Centre for Internet & Society

Customers will now be able to transfer money from their accounts to any other account in the country using their cellphones, through the National Payment Corporation of India's Inter-bank Mobile Payment Service (IMPS). The facility allows transactions without the need for a computer or an Internet-enabled phone.

Experts say the service introduces a new form of customer-friendliness that a developing ICT nation like India requires. The Telecom Regulatory Authority of India records more than 670 million registered mobile subscribers; with the penetration of Internet technologies through mobile phones being higher than the spread of the Internet through broadband connections, the service, they reckon, is expected to boost banking transactions better than Internet banking.

“Though the Internet banking services are user-friendly, they are actually restricted to a limited number of tech-savvy, English-speaking Internet users in the country. With the IMPS, the mobile phone, which is ubiquitous, becomes a handier device for the average user,” says Nishant Shah, director (research), Centre for Internet and Security.

The service provides an inter-operable infrastructure for banks to offer a real-time money transfer facility to customers through mobile phones in seven seconds, says A.P. Hota, CEO and Managing Director of the NPCI. The mobile fund transfers offered by banks and technology providers take 24 hours, and are allowed only if the sender and the receiver hold accounts in the same bank, a hiccup the IMPS seeks to overcome.

With mobile phone-based applications popular and more inclusive in their reach, Mr. Shah says, it might be not only more far-reaching to have banking services available through encrypted SMS systems, because it is a medium that people are familiar with, but also the application-based systems are going to benefit a lot of people, especially who live in areas with inadequate access to banking systems.

Citing South Africa and the Philippines where the IMPS has been successfully launched, experts say the banking and telecom sectors are equipped with the latest security measures for launching the service. With most banks now using a Java-based robust system which works on some kinds of phones and is supported by a limited number of Operating Systems, the system is said to have tried-and-tested security features with double layers of encryption. Hence, the responsibility of caution is more on the side of the user than on technology, experts say, citing cases of sharing of passwords, leaving phones unlocked and sharing of sensitive information with strangers as causes for financial crimes online.

Seven banks have already been offering the IMPS. Seven more are linking up through this network. Gradually, all 50 banks licensed by the RBI are expected to offer the service, which will be free of cost till March 31, 2011. 

Read the original in the Hindu

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