Opportunities For Financial Inclusion Via Mobile

Payment Systems In a Developing Country

By
Prof.Sri Ram Khanna
National Consumer Helpline University of Delhi ,India
and Managing Editor ,Consumer Voice

Opportunities For Financial Inclusion Via Mobile

Payment Systems In a Developing Country
Financial Inclusion is the availability of banking and other Financial
services at an affordable cost to disadvantaged and Low Income Groups
who are outside the financial spectrum.
Financial inclusion mainly focuses on the poor ,illiterate or socially
disadvantaged who do not have formal financial institution support and
getting them out of clutches of local money lenders.
No Bank Accounts
No Cheque Books
No Credit Cards
No Debit Cards
No existence for banking end Institutional Finance system, not eligible
to get institutional finance.

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IS Money Transfer by Mobile Phone the New Magic Bullet?

Technology is accelerating access to money transfer and helping the

informal to „formalise‟.Recently,telecom service operators have started to
help clients to send money home via text messages.

If the receiving household does not have a bank account,then the
remitted sum can be converted into pre-paid debit card that can be used
to make purchases.

Alternatively ,a line of credit can be opened at local stores with

password protection operating through SMS.Thus the particular
circumstances of African development –namely money transfers over
long distances ,Lack of „bricks and mortar' banking infrastructure but
ready availability of mobile telephony –have led to the evolution of
„branchless banking‟,in which Africa is leading the way.

IS Money Transfer by Mobile Phone the New Magic

Bullet? (Example Of Kenya South Africa/)
Safaricom in Kenya introduced M-Pesa in March 2007 with initial support
from DFID‟s Financial Deepening Challenge Fund.The service provides an
SMS –Based ,Low Cost ,person to person money transfer facility ,which
also allows the user to purchase pre-paid goods and services (such as
mobile top up time and utilities).
It has seen subscribers increase from around 100,000 at its launch to
more than 7 million by August 2009.During that time M-Pesa has moved
some 130 billion Kenyan shillings ($1.7 billion).The average transaction is
just over$20 but the volume has now risen to $2 million per day.
South Africa‟s MTN recently announced plans for a fully fledged bank
account on mobile phones,with an optional credit card.The service will be
extended to the 20 countries where MTN operates ,including Uganda
,Nigeria ,Cameroon and Cote d‟lvoire which combined have over 90 million
mobile phone users.

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 IS Money Transfer by Mobile Phone the New Magic Bullet?
(The Philippines Way)

In the Philippines ,Smart Communications and Globe Telecom have over 2.5 million
active users of mobile money services combined,and offer the equivalent of small
scale transaction banking to a total of 5.5 million customers.
FINO(Financial Information Network and operations) ,a technology provider offering
various financial services on behalf of banks ,reached 5.8 million poor clients with in
two years.
The Success of mobile banking is attributed in large part to cost reductions.
In the Philippines ,where the adoption of mobile banking has been particularly rapid
,the level of mobile phone penetration (49%)significantly exceeds banking
penetration(26%).
In the other Asian countries ,however,the levels are reversed (15% and 32%
respectively in Bangladesh for example).
Mobile Operators in the Philippines such as Smart and Global Telecom /GXI have
been allowed to design.market and extend payment and transfer services to the mass
market in the way that traditional banks have not done.

IS Money Transfer by Mobile Phone the New Magic Bullet?

(Examples of Pakistan/Bangladesh )

Costs savings Transactions costs through a Filipino Bank are$2.50 per item while through a
mobile phone the cost to the bank is $0.50.It costs 30 times more to set up a bank branch in Orangi
Slum,Karachi,Pakistan than setting up an agent to manage branchless transactions electronically.

 In 2009, Telenor Pakistan (a leading telecom operator in the emerging economy) purchased a
majority stake in Tameer Microfinance Bank in order to introduce the branchless/mobile banking
platform named Easy Paisa or Easy Money.

Indeed Reports have suggested that Tameer bank in Pakistan has decided not to open any more
branches outside of major cities.It has been claimed that millions of subscribers of one of the top
three mobile operators will ,with in a short time ,become accounts holders at Tameer.Yet those
customers may rarely visit a Tameer branch,if at all.

