There is trouble brewing at Bangalore-based mChek, one of the earliest companies in the mobile payment segment. Sources in the know said the company might have suspended operations.
Sources in the sector said the company had been going slow in operations for a year. Many of the partners Business Standard spoke to confirmed they were looking to end their tie-ups with the mobile platform company.
In a 2009 media update, the then chief executive officer, Sanjay Swamy, had said the company had a one-million user base. It also had the backing of venture capital (VC) firms Nexus Venture Partners and Draper Fisher Jurvetson. And, had raised $10 mn from VC firms in 2008 and 2009.
In 2009, mChek had entered a tie-up with Airtel and launched mChek on Airtel, on a voice platform, to allow users to pay Airtel mobile and fixed-line bills, recharge Airtel pre-paid and digital TV accounts, recharge Delhi-Gurgaon expressway toll tags, pay insurance premiums, buy gifts, tickets and shop using their mobile phones. But early this year, Airtel announced the launch of Airtel Money, like a mobile wallet, allowing similar services. mChek also had a tie-up with companies such as Tata Docomo, Visa, Mastercard, ICICI Bank, Standard Chartered and Essar.
That things are not well is evident from the company’s website. It has not been functioning properly. New customers and existing account holders cannot sign into their accounts or create a new one. Features like mChek download are not working and when clicked says ‘Service temporarily not available’.
The contact numbers available on the website are also not working. The only number that does work is of the head office in Bangalore but despite calling for two days, none responded. More important, customer complaints on social network Facebook have remained unanswered for months.
Attempts to get in touch with the company were futile. Tries to get Gautam Shiknis, the CEO, failed. An email to investor Nexus Venture Partners got no response. When contacted, Sandeep Singhal, co-founder, Nexus, said: “We do not comment on portfolio companies.”
When asked if Naren Gupta, on the board of mChek, could comment, Singhal said that as a policy, the company did not speak about portfolio firms. Requests to share any contact of mChek were also declined buy the VC firm.
According to Shiknis' interview to a magazine in 2011, the company had entered the financial inclusion area and applied for a banking coordinator licence. But a query to Nexus on whether it was undergoing any business change was not answered. An email to Mohanjit Jolly of Draper Fisher Jurvetson, another VC investor in the company, remained unanswered.
Meanwhile, several bank partners have become a bit impatient with the company's pace of work. Corporation Bank a partner, confirmed that operations with mChek since 2010 had not been up to the mark. “There have been no usage in the last few months. We are taking steps to end our tie-up with mChek,” said a senior Corporation Bank official.
A senior official from Bank of India also confirmed problems with mChek. “The bank will have to look for shifting customers (under the mChek tie-up) to some different arrangement. We are looking for another partner and are in the process of floating an RFP (Request For Proposal) for the process,” he said.
“mChek started really early as a mobile platform for payment. But like any other mobile application, customers found it a bit cumbersome. We did not see much traffic coming from their channels. More, the company did not promote its platform well. Add to this almost every bank has come out with their own application, and net-banking offerings,” said a senior executive of a company that had tied-up with mChek for mobile bill payment.
People in the sector say the exit of Sanjay Swamy in 2010 also took a toll. “For a start-up or a small company, the role of the CEO or founder is very important,” said an agency in a similar segment. Swamy, now chairman at Ezetap, a mobile payment company, said he’d not been with the company for almost three years and wouldn’t be able to comment on its operations.
After OnMobile, this is the second mobile-based business facing challenges on this scale in the Indian market. Though the OnMobile issue was management-driven, the numbers show that India as a market for mobile-value added services had not added to the company’s revenue growth. This is despite the fact that India has over 900 million mobile users.