Visa Shelves Mobile Payment Venture In India

Visa, one of the largest payment companies in the world, has junked its mobile payment venture in India after leading telecom companies refused to share their network.

The company Movida India, the joint venture that Visa had formed five years ago in partnership with Monitise Plc UK, has shut shop and Naushad Contractor, head of the 50:50 JV, has quit, three persons aware of the development told ET.

Visa had set up a customized platform using Monitise software that could be used by banks to offer their customers mobile payment services.

Visa, which felt the platform would add to its card transaction volumes, had tied up with leading banks like ICICI and HDFC. But the missing link was a deal with large mobile service providers. For the past few years, Visa had been lobbying with the government, Reserve Bank of India and telecom regulator for allowing it to tap the Unstructured Supplementary Service Data (USSD) channel of telcos.

The USSD channel is a simple interactive text messaging system that can be used by a mobile phone subscriber to reach out to her bank for transfer funds, check balance amount, pay bills, cancelling cheque, putting in a request for a new cheque book, obtaining account statement, and even buying books and music using debt or credit cards.

“It happened at a time the mobile companies themselves were emerging as serious players in the mobile banking space. The telecom regulator and the concerned ministries were in favour of letting Visa use the channel of telcos. But telcos refused to share their bandwidth and network though they had grudgingly given access to the state-backed National Payments Corporation of India (NPCI),” said a senior person in the payments industry.

“I believe telcos did not have a choice when it came to NPCI as the PM himself was gung-ho about financial inclusion and ‘Digital India’ through mobile banking. Well, Visa did strike deals with few telecom companies but they were not the biggies. It made no sense for Visa to continue the venture unless users of leading mobile companies used the service,” the person quoted above added.

Contractor could not be contacted for comments while emails and text messages to TR Ramachandran, Visa (India) head, went unanswered till the time of going to press.

Visa’s interest and subsequent exit from the mobile banking initiative bring to the fore the fierce competition in the mobile banking space — as the entry of Visa would have shaken up the sector — the interest of telecom companies in developing the business, and the formidable clout of large telcos in disregarding the views of regulators and government and refusing to share the channel with Visa.

The telecommunication tariff (56th Amendment) order, 2013 states that all telecom operators are ‘obliged’ to provide connectivity to any payment aggregator who has set up a USSD gateway.

ET had earlier reported that officials of Telecom Regulatory Authority of India had assured Movida they would ask telcos to share USSD access and also specify the dates by when it would be given as long as mobile payment firms meet certain conditions like authorization from banks.

Bank customers carrying out mobile banking using the USSD channel require no smartphone or internet connection on their handsets, but can ‘talk’ to their banks by sending a simple text. While the number of mobile subscribers has surged, most of them do use smart phones — and therein lies the potential of the USSD technology.