We have been harping on the fact that e-wallets and mwallets are important for the growth of digital commerce in India and we discussed this point in our last WATBlog Panel discussion as well.
Well its seems that telco’s have already started putting the pieces together as far as launch plans for mwallets are concerned. Businessline reports that Reliance Communications is planning to launch an SMS-based vending service in collaboration with E-Cube, an embedded software company. The services would be launched with actual physical presence of vending machines connected to a screen which shall flash sms numbers that ones needs to sms to buy a product. The user who smses shall be charged the amount of the product in its mobile bill.
A similar service debuted in other parts of the world like Russia as well earlier this year. Apparently this isn’t the first time such an initiative is being tried in India. Way back in 2003 BPL Mobile (Now loop mobile) had reportedly tried launching exactly the same service with Cadbury chocolates but I guess those were early days and RBI must have shot the project down as there were no regulatory norms present at that time for sure. It would be nice to get info on who was leading this project then. Let us know via comments.
Here is a graphic on how the service will work (pic via procontent):
There will be LCD panels at strategic locations with an SMS number flashing
User sends an SMS to the mobile number displayed on the LCD panel with regards to the product he wants to buy.
The LCD panel is attached to a vending machine which drops down the product and the user is billed via his/her mobile phone.
Will this impact digital commerce market?
There can be several applications of this when it is launched and it would mean people can use mobile phones like credit cards. As one knows the American system has a fantastic credit cards system which has enabled digital commerce to boom. In India the POS (point of sale) device penetration and the credit card penetration is dismal and hence there is opportunity for alternative payment modes.
Mobile being the highly penetrated device (over 400 million i.e. over 40%) and sms being the last mile tool it seems very likely that this can create the commerce impact that credit cards have done for america.
Though what remains to be seen as to who takes the hit once customers start defaulting on their mobile payments?
Is it the merchant? or the operator? This details is where the devil lies and as this model becomes mainstream these are the issues that the RBI would have to address.
I think this kind of service will have many issues like
* How will you charge service tax or VAT on the transaction
* Who will bear the burden of the Tax,customer or the vending company
* The product being vended will cost more
* How about the MRP regime that India has as of now
regards
sanjeev sharma ( Vending professional)
For this service to be successfull, even the networks should be optimum. What happens in case the SMS does not reach the SMSC or even if the SMS reaches the SMSC there is a delay in the dispensing of the product from the vending machine.
The SMS also has to be childsafe. What if a child buys the product that the parent does not approve of.