With more than 8 million customers already using M-Pesa, Vodafone is optimistic that demonetisation would further increase its customer base. The telecom operator has been investing in M-Pesa for over three years and affirms that it will continue to invest in building its infrastructure. With launch of its latest offering ‘M-Pesa Pay’, the digital solution has targeted lakhs of Indian merchants. In conversation with Suresh Sethi – business head of Vodafone M-Pesa…
When did Vodafone start work on M-Pesa Pay?
M-Pesa Pay has been a recent work as the regulation changed couple of weeks ago. The government made a provision to enable merchants with digital transactions. Already, there were a lot of peer-to-peer transactions taking place. Merchants were able to do person-to-person payment, but there were limitations in the transactions, as these customers are with limited KYC. Through M-Pesa Pay, the merchant can declare that he or she is a merchant and enjoy higher (cash storage) limitations. A merchant always requires higher limit compared to any other customer. Based on this necessity, M-Pesa Pay came into existence.
Are there any transaction costs to the merchants? How is Vodafone monetising this solution?
Currently, merchant payment is free-of-cost. There is no cost involved. Currently, we are investing in this business and we will see how digitisation is going. We are very keen to further invest in this business. With the transition to digital, more and more models will come into play which will create a sustainable business model. Today, we are bearing to build this eco-system.
What would your views be to critics who doubted your enter into the space?
When we started three years ago, we were enabling cash to digital. For us, cash to digital did not take place a month ago. Mobile and mobile technology were critical to the entire play. We required creation of a physical eco-system, where cash can be converted to digital. The reason for such a move was that India was a cash society. Probably, we are the only wallet who is catering to a customer who is carrying cash. Our customer can go to any of 130 thousand outlet give cash over the counter and get cash into e-wallet. We are also present in the other side of the spectrum, where we catering to customers who have credit and debit cards – that is where everyone else is sitting. In the cash to digital space, we are only the company who is occupying the space and it is a huge area.
Today, when everyone is talking about digitisation and less cash society, I think this plays very well with what we have achieved and what has been playing out.
In September, M-Pesa witnessed a transaction of Rs 860 crore. Post festive season and demonetisation, where do M-Pesa transactions stand?
App downloads have more than doubled. We are seeing huge thrust in the space. Currently, this is the observation that could be shared.
Can we expect double digit growth in transactions anytime soon?
We can look at it very soon. I would not make a forward looking statement. But we see this (demonetisation) as a catalyst to sharper growth.
What is the ratio between Vodafone and non-Vodafone users using M-Pesa service?
We are catering to both Vodafone and non-Vodafone user. The service is downloaded and used equally by bother types of users. The reason for this is that we are catering to migrants who are sending money back home and also partnered with government on various schemes.
Is there any upcoming partnership with various state governments?
Government subsidiary schemes are usually run pan India. For instance, NREGA (National Rural Employment Guarantee Act) has been done with some states, now we are trying to reach out to other states and scale it up. For National Rural Health Mission (NRHM), we teamed up with three states. At present, we are working with 10 states. We are planning to enter new areas, working on multiple schemes.
What are the challenges faced while dealing with banks?
Critically, there were limitations as to what one could do as a wallet institutions and that is where RBI came into play. RBI came with a definition to create a differentiated banking regime, where players like us become more comprehensive player in the space. Payment banks will help overcomes those challenges. This is a good development.
There is a lot of competition in the space. How do you see that?
Everybody is playing to their strength. But to make this a sustainable journey, we need to get that network effect for that everybody has to pitch in. At some point, it will get consolidated down the line.
Do you think M-Pesa is way ahead compared to their competitors?
Definitely, we are ahead of our competitions, due to our infrastructure and presence.
Has there been any change in your plan post demonetisation?
No, there has not been any change in the plan. It is a mega push that has helped the eco-system.
Are you looking at adding more agents and outlets?
Yes, we are constantly looking at that. We are already investing heavily on that.
Do you think demonetisation will change the game? What is M-Pesa’s expectation going forward?
This would accelerate the work towards less cash economy. We were working towards reducing cash society. The whole idea was about sending the money from person to person and it should not be converted into physical cash. The sustainability of the model has to come in India. We have achieved this sustainability in Kenya. Once the cash remains in digital then it will become a sustainable model.