Mobile-phone subscribers are growing at the rate of 8 mn or so per month in India, going by Trai's latest estimates. In May 2008, the number of wireless subscribers in India stood at about 278 mn. And if each phone is used for a transaction of even Rs 100 a month on average, it amounts to Rs 35,000 crore in a year!

It is therefore inevitable that loads of third-party and value-added services are finding their way to the mobile platform. Some of these come under the umbrella of m-commerce-using your mobile phone for financial transactions. Several banks have taken the lead here to become commerce enablers.

• ICICI Bank provides a host of services such as balance enquiry and cheque-book requests, funds transfers, bill payments and more.
• HDFC Bank has tied up with Reliance Mobile for a virtual credit card. This enables payment of Reliance Mobile post-paid bills, prepaid recharges and Reliance Energy utility bills.
• Standard Chartered bank customers can use their mobile phone to transfer funds via ATMs. Citibank offers a variety of services.
• Airtel in association with mChek and tie-ups with SBI HDFC Bank, ICICI, and Corporation Bank enables customers to pay their bills and conduct other financial transactions through the mobile phone.
• Third-party mobile-payment service providers, like Obopay, PayMate and MChek have some tie-ups in place, and are looking to tie-up with other banks that want to provide m-commerce services to their customers.

In this fluid, rapidly changing landscape, RBI has stepped in with a set of draft guidelines for banks that provide mobile-payment solutions. RBI's guidelines deal with making these services more standardize-so that they are available over low-end phones as well (and not just GPRS-enabled, high-end phones), even for small transactions worth Rs 1,500 or less. The creation of RBI's guidelines is a clear indicator of the fact that mobile payment mechanisms are here to stay. In fact, at the moment the banks are moving faster than the RBI would like and have been asked to slow down.

The enablers for a mobile wallet to be a reality are the large and growing subscriber bases, the sheer convenience of transactions and the tremendous savings in time and money. What are the humps that need to be crossed?

The first of these has to do with viability. So while the potential is huge, India's mobile telephone market yields considerably low ARPU and more than 80% are prepaid customers-who may not be the high spending category. Therefore, the offerings would have to be of the high volume low revenue category. Paying for say air tickets over the mobile phone would be a great service but used by few.

Second, introducing mobile-payment services requires huge investments to build the technology infrastructure and gain consumer acceptance. Given the nature of the market, would the volumes of these transactions justify the investment? What would the transaction costs of providing these services be? If transaction costs are high relative to the cost of the product or service it could be an inhibitor.

Third, and perhaps most important to consumers, is security-both of the transactions conducted and of consumers' identities. With identity theft on the rise on the mobile platform (a technique that's recently come into play is 'vishing', using voice or SMS to gain personal details about a person), building security and convincing customers would be a key factor.

Service providers speak about paying taxi or auto rickshaw fares via the mobile phone. That is a point worth reaching. We are some time away from the wallet becoming really thick. But it the correct time for entering this space. A couple of years earlier would have been too early. A couple of years later would be too late.