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Top three predictions in the mobile payments space for 2014

Mobile has been one of the most talked-about technology verticals and continued to see innovation in 2013. New companies emerged in India and explored opportunities in this space that changed the way people lived and interacted. Some of the applications where mobile is already making life easy include doctor's appointments, restaurant booking and air/bus ticket bookings, among others. However, the most significant impact going forward would be felt in the payments side.

This is evident from the fact that global players like Fortumo and Boku have recently announced expansion into India with an aim to tap the massive opportunity in a country where few people have bank accounts but many more have a mobile connection. In short, if exploited properly, India could be sitting on the cusp of a revolution in mobile payments.

Techcircle.in talked to a few industry experts to see what is in store for the year 2014.

Companies providing easier P2P money transfer will gain traction: Jitendra Gupta, co-founder and CEO, Citrus Payment

In the coming year the Indian market is going to see lot of wallets being pushed to consumers. I am already seeing many wallet companies getting active in the market over the past couple of months. These companies are spending huge amount of money to acquire consumers. However, the ultimate winner will depend on adoption.

I also feel that the P2P money transfer can be made much simpler. I see a lot of scope for this, as it has already been successfully experimented in the US by Paypal, Square and Dwolla. As of now, it is very complex in India and the process involves almost four-five steps before one can pay. I believe that a company which can improve the experience of money transfer between individuals will gain huge traction.

Mobile operator billing will emerge as the default payment system for digital goods: Sanjay Sinha, head, Fortumo India

In markets like India where the number of credit card users is very less, operator billing has proven to be one of the best ways to collect online payments from users. Mobile payments work well for buying virtual and digital goods such as games, e-books, music and video. So, the next logical step is to use operator billing for micropayments for physical goods such as ordering pizza or a taxi, buying flowers or movie tickets. Mobile payments already provide a one-click payment experience which has much higher conversion than credit cards. For physical goods, additional capabilities of phones could be utilized as well. For example, by ordering takeaway food to your home, you could not only confirm the payment but also send data about your location to the merchant for a quicker delivery experience.

However, there are several challenges related to implementing mobile payments in the physical world that include commercial terms set by the operators, legal regulations and how merchants would be connected to end-users. But the size of the market makes it attractive to any operator billing provider.

Anyway, the explosion of mobile internet is leading to an unprecedented growth in mobile transactions and thus to mobile payments. It's a no-brainer that mobile payments will be a dominant payment system in India. But I would like to add that the growth of mobile internet would outpace the growth of banking based e-payment systems in short or medium term. Therefore, mobile operator billing-based payments will emerge as the default payment system, at least for digital or virtual goods.

Now examine the mobile payment system from the perspective of consumers and merchants, the key stakeholders. What consumers want is perhaps ease of use and security. Above all this, pricing must suit their wallet. And what merchants want is higher revenue share and a shorter payment cycle. Meaningful innovation for the future will be driven toward these needs. Personalized pricing, secure universal one-click payments, higher revenue share, weekly or fortnightly payment cycle for merchants, and not to mention purchase of physical goods, are some future innovations that I can foresee in operator billing-based mobile payments.

Aadhaar integration to happen in 2014: Alok Mittal, managing director, Canaan Partners 

From an India standpoint, enabling mobile payments (micropayments through operator billing and e-payment through National Payments Corporation of India) is still nascent and that should gain maturity. The interesting play there would be with Aadhaar or UID integration, which can simplify mobile payments.

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