mChek Drives Financial Inclusion via Mobiles

8/8/2019 mChek Drives Financial Inclusion via Mobiles

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mChek drives financial inclusion via mobiles

India Blooms News ServiceKolkata, Dec 16 (IBNS) mChek, a leading mobile payment provider, and Swayam Krishi Sangam NGO, a

registered society that acts as a Business Correspondent intermediary for banks, have partnered to launch an

innovative model for cash-free microfinance for unbanked and under-banked customers.

Vikram Akula, Chairperson of SKS NGO, said, The poor i n India have few secure and convenient places tosave their money. The mainstream banks cannot reach these individuals, the poor must struggle with the high

costs and inherent risks of operating in cash. By using mobile technology and bringing banking services to

their doorsteps, we are truly extending financial inclusion to the unbanked across India.

Cashless payments using mobile technology offer us a powerful tool to increase security for loan officers who

today must carry large amounts of cash and are therefore the targets of robbery and violence, We also believe

that the efficiencies gained by using mobile payments instead of cash can one day enable SKS Microfinance to

offer better products and services to our members, added Akula.

Also commenting on the partnership mChek CEO Sanjay Swamy said, The vision of mChek is bring together

the eco-system of partners across the banking sector, banking service providers, as well as leading Telecom

Operator partners like Airtel and to serve the entire base of users right from Platinum customers of banks to

the unbanked and under-banked base - with one common product.

Transaction services for customers through this initiative include balance enquiries, deposits and withdrawals

at SKS NGO bank intermediaries, also known as business correspondents; a range of payment transactions

including payment to local kirana grocery shops, re -paying loans borrowed from microfinance institutions, as

well as re-charging prepaid mobile phone cards.

Things will always go wrong but that is the time, when people should trust you the most.

With this success mantra, Sanjay Swamy has made it big in the mobile payment service

industry. The CEO in conversation with Franchise India Media.

Shambhavi Anand (SA): Tell us about m-Chek.

Sanjay Swamy (SS): We are a mobile payment service provider. Our focus is to enable our

customers, to pay the bills through their mobile phones using their bank accounts, credit cards and

debit cards. Our key partners are the major telecom players and banks in India, namely, Airtel and

Tata Indicom; and ICICI, HDFC, SBI, Standard Chartered and others respectively.

(SA): What inspired you to take up this concept?

(SS): In 2003, I had come to India for a vacation, I inquired about the time from an auto driver and he

referred to the time displayed on his mobile phone to do the needful. That kept me wondering about

the impact of mobile telephony, as the incident happened when there were just 30 million mobile

phone users in the nation. So you can imagine the current impact and the future potential!

Since its advent in India, the mobile telephony has been booming, creating innumerable and various

kinds of opportunities. To leverage the benefits of the flourishing sector, we created a business model


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based on mobile telephony that was sustainable. Also, the Internet connectivity in the country has

been gradually improving; there could not have been a better option than clubbing the mobile phone

services and the Internet to form the basis of our service.

Looking from the consumers point of view, one might say that cash-based transaction, for paying a

bill, costs nothing. But they forget that it costs them their valuable time and energy, not to mention thetraffic jams and pollution that they endure during the process. I felt, there was a compelling need for

such a service.

(SA): How did you go about funding your startup?

(SS): m-Chek is a venture capital-funded company.

(SA): What challenges did you face as a start-up?

Given the space that we are in, consumer perception is very important. We deal with consumers

money so we need to be very careful and work hard for winning their trust, which is our biggestchallenge. We cannot afford to make mistakes. Security is the main concern and non-negotiable too.

But since our team comes from the security domain we are confident about it.

On the other hand, we work with partners, who are leaders with strong reputation in their domain. So

as they were putting a bet on us, we had to live upto their standards. However, over a period of time

we have been able to build both trust and reputation.

(SA): Considering the Airtel-m-Chek and now Tata-m-Chek relationship, how does the model

work?

(SS): We have a partnership model. They are challenging partners to work with. But the kind ofservice we provide, we needed to work with large companies. Big companies are able to appreciate

partners, who have unique things to offer. The model that we have is scalable and viable for both the

parties. We have been lucky enough to establish a relationship with some of the largest companies

not just in India but the world too.

What challenges do you expect to face in the future?

(SS): We have a competition with the cash-based method of payment. Mobile payment has to win

over cash-based transaction. Customers should say the mode of payment through mobile isthe best.

They should use m-Chek for everyday bills.

Our challenge is to realise this, rapidly. Like, today, when you meet someone you assume that the

person owns a mobile phone, likewise, there should come a day when you assume that people use

m-Chek. m-Chek should become a verb.

(SA): What are your future plans for the company?

(SS): Right now our focus areas are recharge, ticketing and some shopping. But we can have more

subscribers through adding more banking and telecom partners.


