National Payments Corporation of India (NPCI), a non-profit organization backed by Reserve Bank of India (RBI) has launched a full-fledged Interbank mobile payment services (IMPS) today. This service offers an instant, 24x7 interbank electronic fund transfer service initiated through mobile phones. In plain english, anyone having a mobile phone that is linked with a bank account can now access their accounts and initiate fund transfers and can receive immediate confirmations. Till now, the mobile remittances have been processed as a NEFT request and not as a RTGS request. Therefore, the transactions were not instantaneous and were processed in batches between 9 am to 7 pm in 2 hour intervals. The new solution IMPS will overcome the NEFT limitation.
NPCI has carried out a pilot project on this and have been working with 4 banking institutes such as SBI, Bank of India, ICICI and Union Bank of India. Now that the pilot is successful, NPCI is rolling this facility across 7 major banks with HDFC, Axis and YES Bank included to the above list. 22 more banks are going through pilot testing. So, how does this system work?
Customers have to register themselves for mobile banking service with their respective banks. Banks will then issue a Mobile Identifier (MMID) and a Mobile banking PIN (MPIN). Customers will then need to configure their mobile handsets by installing the banking application. If the bank supports IMPS over SMS, then the customer does not have to install a dedicated application and can just rely on SMS for banking needs.
How to transfer money?
Customers can transfer money through mobile phone only to those users who also have registered for IMPS with their banks. To send money, customer should input the receivers mobile number, receiver's MMID, the amount to be remitted and should validate the request with the MPIN. Once the transaction is successful, customer will receive a confirmation SMS containing the transaction details with the transaction number. Customer can then call up the receiver and confirm if he has received the payment.
There are possibilities for wrong credits under this approach. To solve this, each transaction will be validated using both the mobile number and MMID combination. This would drastically reduce the chances of wrong credit.
How does this work?
Once the sender initiates the request, the remitting bank validates the details of the remitter and debits his/her account. This particular transaction is then sent to NPCI by the remitting bank. NPCI in return would pass on the transaction to the beneficiary bank, which in turn validates the details of beneficiary customer and credits the corresponding account and sends confirmation back to NCPI and sends an SMS to the beneficiary customer informing him about the credit. NPCI relays the confirmation to the remitting bank and the remitting bank would relay the confirmation through SMS to the sender. The whole payment would be completed within 15-30 seconds!
What are the limitations?
A daily cap of Rs. 50,000 per customer per day is imposed and the limit includes both withdrawal and deposit. The transactions up to Rs. 1000 are processed without any encryption. Amounts beyond Rs. 1,000 would be facilitated through proper end-to-end encryption.
Banks will be offering IMPS to its customers for FREE until March 31,2010. Beyond March 31, the charges would be decided and fixed by the individual banks and we dont have much information regarding the same. But you can expect Rs. 0.25 per transaction as service charge. The customers will be just beairng the GPRS or SMS charges for every transaction. SBI has already enrolled 8.5 lakhs customers under this system and ICICI has enrolled 4 lakh customers into IMPS.
The beauty of IMPS is that there is no fixed timings or days to do the transaction. Holiday or no holiday, day or night you can transact 24x7.
So, next time you are in the road, you can just make the transaction through your mobile phone. Given the ubiquitous nature of mobile phone, every common man will hold a mobile handset with him. It might be your maid, your auto-wala, water-walla, flower-wala or vegetable-wala...that's the reach that mobile phone provides! Mobile payment is on!