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India’s Mobile Payment Startups Face Reluctant Indian Consumers & other problems

This article goes into great detail on the various technical, societal, and economical problems faced by Indian Mobile Payment Startup companies in trying to get more Indian consumers to use mobile payment systems instead of cash.

To illustrate this point, the article mentions that India 554 million active cell phone users, but only 4% of those users use mobile banking services.

There are roughly 910,000 point-of-sale terminals nationwide, according to the consultancy Deloitte. That is nearly double the totals from four years ago, but there is plenty of room for the noncash economy to grow. India currently has 758 point-of-sale-terminals for a million residents, considerably behind China at 1,700 per million and Brazil at 25,000 per million in 2009.

The article explains that one of the main reasons for the slow growth in mobile banking technologies in India is due to the lack of consumer trust in the security of mobile banking technologies. Many Indian consumers believe that paying through cash is safer than paying through mobile banking technologies.

The Indian startup mobile banking company Ezetap is hoping to bypass consumer security concerns with mobile banking & of having to deal with the multiple mobile carriers & banks used by Indian consumers by focusing on selling its mobile banking technology directly to merchants that would benefit from cheap mobile payment receptacles.

Other obstacles faced by Indian mobile payment companies include restrictions from the Reserve Bank of India (R.B.I) that limits what kind of transactions Indian consumers can pay for with mobile banking technologies as well as requiring mobile payment companies to obtain licences from the R.B.I to offer virtual/mobile wallets without a banking partner.

Even wealthier Indians are reluctant to use mobile payment technologies in India due to fear of fraud from Indian banks as they are not directly liable for fraudulent card transactions.

This article shows how establishing mobile payment systems in India is currently a massive challenge due to the many social, legal, and economical barriers faced in developing and using mobile/virtual payment systems within India.

By Matthew Salava

A senior Information Technology student at FSU. I will be graduating in Spring 2014.

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