Paying bills with cash in India is time-consuming and labor intensive. You must travel to the state-run collection center to pay your electricity bill each month. If you live in a rural area, it can be a long walk from your village, especially during monsoon season. Then there are the lines—the wait time at a collection center can last for hours on end.
It would be so much easier if you had a central place close to home to pay all of your bills.
The Struggle to Join the Digital Economy
Now imagine that you’re a utility company or a mobile phone company in India. You know that there are several advantages to a digital payment system: it keeps overhead low and keeps your receivables collected promptly. But the majority of your consumers either have no access to the Internet or have no access to banking services.
So how do we bridge the gap between the average consumer in India, who must pay cash for services and products that are essential but inconvenient to obtain, and the companies that supply them?
Mobile Payment May Be the Answer
Digital payment networks like MoneyOnMobile are revolutionizing India’s economy taking the hassle out of bill payment. As India’s largest mobile payment platform, MoneyOnMobile is authorized by the Reserve Bank of India (RBI) to set up a payment system that enables registered users to buy products and services from registered merchants.
Harold Montgomery, CEO and Will Dawson, EVP, both of MoneyOnMobile gave us a quick walk-through of how it works:
- MoneyOnMobile prepays biller. MoneyOnMobile has agreements with all mobile operators and electricity and piped gas providers in India. MoneyOnMobile buys several hundred thousand dollars’ worth of units from each biller, for which they receive a discount because they buy in bulk.
- Store agent pays into MoneyOnMobile account. “Think of it as if they’re putting $10 in cash into a bank account. And they’re going to tell us in a minute where they want to spend it,” says Harold Montgomery, director of MoneyOnMobile.
- A customer walks into their local MoneyOnMobile provider. With over 280,000 MoneyOnMobile agents throughout India and a goal to penetrate 80% of the market within the next five years, it will be quite easy to find a member of MoneyOnMobile’s digital payment network.
- Customer hands cash to agent, agent performs a transaction via mobile SMS. “They’ll walk into one of our agents, hand over that cash and have that agent take the cash and perform a transaction. About 60 to 65% of our agents use feature phones.” Says Will Dawson, [title needed] of MoneyOnMobile. “So [the agent] just types on a phone, [and] an SMS message gets sent to MoneyOnMobile. MoneyOnMobile then performs that transaction with the necessary biller, the agent gets a confirmation, and the consumer walks out of that shop with an SMS, a text message on their phone that says, ‘That electric bill has been paid.’
- MoneyOnMobile agent gets paid a commission. “The agent makes money out of this by taking a commission on each of the transactions,” Dawson says, “and depending on the transaction, it’s either the biller [paying the commission] or it’s the consumer that’s paying a fee to perform that transaction.”
- Biller saves money. “The reason that billers like to use us is, we’re a cheaper cash collection mechanism than their typical storefronts,” reports Dawson, ”generally, they have to open up a physical shop in a neighborhood, have people standing there, taking cash, performing the transactions. So instead of building out all of that infrastructure, they would leverage us as a less expensive option to get their bills collected.”
Convenient Bill Payment From the Ground Up
“So that’s how it works,” adds Montgomery, “you can imagine it a big flow of rupees, in this case, from the consumer to the store, from the store to MoneyOnMobile, and from MoneyOnMobile to the vendor. From the street level, all the way through the roots of the tree, out through the leaves to the vendor community.”
The digital payment network will make it possible for every person on the street to pay their bills effortlessly and on time.