Brace up. After the 15^th of June, you probably will be able to use your mobile phone as a debit card or a credit card.

 

 

The Reserve Bank of India, in its annual policy statement on Tuesday, said it was in the process of formulating the guidelines for a payment system using mobile phones. RBI is in discussions with banks, service providers and industry bodies to develop the payment system. The bank said the draft guidelines would be placed on its website by June 15.

 

 

 

M Commerce is at a very early stage. It is about the purchase and sale of goods and services through the mobile with the use of a financial institution, which acts as an intermediary. Purchase and sale of VAS content cannot be classified as M – Commerce.

 

 

“The rapid expansion of this mode of communication has thrown up a new delivery channel for banks,” RBI said in the policy statement.

 

 

A few banks have already started offering M – Commerce and Mobile Banking solution but this policy statement will allow the proliferation of M – Commerce to all levels and all kinds of merchants. So far we have seen only restricted agreements.

 

 

We have already reported about the Indian Railways tying up with 100, 000 recharge vendors across the country for the sale of railway tickets via mobile. This move, however does not allow the end consumer to make a purchase. So in effect – there are now 100, 000 + touchpoints for the Indian Railways. In the same post we also spoke about the information that we received about the IRCTC tying up with Paymate. Once the average Indian Jaikishan is able t make payments through his mobile phone; there will be 260 Million Touchpoints.

 

 

 

While we are at the subject of booking rail tickets, it is also important to know that ICICI Bank has started a service called mShop which allows users to shop via their mobile phones after synchronizing their mobile phones to their bank accounts. [Currently this service can only be used for booking railway tickets (through IRCTC) via SMS and for Recharging your Prepaid Mobile connection.]

 

 

 

On another note, we have received information that the Life Insurance Corporation of India has also recently tied up with PayMate in a move that should soon enable consumers to pay their LIC Premiums via mobile.

 

 

HDFC Bank has also been toying with the idea of creating a mobile wallet for a few months now. ‘Mobile wallet’ is expected to bring in more security and reliability to the new payment system involving mobile phones. The application will be downloadable unlike the SMS based service, which doesn’t require any special setup. Text based services like SMS are convenient, but they pose big risks and are easily vulnerable to manipulation and security attacks.

 

 

Mobile Wallet is a JAVA based downloadable application, which can be used on a GPRS enabled phone. The phone will contain the details of owner’s credit card and the application will initiate a payment or transaction securely and verified by a PIN, which can be used only for one time.

 

 

 

In India currently, players such as MCheque and PayMate are betting big on SMS. Security concerns aside, they are confident that for mobile commerce to gain a significant amount of traction (by being accessible), SMS has to lead the way.

 

 

Recently HDFC Bank launched India’s first virtual credit card to Reliance Mobile users across India, wherein the Reliance Mobile is the credit card and mobile number is the credit card number.

 

 

The service is called mPay and allows Reliance Mobile Users to pay their Reliance Mobile post paid bills, buy their pre-paid top-ups, and pay their Reliance Energy monthly electricity bills. The service is supposed tp extended to allowing the customer to book movie tickets, travel tickets, merchant payments at shops, restaurants, shopping on the Internet, amongst other services.

 

 

As I said earlier however, this is a walled garden to a certain extent and does not proliferate to all products and services for payments. For the potential of M – Commerce to really be tapped, its scope has to be extended. The Policy Statement by the RBI should help to a large extent.

 

 

There are 10 Million Credit and Debit Card holders in India while the number of Mobile Phone Owners has crossed 260 Million according to the latest estimates.

 

 

 

 

 

 

 

 

 

 

 

 

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