In the boat markets of Bangkok one can make payments through charged cards provided by
mobile operators.Other example could be Bangladesh‟s „Gramin Phone‟ working on same principal

3
 Table2 Wireless and wire line subscriber growth
1998 to 2009 in INDIA

Source: - TRAI, press release,(press release no 54, 60, 89/2008, 16,

38/2009)
7

Relevance and Potential of Mobile Money in India

Mobile Money is a term describing the services that allow electronic money
transactions over a mobile phone.It is also referred to as mobile financial
services ,mobile wallet and mobile payment.
Mobile banking :use of a mobile phone to remotely access a bank
account,primarily for account balance check up and bill payment services.
Mobile money transfer (remittance)-a peer to peer application making use
of a mobile phone to send money to a family or friends,primarily across
international borders.
Mobile Commerce(payment)-use of a mobile phone to perform financial
transactions for purchase or sales,either remotely or on –site ,retrieve
promotion information or coupons,and deliver gift items.
Mobile Banking Mobile
commerce(payment)
Stock trading,bill
payment Train fare,parking,shopping

Mobile banking
Inter account fund transfer
/account enquiry
Mobile money
transfer(remittance)
Stock trading,bill
payment

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 Relevance and Potential of Mobile Money
Mobile Phones as a delivery channel for extending banking services have
off late been attaining greater significance.
The rapid growth in users and wider coverage of mobile phone networks have made this channel an
important platform for extending banking services to customers.With the rapid growth in the number of the
mobile phone subscribers in India:
The number of telephone subscribers in India increased* to 621.28 million at the end of March 2010 from
600.98 Million in February –2010,thereby registering a growth rate of 3.38% with this overall Tele-Destiny
in India reaches 52.74
Total Indian Telephone Subscriber base reaches 621.28 million
Wireless Subscription base reaches 584.32 million
Wire line subscription remains at 36.96 million
20.31 Million new additions in wireless
Broadband subscription is a mere 8.75 million
banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of
banking services.

(*As per Press release from Telecom Regulatory Authority of India data as on 31st March
2010)

Fewer Bank Accounts than Mobile Users In India

In India the banking system is still not much accessible to all the population
,as till now only 34% population are able to use banking services and still a
large pool of people are not able to access the banking facility.

Mobile Banking Services are being actively used by miniscule number of

the mobile subscribers today.Services that are most popular today include bill
payments,telco recharge,insurance premiums,donations to charity,movie and
travel ticketing.The stage is now set for money transfer to become a key
service too.
As Reported by Banks 2,47,093 Customers have Registered as on
Feb,2010 For Mobile Banking Services offered.

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5
RBI-Central Bank’s Policy on Financial Inclusion led to a few key
developments :
NO-Frill Accounts :In November 2005,RBI asked banks to offer no –frills savings
account which enables excluded people to open a saving account.No Frills account
requires no(or negligible)balance and is without any other facilities leading to lower costs
both for the bank and the individual. A report by Skotch Development Foundation said that
25 million no-frill accounts were opened between April 2007 and May 2009.
Simple KYC Norms:In order to ensure that persons belonging to low income group
both in urban and rural areas do not face difficulty in opening the bank accounts due to
procedural hassles ,the KYC procedure for opening accounts has been simplified for those
persons who intend to keep balances not exceeding $1,127(INR 50,000) /-in all their
accounts taken together and the total credit in all the accounts taken together is not
expected to exceed $2,254(INR 1,00,000) in a year.
Easier credit Policies :Banks have been asked to consider introducing General
purpose credit card (GCC)Facility up to Rs25,000/- at their rural and semi urban
branches.GCC is in the nature of revolving credit entitling the holder to withdraw up to the
limit sanctioned

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Usage of Regional language :The banks were required to provide all the material
related to opening accounts ,disclosure etc in the regional language considering that
India has over 20 official Languages.

Other Rural Intermediaries :Banks were permitted in January 2006,to Use other
rural organisations like non governmental organizations,self help groups,micro finance
institutions etc for furthering the cause of financial inclusion.

