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CoverStory
According to Miami-based Net Element International Seizing an opportunity in April 2012, U.S.-based Calpian
Inc., which launched TOT Money as a Russia-based sub- Inc. acquired significant ownership of Mumbai, India-
sidiary in 2012, the current situation in that country could based My Mobile Payments Ltd. and established Digital
bolster its business in that region. Net Element CEO Oleg Payments Processing Ltd., which does business with
Firer stated during a quarterly earnings call in May 2014 consumers as Money-on-Mobile. The stored-value service
that its business focuses on alternative payment systems allows Indian consumers to pay for goods and services or
operating outside the Visa and MasterCard networks. transfer funds from one cell phone to another using short
message service technology.
TOT Money uses a direct carrier-billing model whereby
the company bills mobile operators for customer usage More than one entity guided Calpian's acquisition. "The
outside the mobile networks. "For example, the consumer Reserve Bank of India issues detailed and thorough
could go online and buy content, and all they have to do regulations on what companies can and cannot do, so you
is put their cell phone number in, and we bill the mobile have to proceed with caution," said Harold Montgomery,
carrier, and then we settle out with the merchant or CEO of Calpian. "In addition, investment by foreign
content provider," Firer said. companies such as Calpian is governed by the Ministry
of Finance Foreign Investment Promotion Board," which
In 2009, Atlanta-based Global Payments Inc. acquired oversees many aspects of the acquisition process, he
United Card Service, a merchant acquirer and indirect added.
payment processor affiliated with Rosbank in Russia.
Global Payments declined to comment on recent Montgomery attributed Calpian's success to its partnership
developments in Russia. However, according to the with a strong Indian management and leadership team.
company's most recent financial statement, cash earnings Today Money-on-Mobile is available at 180,000 retail
from international merchant services, including Russia, locations, and growing, and has reached 10 percent of
rose 10.4 percent for the nine-month period that ended India's 900 million mobile phone subscribers, 98 percent
Feb. 28, 2014. of whom prepay for their phone services. There are
approximately 150 million mobile Internet connections in
When promoting mobile or any other commerce model India.
in Russia, it's important to understand very few Russians
carry debt. "Most of the mobile subscribers are top- Cash on delivery remains a dominant model in India.
up users," Firer said. "I think between the top mobile "We had a meeting with McDonald's of India that
operators in the country, it's over 200 million subscribers operates 250 stores in the northern region of India, and 50
and growing." percent of their business is home delivery, which is really
e-commerce if you think about it," Montgomery said. "You
Rising affluence among certain segments of the population call up a call center, order a meal and they put it on a
could change this dynamic. "I think Russians have woken motor scooter and send it out to you."
up to consumerism in a big way," said Mercator's Moudgal.
"They are one of the biggest spenders amongst travelers There are obvious financial risks associated with this
outside of the Chinese, Japanese and Germans, and they model. He believes that in the future a retailer-assisted
have money. A lot of it is oil wealth, but there is also new model could emerge in India resembling the Sears catalog
wealth that has come in." stores of yesteryear. In the modern era, customers will
order products at local stores via iPad, items will be
Patchwork India shipped to the stores for pickup and the store owners will
Within India's population of 1.2 billion, there are six major earn a margin on each order.
language groups and 110 distinct dialects spoken. In
March 2012, RuPay was launched as a national payment "India is an environment where most people do not have
card network by the National Payments Corp. of India. It a car or motorized transportation, so they're walking
now has about 20 million cardholders. everywhere," Montgomery said. "You need within a
quarter mile of where you live all of the goods and
"In India there are 30 million small to midsize merchant services that you need to function." For example, in India
businesses," Moudgal said. "It's a rapid-growth region it is common to purchase a cell phone and dinner plate at
and many companies have partnered with banks mainly the same retail location.
and have actually come up with solutions, but there's no
trust in leveraging electronic payments. Cash is still king Montgomery enjoys working the India side of his business
in India and even in China." Other hurdles mentioned and advises ISOs to seriously consider which regions are
include lack of infrastructure to deliver physical goods most attractive from a personal perspective due to the
efficiently, payment complexities due to fragmentation time commitment and the fact that there is no ready exit
and regulatory and tax restrictions. strategy.
