    I liked most of your write-ups. They reflect a lot of creativity. Good work !!! I came across ur blog in my quest to search writers for an upcoming magazine that me and some of my friends are gonna start this 26th…..its totally for social cuase……shall u not come along with us…..in case interested drop me a mail at mihirjha@readersquotient.com
    Keeep posting
    Regds/sangeeta

  • 3 sunil // Jan 22, 2010 at 9:28 pm

    Hi Rajesh,
    Its Nice you think so much about all of us indians and about india’s continuous growth. I use to think previously that what exactly the people will be writing in the blogs everyday but after reading your posts i can make out that blogging is really good medium to make out something about anybody by reading his own comments about others..and about the whole world.
    I would really like to have people like you in our politics. this is the most important need of indian economy to make it grow and grow. I feel the people of indian govt. should think all the things professionally and not on the basis of making money. I feel the professionalism with Govt can change the indian economy and may take india to another level where we actually want to go.
    And we require these kind of posts from you who can make us think like you and have contributed in india’s growth.

    keep writing…..

    Regards
    Sunil

  • 4 MrDalal // Jan 23, 2010 at 12:07 am

    “If we can even imagine India’s top 20% (10 crore) mobile users spending Rs 50 a month on new services, it creates a new annual market of Rs 6,000 crore ($1.3+ billion).”

    This is the exact kind of flaw, i think, one should avoid when thinking up concepts like this.

    Lets take a bet Rajesh, Mobile payments are NOT happening in India in any meaningful scale, anytime in the next 30 years. My simple reasoning: ppl will just use cash. (Anecdotal evidences and unheard of start-ups and their feeble attempts to get the concept up and running will not count. ) Catch u in 2040.

  • 5 udaya // Jan 27, 2010 at 4:18 am

    The comments are interesting. Other than the systemic constraints that seem inherent, Mr. Dalal among others comes up with counterpoints that deserve deeper thought.

    1. On the whole, however, I think he would lose his bet over mobile micropayments, I hope he did not bet his shirt. Some thoughts….

    2. These things peak suddenly, for example, mobile charges were 16 rupees a minute when mobiles were introduced and were a luxury, it stayed that way for three to four years, it took just a disruptive operator to change the market dynamics suddenly and for the good. something like that cannot be ruled out in this case also, a disruptive operator, a disruptive application is all that it takes to upset the market and mainstream it.

    Also cash flows from common enough applications, no one really imagined that there is so much cash in ring tones and wallpapers, today companies are raking in the cash. And from a disorganised market, we stay and learn.

    3. Systemic constraints seem to exist and once they are broken, the government will see light and change the laws. Case in point: VOIP in India, DOT changed, so will RBI. Tracking processes will fall in place.

    4. Agreed that clone of American applications and app stores may not work in India, but surely the natives can come up with native ideas, ex: missed calls.

    I guess with a little brain storming it is not difficult to come up with an application that will pull in the droves and even in India.

    5. There is always a learning curve and there is always a population turnover, and at some point they do meet. Children as techguides for the older ones is a reality, in India and elsewhere, so what if the older ones can only dial.

    6. I guess companies will shift to accepting mobile based payments with lower commissions not only because potential volumes are there but also because if they dont do it today, someone else will.

    7. Rajesh’s problem is in many senses universal, and not about micro payments alone, there will be a time when most transactions shift to the web and a virtual currency related to cold cash is necessary. Given security risks, prepaid vouchers over mobile seem a good first move shortcut.

    8. And he is right again, some people should succeed first and easily, then the crowds will come.

  • 6 ravi // Feb 1, 2010 at 12:38 pm

    a. Mobile operators are an issue only if you want to use their payment network. Since they are collecting the money from the users, they are taking more than 30% of the payment (whether justified or not, thats the way it is)

    b. But what is stopping anybody from using the mobile network as just an SMS network, use a separate money account (using oxycash etc) linked to the mobile to do payments and enable payments on that?

    c. if (b) is done, prices in (a) will automatically come down. Currently, none of the 12 operators are seeing any need to reduce the transaction charges as there is no competition

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