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6
June 2008 -Reserve bank of India had set up the Mobile Payments
Forum of India(MPFI),a working group on Mobile Banking to
examine different aspects of Mobile banking (M-banking).On the
basis of the recommendations of the MPFI ,RBI has issued
guidelines for implementation by banks.

Guidelines Focus on these areas:

(1)Technology and Security issues
(2)Business Issues
(3)Regulatory and Supervisory issues

September 2008-RBI has issued revised guidelines

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Main Highlights of RBI Guidelines (As on Oct,08,2008)

To ensure inter-operability between banks and their mobile service providers,banks have
to adopt the message format like ISO 8583,with suitable modification to address specific
needs
 A per transaction limit of Rs.2500 /-shall be imposed on all Mobile Banking transactions.
Subject to an overall cap of rs5000/-per day per customer.
Banks wishing to provide mobile banking services shall seek prior one time approval of
the Reserve Bank of India, by furnishing full details of proposal.
For channels which do not contain the phone number as identity, a separate login ID and
password shall be provided to ensure proper authentication, Internet Banking Login IDs and
Passwords shall not allow to be used for mobile banking.
Banks offering mobile banking must ensure that customers having mobile phones of any
network operator is in a position to avail of the service.Restriction, if any, to the customer of
particular mobile operator(s) is permissible only during the initial stages of offering the
service, up to maximum period of six months to review.
 Banks shall put in a place a system of document based registration with mandatory
physical presence of their customers, before commencing mobile banking service.

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7
 Recent Initiatives by RBI

Revised Guidelines As on Dec24,2009

Transaction Limit:
 Banks are now permitted to offer this service to their customers subject to a daily cap of rs50,000
per customer for both funds transfer and transactions involving purchase of goods and services
Technology and security standard:
Transactions up to Rs1,000 can be facilitated by banks without end to end encryption.The risk
aspects involved in such transactions may be addressed by the banks through adequate
measures.-The RBI has stepped away from the specifying implementation and given the
responsibility and flexibility to the banks.
Remittance of funds for disbursement in Cash:
In order to facilitate the use of mobile Phone for remittance of Cash ,banks are permitted to
provide fund transfer services that Facilitate transfer of funds from the accounts of their customers
for delivery in cash to the recipients.
The disbursal of funds to recipients of such services can be facilitated at ATM‟s or through an
agent appointed by the bank as Business Correspondent.

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Local Shops to Operate as Bank

Banks have been prodded to open a no frill accounts,and to appoint” business

correspondent”in areas where the size of and volume of transactions are too small to
justify a branch. Reserve bank of India allows banks to appoint the local Grocery
/medical/fair price shop as a “business correspondent”.
Potential Customer can go to these neighborhood places and operate their bank
accounts,typically with a mobile phone interface that works at negligible cost.
Typically a customer would deposit money with business correspondent who would
then send a short message (SMS)to the bank :in some cases ,a receipt is issued.The
bank in turn ,messages the customer directly .At the other end ,the person who is getting
the money either go to the bank branch or to the business correspondent closest to
him/her to withdraw the money ,and the SMS routine gets repeated.
Example :A domestic help working in Bangalore spends Rs200($4.5) in courier charges
to transfer Rs2000($4.5) Home –Even home is mere 100 km away.RBI has shown a
forward thinking mindset in stating that only the sending side of the money transfer
services needs to be from a bank account-But it has also done things in a manner that
will make it simpler for recipients to enter the banking system over the time.

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8
Leading Mobile Commerce Players In India –Many
Platform Providers (Not Banks)
Mchek: Consumer can utilise services by registering his mobile number
with mchek.He is going to get the 6 digit PIN to authorize the payments .At
present Mchek provides facility by registering Credit card for payments

Ngpay:To utilise services of Ngpay ,Consumer has to register with Ngpay

and after that he has to download the application on his mobile(model
specific).And through Ngpay application he can choose the service provider
from list to make payment

Pay mate: For PayMate Registration Consumer need to link his Mobile
Number to his existing credit card or bank account. On successful
registration he is going to get the 4 Digit Pin Number .At the time of
transaction consumer need to authorize the payment with his PIN Number
.Then after this PIN authorisation amount gets charged to account he has
linked with.