40
According to Miami-based Net Element International Seizing an opportunity in April 2012, U.S.-based Calpian
Inc., which launched TOT Money as a Russia-based sub- Inc. acquired significant ownership of Mumbai, India-
sidiary in 2012, the current situation in that country could based My Mobile Payments Ltd. and established Digital
bolster its business in that region. Net Element CEO Oleg Payments Processing Ltd., which does business with
Firer stated during a quarterly earnings call in May 2014 consumers as Money-on-Mobile. The stored-value service
that its business focuses on alternative payment systems allows Indian consumers to pay for goods and services or
operating outside the Visa and MasterCard networks. transfer funds from one cell phone to another using short
message service technology.
TOT Money uses a direct carrier-billing model whereby
the company bills mobile operators for customer usage More than one entity guided Calpian's acquisition. "The
outside the mobile networks. "For example, the consumer Reserve Bank of India issues detailed and thorough
could go online and buy content, and all they have to do regulations on what companies can and cannot do, so you
is put their cell phone number in, and we bill the mobile have to proceed with caution," said Harold Montgomery,
carrier, and then we settle out with the merchant or CEO of Calpian. "In addition, investment by foreign
content provider," Firer said. companies such as Calpian is governed by the Ministry
of Finance Foreign Investment Promotion Board," which
In 2009, Atlanta-based Global Payments Inc. acquired oversees many aspects of the acquisition process, he
United Card Service, a merchant acquirer and indirect added.
payment processor affiliated with Rosbank in Russia.
Global Payments declined to comment on recent Montgomery attributed Calpian's success to its partnership
developments in Russia. However, according to the with a strong Indian management and leadership team.
company's most recent financial statement, cash earnings Today Money-on-Mobile is available at 180,000 retail
from international merchant services, including Russia, locations, and growing, and has reached 10 percent of
rose 10.4 percent for the nine-month period that ended India's 900 million mobile phone subscribers, 98 percent
Feb. 28, 2014. of whom prepay for their phone services. There are
approximately 150 million mobile Internet connections in
When promoting mobile or any other commerce model India.
in Russia, it's important to understand very few Russians
carry debt. "Most of the mobile subscribers are top- Cash on delivery remains a dominant model in India.
up users," Firer said. "I think between the top mobile "We had a meeting with McDonald's of India that
operators in the country, it's over 200 million subscribers operates 250 stores in the northern region of India, and 50
and growing." percent of their business is home delivery, which is really
e-commerce if you think about it," Montgomery said. "You
Rising affluence among certain segments of the population call up a call center, order a meal and they put it on a
could change this dynamic. "I think Russians have woken motor scooter and send it out to you."
up to consumerism in a big way," said Mercator's Moudgal.
"They are one of the biggest spenders amongst travelers There are obvious financial risks associated with this
outside of the Chinese, Japanese and Germans, and they model. He believes that in the future a retailer-assisted
have money. A lot of it is oil wealth, but there is also new model could emerge in India resembling the Sears catalog
wealth that has come in." stores of yesteryear. In the modern era, customers will
order products at local stores via iPad, items will be
Patchwork India shipped to the stores for pickup and the store owners will
Within India's population of 1.2 billion, there are six major earn a margin on each order.
language groups and 110 distinct dialects spoken. In
March 2012, RuPay was launched as a national payment "India is an environment where most people do not have
card network by the National Payments Corp. of India. It a car or motorized transportation, so they're walking
now has about 20 million cardholders. everywhere," Montgomery said. "You need within a
quarter mile of where you live all of the goods and
"In India there are 30 million small to midsize merchant services that you need to function." For example, in India
businesses," Moudgal said. "It's a rapid-growth region it is common to purchase a cell phone and dinner plate at
and many companies have partnered with banks mainly the same retail location.
and have actually come up with solutions, but there's no
trust in leveraging electronic payments. Cash is still king Montgomery enjoys working the India side of his business
in India and even in China." Other hurdles mentioned and advises ISOs to seriously consider which regions are
include lack of infrastructure to deliver physical goods most attractive from a personal perspective due to the
efficiently, payment complexities due to fragmentation time commitment and the fact that there is no ready exit
and regulatory and tax restrictions. strategy.
40
