Mobile-banking gets RBI okay

MUMBAI: Mobile phone owners in the future will be allowed to transfer
funds from their accounts to other mobile phone owners across networks
and service providers. This is what the Reserve Bank of India's (RBI)
draft operating guidelines for mobile payments aim to achieve.

As per the draft, even those with the most basic mobile phones may be
able to pay for transactions through their mobile in the future. RBI
has permitted the use of SMS-based mobile payments for small
transactions up to Rs 1,500 in its draft.

The central bank has mandated that SMS be used for small-ticket
payments up to Rs 1,500, thus making it possible for even the most
basic mobile phone to be used for m-banking . It has also asked banks
to make their mobile-banking services available across all phone
networks.

Further, RBI has said that the long-term goal of the mobile-payment
framework in India would be to enable funds transfer from and account
in one bank to any other account in any bank on a real time basis,
irrespective of the mobile network the customer has subscribed to.

Banks have evinced considerable interest in the m-payments space over
the past couple of years and the top players have already rolled them
out. However, most of these are restricted to certain mobile-service
providers or to high-end users with GPRS-enabled instruments. The
central bank's move of making the m-payments space operator-agnostic
is being perceived by many as an attempt to broadbase the service.

Meanwhile, payments service providers have applauded RBI for its
proactive stance on the issue. "It is a very positive step from the
regulators, which shows their support for the initiative. They have
clearly spelt out the roles of each of the players, with enough scope
for flexibility ," said mChek CEO Sanjay Swamy. Paymate founder and
managing director Ajay Adiseshann said, "The guidelines come at the
right time for the industry. Also, the fact that small-ticket payments
will be encouraged is a positive."

The central bank has suggested that banks issue a separate mobile-PIN
which will be completely different from the internet banking
passwords. It has also suggested that the possibilities of dual-factor
authentication and one-time passwords be looked into. However, there
is some concern over the SMS channel being used for payments, since it
is often unreliable and prone to tampering.

The guidelines also recommend that banks do not compromise on their
knowyour-customer and anti-money laundering guidelines. It has also
been recommended that banks explicitly state the risks to the customer
and also get them to sign a contract before the service is adopted .

This is a move which m-payments service providers feel will act as a
deterrent to rapid adoption of the service. Banks that have already
started offering mobile banking services to their customers have also
been given three months to comply.