Other Non Banking Indian Players are atom technologies,ITZ Cash

card,beam technologies etc.

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Indian Non –Bank Mobile Payment

Service Providers –Emerging Scenario
 Mchek: Consumer can utilise services by registering his mobile number
with mchek.He is going to get the 6 digit PIN to authorize the payments .At
present Mchek provides facility by registering Credit card for payments

 Ngpay:To utilise services of Ngpay ,Consumer has to register with Ngpay

and after that he has to download the application on his mobile(model
specific).And through Ngpay application he can choose the service
provider from list to make payment

 Pay mate: For PayMate Registration Consumer need to link his Mobile
Number to his existing credit card or bank account. On successful
registration he is going to get the 4 Digit Pin Number .At the time of
transaction consumer need to authorize the payment with his PIN Number
.Then after this PIN authorisation amount gets charged to account he has
linked with.

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9
 mChek
• Key Features of Mvchek

• mChek‟s operations have passed the grueling Payment Card Industry‟s Data Security
• Standards (PCI/DSS) and have been audited by Ernst and Young, on behalf of Visa.
mChek has secured the BS-7799/ISO 27001 certification.

• The Key attributes of the mChek payment solution are

• VISA certified process
• Two factor authentication: Requires mobile phone to be present and 6digit pin for
• a transaction
• mChekPIN is not saved on phone (not sent on SMS)
• One time registration process to link mobile phone with credit card which can be
• done on the mobile phone or on the web.
• Requires the customer to only remember his 6 digit mChekPIN for approving
Transactions.
• Payment solution for multiple scenarios like web, telecalling and mobile initiated.
• Works on ALL mobile phones (no GPRS required)
• All VISA and MASTERCARD credit cards accepted

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Process
Mchek Consumer

Registration of Credit
Card/Mobile Number on
website of m-chek
For Airtel users it can
through SMS also

Merchant will
receive Mchek will give PIN Number to
the Payment Mchek Consumer
Platform

When consumer wants to transact

he has to send sms to short code
Pay Airtel<amount>to 543219

Consumer will receive

“Please Pay Request”

Consumer has to authorize that

Transaction with M-chek Pin

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10
 • Ngpay is a virtual
mall –located
entirely on the
user‟s mobile
handset

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Ngpay
• NGPAY is a brand name for the proprietary mobile-commerce platform
provided by JiGrahak Mobility Solutions (P) Ltd. JiGrahak is based in
Bangalore and was set up in 2004 with a focus to launch IP-based services
in the mobile commerce domain
Step 1:

• Download ngpay – SMS “ngpay” to 567671 or download from

www.ngpay.com. Consumer will receive a SMS from ngpay containing a
link to download the application. He has to Select the link and follow the
instruction to download and install.
Step 2:

Consumer has to register with ngpay by providing a few personal details -

name, mobile no, address and a 6 digit ngpay PIN.
Step3
Consumer has to Create your “My Services” List-
Consumer has to Create a list of His favourite ngpay partners and
services. You can always update this list.
Step4
Consumer has to select merchant from the list and also the payment
option. Currently, Consumer has choice of Visa/MasterCard credit cards,
HDFC Bank Account and ITZ cash cards are supported
Step5:
Consumer transaction details get stored in the ngpay History under the My
Profile menu. In addition, ngpay also sends Consumer a SMS and an
email with the transaction details. 22

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 Working Of Ngpay

Consumers download Consumers complete a Users can transact with any

highly interactive, user quick and simple of the businesses in our
friendly 64kb Java client. registration partner network. Users
select the ones they are
Free for Users ngpay uses the profile to interested in.
improve customer
Works across telecom service Secure Wallet provides 1-
networks click txns using bank
accounts, credit / debit /
Works on entry-level cash cards.
GPRS-enabled handsets 23
(Rs. 2500)

Advantages

 There are no charges for download, registration and use of ngpay

 Offering services of HDFC Bank
 Bill payment services-about 22 merchants are there for
utility,insurance,telecom bills, Charity/donations to CRY,Cancer Patient
Aid,Banking ,Travel Services
 visa/master-credit cards/HDFC Bank A/c and ITZ Cash Cards for only
IRCTC transactions

Disadvantages:

 Java Enabled Phone is required

 GPRS Services required
 Consumer has to download the application first to utilize the services.
 For using HDFC bank services consumer need to have internet password.

