However, the penetration of mobile in proximity payments is currently negligible with less than 2% flowing into it. The fundamental issue with proximity payments is the lack of necessary infrastructure for mobile payment acceptance by scanning the QR code on Mobile phone screen. The total number of POS terminals in India is less than 700,000 which equates to 5.4% penetration. To add to this concern, more than 13 million retail establishments are fragmented across the country with almost little capability and incentive to acquire POS terminals. Another key challenge in implementing proximity mobile payments in India is the apparent lack of readiness of various players to interoperate in order to adopt the technology at scale. Mobile payment service providers and banks need to work together to create a seamless ecosystem for the technology to work efficiently. On the solutions side, none of the incumbents’ mobile payment companies are currently set up for the mass market. All players solve specific problems with limited geographical reach. The partnership model which is presently taking off in other developed economies is still yet to gain traction in India.
The future of mobile payments in India depends largely on the payments bank license which is to be provided by RBI. Both telecom operators and third party payments service providers have applied for the license. Companies like Paytm, essentially technology companies operating in the transaction space, do not have physical retail networks, particularly in rural areas, where a large section of the currently unbanked population resides. On the contrary, telecom operators can at least make use of their network indirectly (RBI does not allow telecom companies to use their network for payments bank) for last mile connectivity. However, those with payments bank license will be able to allow cash withdrawals through a wallet which would solve a portion of the problem. International remittance which is currently not allowed for non banks can be offered through payments banks’ wallets which will be an additional revenue stream. Although payment banks will allow cash withdrawal, international remittances etc., the proliferation of mainstream proximity mobile payments in India still seems to be a distant dream. Barcode scanner will help to solve all problems .
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