Mobile Payments Gain Traction Among India’s Poor

He manages to save enough that he regularly can send a few hundred rupees to his family in rural Siddharthnagar, a thousand miles across India near Nepal.

“I have to go to a bank and fill out a form. That takes an hour,” Mr. Ramtheol said. “The bank is only open when I am supposed to be working, so I lose an hour’s pay.”

He’s intrigued by a new service that will enable him to send the money by cellphone to his family. MoneyOnMobile, an Indian start-up, is latching on to an idea that began six years ago in Kenya of transferring money with a few taps of the keypad on an everyday cellphone. That country’s mobile payment service, M-Pesa, has become so popular that most Kenyans these days send money, buy groceries and pay restaurant and medical bills and school tuition via cellphone — wirelessly transferring the equivalent of $21 billion annually. M-Pesa has inspired almost 200 similar efforts in other countries.

South Asia is a fertile market for the concept. The region consisting primarily of Bangladesh, India and Pakistan accounts for the largest number of offices actively providing mobile money services, 3.8 million compared with 805,000 in all of Africa and 1.8 million in East Asia and the Pacific. After only four years in operation, Pakistan’s wireless network, Easypaisa, is moving some $3.5 billion annually. In Bangladesh, where the bKash wireless payment system has been operating for only two years, the transaction rate is $4 billion annually.

India has been proceeding more slowly, but the pace is quickening. According to the latest tallies from the nation’s central bank, the Reserve Bank of India, the number of wireless money transfers has more than doubled since September 2012, moving the annualized equivalent of $3.2 billion. Lately, the two best-financed efforts, Airtel Money and Vodafone M-Pesa, have begun expanding across the country. And because of the nation’s huge population, broad adoption of cellphones and some of the lowest airtime rates in the world, even a modest conversion to mobile money in India could make South Asia the world’s largest wireless-transfer economy.

“India is probably the most exciting market for mobile money in the world,” said Michael Joseph, the man credited with the success of M-Pesa in Kenya. Now in London, he heads mobile money programs globally for Vodafone. “When India takes off,” he said, “it will eclipse anything we’ve done in Kenya.”

Indian regulators concur. “We have not set a target, but it is going to happen,” said the Reserve Bank’s deputy governor, Harun R. Khan, who oversees the nation’s payment systems. “I’m optimistic about its future.”

By 2015, mobile money transfers in India could total $350 billion annually, some analysts estimate. The size of the opportunity has attracted the major banks and mobile network operators but also at least a dozen new companies, including Beam Money, CanvasM, Ezetap, PayMate, Y-Cash and Zaakpay.

The most rapidly growing new venture is MoneyOnMobile, just across a causeway from the slum recycling shop where Mr. Ramtheol works. In operation less than three years, MoneyOnMobile already has attracted four times as many users as Kenya’s M-Pesa (75 million versus 18 million) and twice as many retail outlets (163,000 versus 79,000) although its transaction volume is tiny by comparison.

The company — controlled by Calpian, a payments processor based in Dallas — was founded by Shashank Joshi, a 40-year-old engineer who has been starting companies since he was in college. “Payments is a globally neglected industry. Nobody pays attention to it,” he said. “But if you actually drill down and look at it, you cannot survive without making payments.”

“Within three to five years,” Mr. Joshi said, “you will see more than 30 percent of this country’s payments moving on a mobile device.”