Visa has scrapped its joint mobile payments venture with banking platform Monitise, as Indian telecommunication companies refused to share their network with the card giant.
Refused access
To tap into the growing mobile payments market in India, Visa started to collaborate with Monitise PLC UK in 2012 on a scheme called Movida India.
Leveraging Monitise’s technology and Visa’s extensive knowledge in the payments industry, the company looked to ‘‘establish mobile handsets as the core device for making electronic payments.’’
Visa had already gained support from ICICI and HDFC, two of India’s largest banks to launch the project nationwide, but failed to secure backing from telecommunication firms. The card company had been in negotiations with the Reserve Bank of India, government officials and telco groups to use India’s Unstructured Supplementary Service Data (USSD) platform.
The USSD channel is a mobile network system that allows users to check their bank balance, transfer funds and to purchase items online.
Legal repercussions
According to India’s Economic Times, telecom companies refused to share their access to USSD with Visa, forcing the card company to pull out of the country.
‘‘It happened at a time the mobile companies themselves were emerging as serious players in the mobile banking space,’’ an insider source told India’s Economic Times
‘‘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).’’
The companies that have refused Visa access to USSD may feel some legal repercussions. India’s 56th amendment, the telecommunication tariff, states that telecom groups are ‘obliged’ to grant admission to offer connectivity to any payments aggregator that has been allowed to use the USSD channel.
‘‘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,’’ ended the source.
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