Paper
Pricing for EM Banking
The importance of designing a relevant pricing scheme for mobile banking in India
2 pages
This Note discusses customer perceptions of key pricing issues that banks consider while implementing agent-based banking. It discusses pricing when a bank is planning to extend its offerings using alternative channels like agent-based banking in addition to conventional banking channels. It analyzes the outcomes of different ways of pricing new channels.
One of the most debated pricing issues is whether to charge a flat rate irrespective of transaction value, or a percentage of the total transaction value. Conclusions include:
- There is no one successful pricing scheme in the mobile banking (m-banking) landscape;
- Pricing schemes can vary from discounted m-banking services to charging customers differently in different channels;
- Pricing m-banking services can be very challenging in a price sensitive market like India, where traditionally banking services have been offered for free;
- Method of calculating commission plays an important role in molding customer perceptions and earning revenues for the implementing bank;
- Pricing schemes should be relevant to the traditional banking context and should take local socio-economic and cultural perspectives and norms into consideration.
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