Real-time mobile payment a long-term goal

BANGALORE:Mobile banking is all set to transform how people transact  on a daily basis. However , the Reserve Bank of India (RBI) has released certain operative guidelines for mobile banking transactions,  which banks feel are restrictive especially the mobile transaction limit of Rs 2,500 (per transaction) with an overall cap of Rs 5,000 per day, per customer.

Vijay balakrishnan, Cheif Marketing Officer, Obopay India comments on the efficacy of the draft guidelines issued by RBI on mobile banking. 

On service being proposed for debit and credit card holders:

We believe that mobile payments should be made accessible to all bank holders once the RBI stipulated safety and security measures are in place. Given the transaction limits suggested by the RBI there is no harm in opening this to a bank's entire subscriber base. Research indicates that mobile payments today forms the lowest cost of transaction and can play a significant role in expanding electronic transactions and thus fulfill objectives of reducing cheque based transactions over a period of time. Further credit/debit card holders currently constitute a low percentage (estimated at 25 %) of the total bank holders. It is widely understood that there exists a significant percentage of debit card holders who are either dormant or seldom use the product. Further as a bulk of these cards have been issued by private sector banks, by extension a wide majority of public sector bank customers could be left out of the usage gambit severely hurting their chances of using this convenient service.

Still, the long-term goal of mobile banking is to enable funds transfer from account in one bank to any other account in the same bank or any other bank on a real time basis (Real-time mobile payment is still a long-term objective).

It is our belief that mobile banking and payments should be made an immediate priority given the fact that India is the world's second largest cellular market and records 8 to 9 million new customers every month. The RBI has itself been encouraging electronic modes of payments and has been mandating banks to increasingly adopt technology in this regard. Therefore this should be a high priority area for the regulator to encourage real time payments through the mobile phone. Given the fact that broadband and internet usage in India is currently low , NEFT and RTGS usage (which rely on internet banking / connections) are yet to hit critical mass. However almost the entire banking base can be expected to have mobile phones and given its cross channel advantages (SMS, WAP or GPRS), the chances of real time funds transfer and reduction in burden of clearing houses across the country can become a huge reality through mobile banking and payments.

 On mobile transaction limit of Rs 2,500 (per transaction) with an overall cap of Rs 5,000 per day, per customer.

Banks today have set velocity limits for debit card daily and monthly usage which are significantly higher. Keeping that in mind, we feel that there is significant scope of increasing the daily limit as long as sufficient safeguards as suggested by the RBI in the interim guidelines is in place. An increase in transaction limits will only encourage users to move from traditional cash payments to electronic payments which are easy to monitor and thus reducing the very high and abnormal levels of cash payments which exist in India today. Low limits set on the other hand will disable & discourage consumers who want to use mobile payments for making payments to buy goods and services multiple times on a daily basis.

On mobile and microfinance (current guidelines do not permit mobile microfinance)

Mobile payments and banking could be the catalyst for financial inclusion by enabling scale and lowering cost of transactions. We believe that any restrictions on microfinance using mobile payments if any should be removed. The issue of no frills accounts becoming dormant or unprofitable for banks can be addressed systemically if MFI , banks and Mobile Payments companies can come together to create a viable and sustainable model in which micro loan repayments are done through the ubiquitous mobile device. In addition this model will create a product ecosystem by which the micro credit loanee will have access to basic financial services (savings), be able to make payments/ money transfers and later access micro insurance.  Given the fact that India is one of the biggest unbanked countries in the world, mobile payments could be that very bridge which can help banks scale financial inclusion targets by connecting the bank and the unbanked customer through the mobile device and keeping servicing and transaction costs the lowest.

On information security

Obopay takes security and fraud issues very seriously. It is completely security compliant and has fulfilled every single safeguard obligation recommended by the RBI. It is both PCI certified and ISO27001 compliant thereby ensuring the highest safety norms of processing, storing, or transmitting data for financial institutions and consumers alike.  In fact, Obopay's Information Security Roadmap ensured that certification requirements were included for integration at each stage prior while developing its mobile payments solution.