Saturday, October 24, 2009

Mobile payments: Some thoughts

I am wondering if this topic fits in to this blog or my techie one. Since it can be of public interest than a technical report, I decided to put it here.
A few months back I was attending a talk by my colleague about this topic. The talk explained the need of mobile payments, the vision and the implementation strategies. The study says that there is a good amount of mobile phone penetration to rural India. An exclamatory mark here is that it is much greater than the bank accounts. In villages it is difficult to walk to a bank miles away and do the transactions, thus they are away from all these systems. Why not use mobile phone as a payment system. This is indeed a great thought and I was very much excited to know how it works. The assumptions (as I understand it from the slides) are
  1. People are comfortable using mobile phones, using numbers; but not english
  2. The service providers are not allowed to handle cash transactions as they are "private" and RBI rules prevent them from this.
  3. It can turn a mobile phone in to a remote banking system for rural India.
With this, companies like NGPAY and MCheck opened service in India connecting banks and mobile phone subscribers. These companies offer banking services by creating a connection to a customer's bank account through mobile phone. People need to enter only pin which is a number apart from the beneficiary's mobile number to pay the amount.
A slight confusion here in my mind is that " how come Bharati and Reliance which are private can not handle money but these mcheck and ngpay can? Are these companies excluded from definition of private companies for banking?
I queried whether it uses SMS and other service messages for handling the payments or some other technology. Because sensitive information is involved and mobile service providers can actually see all these transactions if they use these things. Interesting answer was "GPRS". I was stunned by that answer.
If the assumption include GPRS, is it "affordable" for rural india and those villagers who use normal handset supporting basic facilities?

Second query " if gprs is available; why can not RBI ask banks to create a secure java client which can use voice biometrics and /or number based user interface with vernacular support. An agreement between mobile service providers and banks to share the information of mobile clients can do the same functionality like mcheck or ngpay. Any customer can download this from his bank site/ from local bank directly and use it. It avoids all these third party business and security issues since it is like normal payment portal with a more user friendly application for mobiles.

When IIT Madras is involved in this program and is the certifying and standard setting agency for mobile payments, what benefit will it make to Rural India ?
Or is it just another exercise which ultimately aims the urban people?