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12
 PayMate
• PayMate is a Mumbai based wireless transactions platform provider.
PayMate is a spin-off from Coruscant Tec a sister concern with a focus on
wireless content. PayMate has created a viable ecosystem to enable wireless
transactions connecting banks, switches, merchants and customers using a
simple, secure and seamless technology.

For Paymate Registration Consumer need to link his Mobile Number to his existing credit card
or bank account. On successful registration he is going to get the 4 Digit Pin Number .At the time
of transaction consumer need to authorize the payment with his PIN Number .Then after this PIN
authorisation amount gets charged to account he has linked with.

Consumer is going to get the Advantages:

 Linking with multiple accounts or credit cards to consumer mobile and he can choose which
account he wish to pay with

He can receive bill alerts via SMS so to pay from anywhere, anytime via mobile

PayMate works on any mobile handset or service provider without any SIM change or GPRS
PayMate is a SMS based application hence compatible with any handset and operator

 It allows the mobile phone to function as a virtual credit card as preferred by the customer
The customer doesn’t need to reveal any credit card details to transact thereby making it
relatively safer than existing options

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• Advantages:
• No GPRS services required
• Easy to use
• Integration of Mobile Number with saving account and credit card.
• No requirement of revealing the credit card info while doing transaction.
• Simple sms based transaction
• At present providing bill mate and gift mate services

• Disadvantages:
• Tie up with credit card and some banks
• Registration is required with banks through service Provider

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13
 Comparative Chart
Parameters
M-CHEK NGPAY PAYMATE
Java Enabled No requirement of Java Java Enabled Phone is No requirement of Java
Enabled Phone but to required Enabled Phone
download for airtel
services it is required
GPRS Requirement GPRS Services not GPRS Services required
required GPRS not required

Registration Process Registration through Registration through Registration through

website/also sms for airtel
users-6 Digit Pin-
www.mchek.com
Charges For Sms Free SMS For Airtel Users
to subscribe
website/sms 6 digit Pin is
required-www.ngpay.com
Premium Charges for sms
apply(rs3 approx)Applied
sms ngpay to 56767
website-
www.paymate.co.in
Premium Charges for sms
apply(rs3 approx)Applied

Download/Registration Mchek services are free – There are no charges for There are no charges for
/Usage Charges there are no charges for download,registration and Using Paymate services
registration and use use of ngpay

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Parameters
M-CHEK NGPAY PAYMATE
Mode of visa/master credit card a at visa/master-credit Credit Card-visa Master. Tie
Payment present cards/HDFC Bank A/c and up with banks-abn
ITZ Cash Cards for only amro,canara bank,
IRCTC transactions corporation bank, south
India bank, standard
chartered bank

Security The authorization sms

Mcheck stores credit card
information in a visa
certified secure data centre
.A verisign SSL pages with
128 bit encryption of all
data protect entered by
Consumer in mCheks
online registration Process
ngpay Wallet is a
tamper-proof digital wallet
on phone and it stores
bank account / card details
in an encrypted form
needs to come from
Consumers mobile Number
and not any other number.
Every transaction is
authenticated with 4-digit
PIN which is known only to
Consumer. The dynamic 3-
alphabet code which varies
for every transaction is an
added layer of security to
address SIM cloning and
phishing

Services Payment of Airtel Postpaid
offered bills or Top-up Airtel Pre-
paid .Payment of Insurance
Premium –Reliance/ICICI
Pru/ICICI Lombard.Booking
of flight tickets,movie
Tickets,Bus Tickets (for
airtel users)
Bill payment services-about Services offered through Bill
22 merchants are there for Mate, Gift mate and Mobile
utility,insurance,telecom Shopping with different
bills,Charity/donations to merchants in each category
CRY,Cancer Patient
Aid,Banking with
HDFC,Travel
services,shopping
services,Movie tickets etc
28

14
• Cost Factor: Integration Cost:Ngpay is having Highest Integration cost
besides transaction Cost and than mchek but PayMate only charges
for Transaction Cost.

