A brutal reminder of how convoluted and treacherous mobile cross-borders are today was shared by Paytm on Friday (June 10). That’s when the Alibaba-backed wallet said that it can’t be used for overseas payments based on current regulations, requiring instead that wallet users pay in Indian rupees.
“The firm issued the clarification via a newspaper advertisement and said it is providing the update for usage of Paytm on Uber through tie-up with Alipay,” according to a report in The Hindu.
“While the mobile technology can create lower cost and friction free alternatives for cross border small value payments, the same is subject to licensing under FEMA (Foreign Exchange Management Act, 1999). Any cross border payments services by the payments bank will be offered subject to FEMA authorizations and RBI approvals. As such, the current Paytm Wallet cannot be used for overseas payments,” the Paytm statement said. “As per the existing authorization, the wallet can only be used in India and any impression that the existing Prepaid Payment Instruments (PPI) semi closed wallet can directly used offshore/for cross border transactions is unintentional.”
Let’s be clear. Paytm is no slouch among mobile wallets and it’s backed by Alibaba—the multinational’s multinational. If Paytm and its partners can’t navigate payments from country to country, that’s frightening.
This is a huge issue. In the near term—say perhaps one year—mobile wallet users will be tolerant. After all, the cellular switchovers are still far from perfect in many geographies, meaning that China shoppers visiting Russia or U.S. shoppers visiting Italy still expect to sometimes have to make special arrangements for data and calls. That buys the payments community some forgiveness time.
But by early 2018, frictionless movement across borders will set expectations of equally easy payments—and in a convenient currency. On Tuesday (June 14), Juniper Research reported its latest projections on international remittances—including a lot of mobile transactions—and projected it to top $25 billion by 2018.
That seems low, given that its’ barely 67 percent more than last year’s $15 billion. Juniper “found a significant upsurge in international remittance activity in the past 2 years with a number of cross-border mobile remittance services being deployed. For example, PayPal-owned Xoom announced in April 2016 that it will expand its services to 13 new recipient countries,” the research house said in a statement. “It found that international mobile money transfers are forecast to grow in frequency in all regions as users become more accustomed to using the service. Higher value transactions are also forecast, going forward.”
That is also tiny compared to the potential for mobile shopping. And, yes, it’s still likely that the vast majority of transactions (true mobile shopping) will stay within the borders of the shopper’s country for most developed nations. Mobile, however, is an enabler, similar to how the Internet itself has proven to be a huge enabler. That means shoppers in regions that have good shopping resources will easily—in theory—be able to cross virtual borders and make purchases All we have to do is make sure that we allow them to pay for them at the end.