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It was great news for mobile payment companies when the RBI doubled the cap on per-day mobile transactions last October. As per RBI guidelines the daily transaction limit for cash transactions rose from Rs 2,500 to Rs 5,000 and for goods and services rose from Rs 5,000 to Rs 10,000. m-Commerce players believe that rural deployment of m-commerce is more important than its deployment in urban areas because of more opportunities. Users in the metros are already equipped with card-based payments and online payment system.

According to statistics, around 50% of new mobile subscriptions every month come from rural areas in India. Jagdish Mitra, CEO, CanvasM says, “The rural market in India holds a huge potential for deployment of m-commerce services and the subscriber base is expected to grow at a CAGR of 85% in the following years.”

Valerie Rozycki, head, strategic initiatives, mChek says, “In India alone, two-thirds of the population is unbanked and has no access to formal bank accounts or financial services. So there is a large rural m-commerce market.”

Empowering the Hinterland
As Jagdish Mitra says, next generation technologies will provide a single platform to cater to end-to-end commerce services for the end-users including rural masses. Electronic or virtual commerce over mobile has the potential to literally change how the average Indian transacts. Rural m-commerce will provide easy accessibility to information, services, commodities, retailing and banking. More reach in rural areas can be enabled using number keys and IVR with multilingual support. Push to m-commerce in the rural segment will provide low-cost information services. People can cut-down on their expenses and time because they can have access to information from their handsets and complete financial transactions using the same device. Needless to say that they can avail a wide range of banking and payment services including remote bill payments, money transfers, payment to over-the-counter merchants, etc.

It can help spread important information on healthcare, farming, provide branch-less banking, crop selling, market updates, new offers, etc. Abhijit Bose, VP, product marketing, ngpay says, “Beyond basic commerce and banking, a large percentage of Indians, especially those in rural areas, are underserved and unbanked. The mobile channel provides a rare opportunity for India to leapfrog years of poor infrastructure development and actually bring the benefits of technology, low cost/mass market goods and services, and financial systems to the rural poor and lower working class.”

Market Opportunities
The rural Indian market is playing a fundamental role in the growth of the mobile sector, thus enhancing prospects of embracing m-commerce services and applications. The size of the rural market is expecting a huge increase in the customer base bringing mobile phones within the reach of millions of new customers. On the market opportunity, Rozycki says, “Even though average transaction size might be smaller for poor rural customers than for higher-income urban customers, the sheer volume of potential transactions creates a huge opportunity. Approximately 70% of the Indian population is rural, and less than half actually have bank accounts and access to financial services today. m-Commerce will be critical for bringing these masses into the financial system.”

According to industry sources, the m-commerce market for the ongoing fiscal is projected to be about Rs 880 bn in FY 2010. Ten percent of $230 bn global international remittance is in India and 70% of this is from the rural segment.

Bose of ngpay says, “There are many consumers in tier-2, -3 and -4 cities who have a lot of disposable cash but have limited access to physical retail outlets. For them, m-commerce will be a huge value-add. Another large percent of rural consumers with less disposable income would only consume a limited set of services/products like rail/bus ticketing, banking, bill payment, top-ups, etc.”

Challenges
Despite the huge potential it holds for the stakeholders, m-commerce to rural areas has some challenges too. Illiteracy and lack of awareness is a major roadblock for the implementation of m-commerce projects here. But the problem is not unique to rural m-commerce alone; when any new service is introduced for the first time, there will be hiccups. For the rural market, consumers should be made literate enough to consume the benefits. Apart from this, the consumer or the end-user needs to have the interoperability where they can access multiple services from various operators.

The rural market in India holds huge potential for deployment of m-commerce services Jagdish Mitra, CEO, Canvas M	The mobile channel provides a rare opportunity to bring the benefits of technology to the lower working class Abhijit Bose, VP, product marketing, ngpay	We have solutions to address various security challenges in the m-commerce domain Amuleek Bijral, country manager, India & SAARC, RSA, security division, EMC	In India two-thirds of the population is unbanked and hence there is a large rural m-commerce market Valerie Rozycki, head, strategic initiatives, mChek

And, as Valerie Rozycki says, mobile money and m-commerce initiatives are still early in India, and the ecosystem for m-commerce is now only getting evolved.

Facilitation of secure mobile transactions is another challenging task. RBI has recognized this growing need for security and has come up with a set of guidelines for banking institutions to ensure that the technology used for mobile payments is secure. Amuleek Bijral of RSA says, “As mobile banking services proliferate, fraudsters will increasingly seek to exploit vulnerabilities in the handsets and associated platforms. To address various security challenges in the m-commerce domain, we have solutions like RSA SecurID® two factor authentication, RSA Adaptive Authentication, RSA FraudActionSM, RSA Access Manager and RSA enVision.”

Rural Initiatives
Undeterred by challenges, m-commerce players have started taking rural initiatives. One of the major player in m-commerce, mChek has been running a live pilot called Grameen Koota (Village Assembly) for three months now.

Grameen Koota is primarily a rural microfinance institution serving over 160,000 members throughout Karnataka. Sanjay Swamy, CEO, mChek says, “The pilot projects will eventually be expanded to other microfinance institutions as well as other institutions working with rural customers.” During the pilot, rural people experienced financial literacy and financial inclusion. Apart from this, safety of electronic money and flexibility of remote transactions were other experiences.

CanvasM has plans to initiate several offerings and services in the rural sector. “Actual use of mobile will start when the services are enabled for rural areas with desired applications and services to the major part of the population,” says Mitra.

Part of the IP developed by ngpay is a technology that works on entry-level handsets, is cost-effective (ngpay is free for users), and simple to use in order to address the key barrier of initial adoption by rural consumers.

The success of m-commerce is primarily dependent on network operators who can effectively enhance and advance the usage of its services. Since collaboration and partnership models are critical in this domain, banks and telecom operators must collaborate, tied together by a preferred technology provider. The market expansion in this domain has to be catered ardently offering a wide scope in increasing revenue for m-commerce players and telecom operators.

Kannan K
kannan@cybermedia.co.in