• Consumer Friendly Application:mChek and PayMate are offering

services ,where no GPRS and Compatible handset is required-simple
sms based services. While For Ngpay Java enabled handset and
GPRS services are required.

• Tie up with Banks/credit card-PayMate is having tie up with

master/visa Credit card and some banks while mCheck is having tie
up mainly with credit card master/visa) while Ngpay is having tie up
with visa/master-credit cards/HDFC Bank A/c and ITZ Cash Cards for
only IRCTC transactions.

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Non Banking Players Rated on a 10 Point Scale

mChek Ngpay Pay
Mate
Ease of Usage 6 5 6
(downloading/)

Cost to Consumers 6 5 7
(GPRS/Java enabled phone)
Popularity/ 7 5 5
Awareness Level

Cost to Merchant 5 5 7

Tie Up with BANKS/master 5 6 8

Visa etc.
Overall Score 29 26 33

Average Score 5.8 5.2 6.6

As far as Popularity is concerned ,mChek is having exclusive tie up with Airtel to give facilities to Airtel users
and according to both Ngpay and PayMate their customer base already crossed 1,00,000

30

15
 Indian Banks Jump into Fray
At present Two Type of facilities being offered by banks-basic enquiry about the balance, alerts
related to credit card limit ,payment due date ,cheque bounce status etc.Another is of Funds
Transfer, Bill Payment ,Stop Payment etc.
In India, First level of services which are mainly alert facility given by many banks but there are few
banks which are providing the both level of services by M-Banking
39 Banks were given approval to launch Mobile Banking out of which 30 banks have
launched Mobile Banking Services as on end of Feb,2010
Yes bank Standard Chartered Bank State Bank of Bikaner & Jaipur
State Bank of India Lakshmi Vilas bank State Bank of Hyderabad
Barclays Bank IDBI Bank State Bank of Indore
Union bank of India ING Vysya Bank State Bank of Mysore
HDFC Bank Kotak Mahindra Bank State Bank of Patiala
Citi Bank Indian Overseas Bank State Bank of Travancore
ICICI Bank Indian Bank Axis Bank
Corporation Bank Vijaya Bank Oriental Bank of Commerce
Bank of India Punjab National Bank Central Bank of India
ABN AMRO South Indian Bank Ltd Karnataka Bank Limited

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Indian Banks:Most Application Confined to Bank A/c Holders

At present Two Type of facilities being offered by banks-basic enquiry about the balance,
alerts related to credit card limit ,payment due date ,cheque bounce status etc.Another is
of Funds Transfer, Bill Payment ,Stop Payment etc.
In India, First level of services which are mainly alert facility given by many banks but
there are few banks which are providing the both level of services by M-Banking. These
banks are namely, ICICI Bank, Barclays and HDFC (Partnering through NGPAY) and
Kotak Mahindra bank and others.

 ICICI Bank: Consumer can utlise the services through downloading imobile application from
icicibank.com and also by sms IMOBILE to 5676766 . –Mainly those who have access to
internet banking already

 Barclays Bank:Banking services available by dialling*598*1#(toll free) . Consumer will need

a normal GSM mobile phone and the Hello Money PIN. subscriber of a cellular service –
Confined to bank account holders

 HDFC Bank: Consumer can utilise banking service by Registration through website/sms 6
digit Pin is required-www.ngpay.com or by sms ngpay to 56767 .After that Ngpay application
will be given to consumer to download -Mainly those who have access to internet
banking already

 Kotak Mahindra Bank :Consumer has to download the application by sending K MOBILE
<Last 4 digits of His CRN> as SMS to 5676788 only from the mobile number registered with
the bank. -Confined to bank account holders
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16
Parameters ICICI Bank BARCLAYS HDFC Bank- Kotak Mahindra
Bank Partnership Bank
through
Ngpay
Application Java Enabled Only GSM compatible Java Enabled The handset must be
required to Handset Handset Required Handset Java-enabled, MIDP
2.0 and CLDC 1.0
run the
compliant and have a
imobile JAR memory greater
Services than 100kb
Is GPRS GPRS Required Not required GPRS Required GPRS Required
required

