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Mobile payment firms are expecting a further relaxation of norms after the successful roll-out of m-banking products. Industry players have been positive with the changes and expect mobile banking to become more practical and broaden it's scope. The increase in limits
is a significant change, which shows RBI's intention of making the medium a universally acceptable payment tool. Further, the relaxation in the registration process is a positive step since one needs to keep the customers' convenience in mind for new initiatives like these.

Mobile banking, which is catching up fast in the cities and hinterland, is not only helping the government to take a step forward towards fulfilling its aim of having one bank account for every household, but also saving crores of rupees by way of reduced transaction costs. The government incurs a transaction cost of Rs. 12-13 for every Rs. 100 it shells out, mobile banking helps to reduce the cost to a mere Rs. 2. RBI estimates that around 40 per cent of Indians lack access to formal financial services and are largely 'unbanked'.

Technology

Mobile payments are a wireless consumer product or service. In short a benefit - convenience, like, escalators, ATMs, etc. Methods and approaches for mobile commerce will differ across region, country and even service providers, as each stakeholder has its own assessment of what works best and what value proposition appeals to the consumer. Basic principles of PIN management, customer confidentiality, KYC, ALM, customer registration, risk mitigation, consumer protection, etc., are applicable. Just as they would apply to credit cards, ATM cards, ATMs, collection boxes, internet banking, internet e-commerce, telephone banking, cheque books, bank website, etc. This is not to say that there is a fool-proof system for any of these, but they are as 'safe' as long as they generate enough 'trust' and convenience to offset perception (and actual) of risk so as to be pervasive in the financial system. After all, a wallet with cash is only as safe as you keep it. Neither cash nor wallet can be pilfer (tamper) proof!

Indian banks and payment service providers have been by and large dovetailing their mobile payment initiatives under the umbrella of mobile banking even before the guidelines were out. The banking system has already been in conformity with these suggested guidelines, which now have the legal sanction of the Reserve Bank of India. Banks own operating experience and other payments systems prevalent have provided the necessary grist for the RBI mill, and as time go on, hopefully these will evolve and become far more enabling for stakeholders, rather than favor one approach or another or cripple themselves in strangulated regulations.

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Dr. Gursharan Singh Kainth started his career as Lecturer at Post Graduate Dept. of Economics, Government College, Gurdaspur, and later at Khalsa College; Amritsar, specializes in Quantitative & Development Economics. Has the distinction of serving Punjab Agricultural Univ, Ludhiana, for more than 2 decades and remained Director-Principal of Saint Soldier Management & Technical Institute, Jalandhar. Currently, heading GAD Institute of Development Studies, Amritsar, a self-financed research institute. Has been honoured with various awards, including Guru Draunacharya Samman, Vijay Rattan Award, etc.
Article posted on December 1, 2008.