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The official added: We need to be very careful as defaults would be high. We do have a demand.

Still, we need to work out how to go about it. We are still working out the legalities ...and have

involved sector experts.

SKS will launch a pilot programme of home lending, but not in the next two-three months.

Home loans would be an extension of the consumer finance business of MFIs, who have already

gone beyond their traditional role by financing the purchase of mobile phones, water purifiers and

even refrigerators and are seeking to expand their product offerings to compete with commercial

lenders.

MFIs have built their success mainly on small joint liability loans that could range between

Rs10,000 and Rs20,000 given to community groups to earn a livelihood. Such borrowers lack

collateral and the credit history that banks require.

Home loans would be of a far bigger sizeup to Rs3 lakhand wouldnt qualify as livelihood loans

that are income generating and aid loan repayments. The risk of defaults is higher also because

the borrowers would be individuals and not groups.

Madura Micro Finance Ltd and Bhartiya Samruddhi Finance Ltd have launched pilot programmes by

giving home loans to around 100 customers each to gauge the viability of the business.

We are still in the process of judging the feasibility of this offering, said M. Narayanan, chief

executive of Madura Micro Finance, which is doing pilots in Madurai and Salem districts of Tamil

Nadu. Its not just about defaults. We have to doubly ensure that all documents are in place and

insist on proper credentials. We also need a guarantor,

The firm offers loans of Rs50,000 for home renovation and repair and Rs1 lakh for buying or

constructing a house. To attract customers, Madura Finance is offering these loans at lower rates

than group loans. While its lending rates for self-help groups are in the range of 18-21%, it is

offering housing loans at 18%.

Bhartiya Samruddhi, part of the Basix Group, is offering home loans that have a duration of five-

seven years, and the firm insists on collateral. The need (for home loans) is huge. However, in

this business defaults could be as much as 2%, said S. Ramachandran, chief financial officer.

MFIs attribute their huge success to default rates as low as 0.01%.

Some MFIs are considering partnerships for entering this segment. Bangalore-based Ujjivan

Financial Services Pvt. Ltd is in talks with a national housing company for a tie-up. Once the tie-up

is in place, the firm will give home loans on an experimental basis. For Ujjivan, which is already

offering loans for leases, rents and home improvement, home loans would be a natural

progression.

There are a few companies set up for offering micro housing loans and they want to work with us

for extending such loans to our customers. We are looking at this, its all in early stages of it, said

Samit Ghosh, chief executive officer.

In their bid to lower risks, MFIs are looking at adopting technologies that would help in eliminating

cash from the system.


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Bangalore-based mChek India Payment Systems Pvt. Ltd and Grameen Koota microfinance

institution are running a pilot to implement mobile payments in the micro-credit sector, which will

help reduce disbursement and collection costs significantly.

Experts say MFIs are being prudent by adopting caution in entering the home loan business, given

their lack of experience in the segment.

MFIs can look at managing and sourcing portfolio for other lenders like housing financial

companies, non-banking financial companies and banks. MFIs can source loans for customers and

help service these to gain experience in this kind of business, said Viren H. Mehta, national

director at consultancy firm Ernst and Young India.

mCheck Mobile Payment System for ICICI cardholdersBy Ankit Sharma

May 28, 2009

In a customer-oriented move, India's second largest bank, ICICI Bank announced a technical tie-

up with the Bangalore based mChek, to provide mobile payment services to its debit and credit

cardholders.

Sachin Khandelwal, senior general manager, ICICI Bank, said, "Our association with mChek will

offer our credit and debit card customers yet another secure and safe option of conducting hassle

free transactions online".

Under the service, the customers would be issued encrypted electronic cards for storing these in

their mobile phones. These mChek VISA Credit/Debit cards can be used for various performing

card-based transactions like buying air travel tickets, utilities pay payments, prepaid mobile

recharges, pay insurance premium, money transfers, book movie or other merchant transactionsdone using debit or credit cards.

Sanjay Swamy, CEO, mChek said, "We are pleased to launch with ICICI Bank, this association

hugely expands the transaction environment for both ICICI Bank and mChek. ICICI Bank

customers now have the convenience of doing transactions from their mobile phones anywhere,

anytime and with banking grade security."

mChek is a secured mobile payment technology that enables mobiles users to access credit cards

on their mobiles. The technology is PCI DSS 1.2 and ISO 27001 certified and has been approved

for adoption by the leading international electronic payment network, Visa International for its

merchants. It was awarded the "Best Billing and Customer Care Solution" by GSM Association at

2008 Mobile World Congress.

The mchek service can be activated on mobile phones simply by sending an SMS MCHEK to

5676709.

mChek Drives Financial Inclusion via Mobiles

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