Operator Only GSM Works on all GSM Any Java enabled Kotak Mobile Banking
operator Handset handset is available only on
GPRS which is a
technology used only
on GSM phones and
cannot be used on
CDMA phones.
PIN required 4 digit pin is Hello Pin is required 6 digit Pin is Net Banking Password
requierd required

Registration Through website No need to download Registration through Registration through

Process of the bank- software website/sms 6 digit sending the sms and
downloading Pin is required- then after that
through
imobile www.ngpay.com downloading the
website application from software
icicibank.com
33

Parameters ICICI Bank BARCLAYS Bank HDFC Bank Kotak Mahindra

Bank
Technology Menu Based USSD(Unstructured Ngpay provides Kotak Bank is providing its
Used application- Supplementary Service 128-bit end-to- Mobile Banking service on
J2ME Data) end financial GPRS based application
grade security platform
from user's
handset, through
to the application
servers. It has
been
independently
certified for
financial
transactions and
is verisign
certified.
Requirements to Java Enabled Consumer need to be a Consumer need Customers having a CASA,
use Mobile Handset. provider that the bank to have a TD, Investment or a
Banking Consumers has a tie-up with Savings/Current/ Demat account with
mobile phone (currently this includes Fixed Deposit access to Net Banking are
number needs to Airtel, Vodafone & Account with eligible to be registered for
be registered for Idea).Consumer will HDFC Bank and Mobile Banking
ICICI Bank need a savings account ngpaysoftware
Mobile Banking (along with debit card) and gprs
Pull facility and with Barclays bank to be services
Account with able to use this facility.
Bank Consumer will need a
normal GSM mobile
phone and the Hello
Money PIN. subscriber of
a cellular service 34

17
 Shortcomings of Central Bank Guidelines
Hardly 240,000 users so far in India

A)At present ICICI Bank is offering Mbanking Facility through GPRS facility on mobile and
customers Who can not access GPRS facility have to download application on desktop
and then transfer to Mobile Phone Using Blue tooth or Data cable .
Whether Consumer who do not have this facility will or will not be able to use
mobile payments?

B) At present Barclays Bank is offering Mbanking Facility to GSM mobile Users through
USSD application.
Whether Consumer who do not have this facility will or will not be able to use
mobile payments?

C)At present Kotak Mahindra Bank is offering Mbanking Facility only on GPRS, which is a
Technology, used only on Java Enabled GSM Phones only for Net banking Customers.
Whether Consumer who do not have this facility will or will not be able to use mobile payments?

D) At present HDFC Bank is offering Mbanking Services by Partnering With Ngpay,

which works on Java Enabled Phones, and application is required to download.
Whether Consumer who do not have this facility will or will not be able to use mobile payments?

35

In Case of Service Providers other than Bank Such as Ngpay,Mchek

Guidelines are Not there .Such as
1)Ngpay is offering Mpayment Facility in which Consumer is required to
register on Website and GPRS services with Java enable Handset is also
required
Whether Consumer who do not have this facility will or will not be able to
use mobile payments?
2)Paymate offering Mpayment Facility in which Consumer is required to
register on Website. -Whether Consumer who do not have this facility will
or will not be able to use mobile payments?
3) Mchek offering Mpayment Facility in which Consumer is required to
register on Website. -Whether Consumer who do not have this facility will
or will not be able to use mobile payments?
Is M-Banking Facility Available to All Types of Mobile Handset? -
Consumer Should know on which type of Mobiles Mbanking Facility can
Be used.

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 Indian Barriers in Mobile payment system :

Technological Barriers :

1)Consumer has to use specific handsets to use mobile banking services ,such
as java enabled handsets.

2)There is requirements of GPRS facility ,internet password and registration

over internet which is not available for all users mainly in rural India.

