NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, April 25, 2014

Money transfer through mobile phones is slowly becoming popular with the country’s top two operators — Bharti Airtel and Vodafone — together having notched up more than 2 million subscribers. Business is slowly gaining traction, say industry watchers, with the subscriber base growing at close to 15% growth month-on-month. Idea Cellular has made a start and Reliance Communications has just won a licence to offer money transfer services.

The biggest catchment for telcos is the 300 million migrant population — labourers working in cities like Delhi and Mumbai who need to send money back home to Uttar Pradesh, Bihar, Odisha or the north-eastern states. While the bulk of the money sent home, approximately 70%, is transferred through informal channels, 20% is routed through the banking channel and 10% via the time-tested money order.

“It is this 70% market which remains largely untapped that we’re looking at,” says Suresh Sethi, business head, M-Pesa, the brand under which Vodafone offers its mobile money transfer service. Sethi’s willing to wait it out because he’s confident business will come; Vodafone has rolled out the service across the country and has around 1.2 million subscribers. For the money transfer piece, it has entered into a strategic tie-up with ICICI Bank.