Missed call money: a mobile phone based system to facilitate payment of small coin change in India.

Author:Ghatge, Uday


The shortage of small coin change in India over the last decade has been primarily triggered by an insufficient supply and mass blocking of coins by a black market. The shortage results in significant loss for businesses which pay premiums to procure coins, and for customers when business owners return 'goodies', e.g. candies to the customer instead of small change. This paper presents "Missed Call Money" (MCM),a concept of mobile phone based 'coin wallet' to overcome this economic problem in India. Merchants as well as consumers would sign up for MCM so they can make small coin payments using a unique, secure, and easy to use mobile based solution. A survey was developed and administered to customers and retail merchants to test acceptance of such a system, and showed positive attitudes towards adopting MCM.

Keywords: Mobile Computing, Service Science, Cloud Computing JEL Classification: E1, F1


The Reserve Bank of India (RBI) is the primary banking authority in India. RBI decides the volume and value of new banknotes to be printed and coins to be minted every year. The quantum of new banknotes and coins depends broadly on the demand for banknotes due to inflation, GDP growth, replacement of soiled banknotes and reserve stock requirements [RBI, Currency FAQs, 2013], RBI submits indents to the Government of India, which then decides on the quantity of new bank notes and coins. RBI reportedly mints adequate coins every year, but there is a discernible shortage of coins in the market across the country. Several steps have been taken by the RBI to augment the supply of coins and banknotes, viz., modernization of mints and printing presses, importing banknotes and coins, and launching campaigns for coin exchange to the public. An annual report of 2007 indicates that coins worth Rs. 8,021 crores were in circulation as compared to a value of Rs. 4,96,138 crores in the form of banknotes. [RBI Annual Report, 2007],The value of the coins in circulation as of 2007 therefore constitutes only 1.61% of the total amount of banknotes in circulation, demonstrating an acute shortage of coins. As a result of this, mass booking of coins by agents has taken place and coins are being sold at a premium of anywhere between 1.5-15%, depending on the demand and denomination of coins.

Black marketers in India have exploited this situation and established a parallel economy by procuring coins through various channels. Coins are being sold at a premium of anywhere between 5-15%, depending on the demand and denomination of coins. [Chitlangia, 2011]. The severe dearth of coins in busy markets of metro cities has forced business owners to procure coins at even higher rates (e.g. purchasing coins worth Rs. 100 for anything between Rs. 120 and Rs. 150)[Sharma, 2012]. Many traders and business owners have voiced their opinions to banking authorities for creating a substantial circulation of coins in the market, as this shortage of coins has led traders to procure coins from temples, beggars and other sources [Lakshmi and Ramakrishnan, 2013],Some banking authorities have also organized coin exchange fairs [Times of India, Coin Fairs, 2012] to help business traders. This problem has persisted for the last many years and this situation has ended up encouraging black marketers to continue functioning. There is no indication even from authorities like the RBI on whether such agent based business is legal, leaving open questions of such magnitude.

The retail market in India is reported to be one of the top retail markets in the world by the Global Retail Development Index [A.T. Kearney, 2013]. The retailer spectrum is very broad, ranging from small groceries (owner staffed and operated) to large supermarkets. A recent study [Accha, 2013] revealed that larger format stores and supermarkets accounted for about 4% of the industry, giving an indication of a very high percentage of the total number of smaller, owner operated stores in the country. In addition to this, the larger format stores are located in urban destinations. The total number of such 'un-organized stores' (i.e. non-chain kirana stores, grocery, chemists, paan shops, food stores etc.) has reached almost 9.8 million according to another study. Over 85% of the overall trade in the country is conducted through these independent local stores [Deloitte, 2010] .Considering that most of the transactions in these stores are cash-based, these numbers suggest that a very high volume of coins need to be circulated in the market.

The transactions at these independent local stores range from bargaining for items to delay in payments by customers. From a customers point of view, it is a nuisance to carry large number of coins everywhere, making the wallet heavy, clumsy and unaesthetic. With a younger demographic, it has resulted in consumers carrying only banknotes instead of coins, making certain transactions of 'odd' values complex. During such transactions, customers often get away by not paying the 'odd' value, which otherwise could have been paid using coins. For example, if a customer has to pay Rs. 10.45, he or she may just end up paying Rs.10 due to not carrying any change. On the other hand, due to an acute shortage of coins, the business owner may not have enough change to return Rs. 0.55 to the customer. In either case, the business owner may have to bear the loss. On the other hand, if the business owner owes a petty amount to the customer, the business owner may end up giving 'candies' of that amount to the customer. This substitution, however, is not well appreciated by customers.


With advances in technology and banking practices, non-cash payment systems have reached a new height. We have already seen credit and debit cards cement their place in payment systems, however there are new initiatives from a technology standpoint that enable cashless payments. Despite the majority of population of India being rural, the country is undergoing a significant transformation triggered by digital technology. The primary cause of this shift is the adoption of digital technology, in particular the adoption of mobile telephones / smart phone devices by urban and suburban demographics, and is slowly percolating to the remote areas.

Cashless payments are slowly paving its way in the Indian economy. Despite cash based payments being predominant in the market, RBI is taking measures to implement and promote cashless payments in India. India's cash based payment culture is evident from the value of bank notes and coins that are in circulation and was at high percentage of 60.07 in 2009-2010, as compared to 39.14 per cent...

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