Pedestrians walk past a Vodafone India Ltd. cheque drop box in New Delhi (Photographer: Prashanth Vishwanathan/Bloomberg)

Vodafone Pushes Mobile Wallet Ahead Of Payments Bank Launch

Setting the stage for its imminent payments bank venture, Vodafone India has launched a refreshed version of its mobile wallet, called Vodafone M-Pesa Pay, with an upgrade that now caters specifically to merchants.

Users can now choose to log into the mobile wallet as a merchant with the option of “collecting” money from their customers. This is similar to the “pull” feature provided by mobile applications that support the National Payments Corporation of India’s Unified Payments Interface.

In other words, a merchant who has a Vodafone M-Pesa Pay application can send a request to a customer through the application. The customer then validates the payment request with his or her mobile PIN and the transaction goes through.

The mobile wallet at this point is not part of the NPCI’s Unified Payments Interface, but Sood said this would be an option once Vodafone’s payments bank is launched.

The launch of the new avataar of Vodafone India’s mobile wallet comes at a time when competitor and market leader Paytm is racking up the numbers both in terms of merchant tie-ups and subscribers.

In a recent interview with wire agency PTI, Paytm founder and chief executive officer Vijay Shekhar Sharma said his company would likely close 2016 with over 2 billion transactions. Paytm had a run rate of adding 1 lakh new users per day before the government announced the demonetisation. Since then, the application is adding 5 lakh users daily.

Conversely, Vodafone M-Pesa, which was launched in 2013, had 85 lakh customers at the end of September, up from 67 lakh in June. In September, according to Sood, transactions worth Rs 860 crore were completed on the Vodafone M-Pesa application. Comparative numbers for market leader Paytm were not immediately available.

Vodafone India’s mobile wallet is primarily targeted at smartphones and feature phones, but the company also provides payment services for basic GSM handsets. A Vodafone can register for Unstructured Supplementary Service Data or USSD services by dialing *400# on their handsets.

Only around 20 crore of the over-100 crore mobile phones in India are smartphones.

The USSD service, provided by the NPCI, allows mobile-to-mobile transactions through voice transmission rather than internet data, which is used by all mobile wallets. The limit on payments made through this service is Rs 5,000 per transaction.

Vodafone M-Pesa Payments Bank

Sunil Sood reiterated Vodafone India’s plan to launch its payments bank by the end of March 2017. He, however, refused to add further details about the rollout.

Vodafone’s biggest competitor in the telecom space, Airtel has already launched its payments bank through a pilot initiative that began in Rajasthan, and is now being expanded to three more states.

Vodafone has an additional hurdle to cross when it comes to launching its payments bank – finding a domestic partner. According to Reserve Bank of India guidelines, payments banks can have a maximum foreign direct investment of 74 percent.

Sood refused to comment on whether the company has found a domestic partner for its payments bank venture.