Business Overview India has now become the third largest card market for VISA international in Asia-Pacific,

after Japan and South Korea. But total spending on cards account for only around 1% of the countrys personal consumption expenditure. The Indian middle classes tend to view credit cards as a potential debt trap, and increasing the acceptance of credit cards among the middle class population is a major task for the financial card companies in India. With many banks closing inactive and unproductive accounts in their credit cards portfolio, the total credit card base in India has shrunk to about 2.2 crores by March-end 2010 compared with 2.47 crore as of Marchend 2009. Credit card issuers are likely to remain hesitant in issuing new cards due to the increasing delinquency rate in the country.

The credit-averse nature of the Indian consumers has given a tremendous boost to the debitcum-ATM card segment, while the number of credit card holders has lagged far behind. Debitcum-ATM cards are mainly used for cash withdrawals at ATMs. With banks going slow on their credit card business due increasing delinquency rate, debit card usage in the country has been rising. Payment for purchases made through the debit card has been outpacing the payments through credit cards. As per the RBI data for the first seven months of the 2009-10, payments made through debit cards recorded over 80% growth over the total transactions in the last fiscal and the value of debit cards payments is 84% of the value of total transactions during the entire fiscal year 2007-08. During the period between April and October 2009, the debit cards transactions are recorded for nearly Rs 10,500 crore where as during the entire fiscal 2007-08, these transactions were around Rs 12,500 crore. On the other hand, the transactions made through credit cards were nearly Rs 40,000 crore as compared to Rs 58,000 crore worth of transactions made during the entire fiscal year 2007-08. Prepaid cards is another category that is catching on well amongst the middle class Indian population, since prepaid cards allow them to spend in accordance to the prescribed limit. The next big thing in the payment instrument industry seems to be mobile payments where in the customer would be able to store virtual money on his mobile phone (M-wallet) and pay at

designated merchant outlets. This is largely being termed as Mobile commerce or Mcommerce. The telecom companies would play a major role in this industry as they are directly in touch with the end customers. But the telecom companies cannot carry out lending, borrowing and m-commerce activities without being regulated by the Reserve Bank of India. This is because the Finance Ministry is apprehensive that mobile operators, after collecting the money from people for m-commerce, could start earning revenues on it by acting as money lenders and that too, without being regulated by the RBI. The success of all card issuers credit, debit, prepaid, M-wallet continues to lie in increasing the number of transactions, and as such, there have been aggressive efforts by the companies to encourage retail outlets to install POS terminals. These outlets would then become Merchants who accept payment instruments. There are companies that specialize in acquiring these merchants and installing POS terminals at their end. Given the industry scenario, all players are aggressively thinking of alternate means to acquire retail merchants.

Industry Overview Telecom companies are planning to enter the mobile commerce industry by issuing mobile wallets to their customers. One critical aspect of the planning stage is to determine and finalize a merchant acquisition strategy. Although the telecom companies have a huge distribution setup, the RBI regulations do not allow them to convert each and every existing outlet into a mobile wallet accepting retail merchant. The guiding principles for telecom companies for acquiring merchants are 1. Ubiquity In a given geography (city, state), mobile wallet accepting merchants should be within reach for all customers i.e. extensive distribution. 2. Merchant categories This instrument should be accepted at all types of outlets kirana shops (FMCG), chemists, food joints, shopping malls, retail chains etc.

3. Regulations The merchants would be bound by an agreement with the telecom companies. The same would have regulations regarding settlement, chargebacks, refunds etc. Business case A leading telecom company is working on launching a mobile based payment instrument using which the customers would be able to store virtual cash on their mobile phones and spend at designated retail outlets. Market studies reveal that the early adopters of this product would be from the age group of 18 -30, and the most efficient channel to reach out to them is the internet and mobile. The company intends to engage its prospects and customers in conversations, creating awareness about the product and driving usage. Keeping in mind the target groups consumer behavior and the available internet and mobile tools for communication, you are expected to propose an online marketing strategy for this company. The following points have to be kept in mind 1. 2. 3. 4. 5. Strategy to be rolled out on a national level Strategy has to be sustainable and not a one-time activity. Need for customer segmentation, if any Strategy should drive usage in terms of no. of transactions and value The online platform, should engage the customers and allow the merchants to

communicate their offerings 6. Roll-out strategy must also be included, with timelines given for each activity