3) Multiplicity of Technologies :
ICICI Bank -Menu Based application-J2ME
Barclays- USSD(Unstructured Supplementary Service Data)
 Kotak Bank GPRS based application platform

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4) Another Problem is that the transfer cost charged by banks are vialble only
is if customers need to transfer at least 3,000-4,000 per month (fairly large
sums for the sections of society aimed at).Since there are 1.4 million outlets
for mobile phone companies to transfer money as against around 85,000 bank
branches the number favour allowing mobile phone companies to transfer
money without the need for banks acting as conduits.
5) Implementaion of Know Your Customer norms is one of the major issue
in the m-payment system.
6)Security remains an important issue that needs to be addressed for mobile
money services
7) User Experience:One of the most crucial and basic elements to making
mobile money services a success is ease of use and reliability.However
,mobile operators,banks and payment providers are struggling to convince
that the new services are better than those in use today.In other
cases,Customers simply do not see the need for the payment functionality to
be developed.A lot of work still needs to be done to promote customer
acceptance.

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 There are about 400 million bank account holders in India, whereas the number
of mobile phone subscribers has reached 600 millions with an addition of 10-12
million new users every month. Of these 490 Million subscribers added in the last
14 years about 50 per cent do not have bank account.
The government has set up a high level inter ministerial group to consider
introducing a mobile based model without links to bank accounts for delivery of
basic financial services.
The group to be set up under the IT ministry that mooted the proposal would
comprise top officials of the Ministry of Home Affairs, telecom, Financial services,
posts, rural development, planning commission, UIDAI, and representatives of
TRAI and RBI.
This Model would allow customers to transfer money to a distant relative or pay
shopping bills through mobile
The modal being proposed is similar to M-PESA in Kenya, which enables users
to complete basic banking transactions without visiting a bank branch.

In Dec,08 Vodafone which is running M-Pesa in Kenya for last 18 years
has proposed to the Indian department of posts to facilitate mobile financial
transactions through post offices .It has asked for share of revenue from
transactions processed through this system.

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Recent Developments in India

SBI to offer mobile banking on low end handset
Jan 2010:SBI offers mobile banking on low end handset:SBI now claims that
they have developed the facility the technology to support low end/entry level
mobile handsets for banking transactions.
Nokia Launches Mobile Money Transfer Platform:Handset Manufacturer ,Jumps
in the Fray
Nokia Launched World’s First Money Transfer platform through mobiles in India
. This Pilot Project has been launched in Pune in partnership with Yes Bank and
OBOPAY,which runs mobile payments platform.
4TH APRIL2010-IBM is working on one that will help the Elderly and the illiterate
The new platform that the IBM is working on can be used to build mobile
applications that richly support multiple modes of user interaction-based on
voice,images,icons and text.
It will be “common across different applications”and not be an operating
system itself.
IBM recently announced a research project ,with NID(National Institute of
Design)for this purpose.

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 WHY DO WE NEED A GLOBAL STANDARD ON
MOBILE BANKING?
Proliferation in technology ,system ,encryption, security ,handheld devices
shall make interoperability impossible.

Consumer will be confused with use of systems and diffusion of the

innovation will be delayed.
Central bank should agree to a platform which can be used by all partners in
Mobile Commerce and banks.
Financial Inclusion can be make realistic and within reach of masses only
when there will be ease of use and availability.This is possible only through
common platform available for all consumers.
Instead of class banking there has to be focus on mass banking to strengthen
the Financial Inclusion by m-payments system.

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• This Presentation is prepared with information from different sources:

• RBI Guidelines(www.rbi.org.in)

• Information taken from the website of Different banks –ICICI Bank,Kotak Mahindra
bank,Barclays bank and HDFC Bank .

• Information taken from the websites of Non-Banking service providers such as

mchek,paymate,Ngpay etc.

• Information taken from mChek,Paymate,Ngpay by contacting their Business

development Departments

• Also by studying Newspaper Articles, Internet and contacting Professionals in same

field.

• Examples taken from International Journals and Papers.

• Information Taken from Consumer Insight (CI)-Our Money,Our Rights

• We are Grateful to Ms.Rinki Sharma ,Sr.Councellor at National Consumer Helpline

• Delhi University in assisting the research on this Innovation in India
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 www.consumer-voice.org

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sriramkhanna@yahoo.co.in

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