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M-Commerce: the changing phase in traditional banking!

traditional banking!

Mobile penetration is 10 times the PC penetration, and expected to become 1 billion by 2012, Ajay AdiseshannFounder and MDPaymate suggests that, it won’t be long before India will become a very large player in the m-Commerce space.

M-Commerce is basically an extension of e-commerce on the mobile phone which enables consumers to make payments for goods and services directly from their mobile phones. This gives the consumer the benefit of making payments from anywhere without the hassle of physically being present at a store, standing in a line or turning on a PC to transact online.

The only difference between e-Commerce and m-Commerce is that while e-Commerce is limited to PC users with an Internet Connection, m-Commerce can use technologies as simple as SMS and IVR among other things therefore being available to the entire mobile carrying population. With mobile penetration at 10 times the PC penetration, and expected to become 1 billion by 2012, it won’t be long before India will become a very large player in the m-Commerce space – explaining why many people see m-Commerce as akin to e-Commerce on steroids !

Security is a major issue addressed by m-Commerce segment. PCI DSS 1.2 and PA-DSS are some of the most stringent security standards adopted by the global payments industry. Every transaction is authorized with a 4 digit PIN which is punched into the customer’s mobile phone over an automatic, secure IVR call-back and there is no manual intervention whatsoever. This process ensures that there is complete control and security and practically eliminating the chances for frauds. Even if the mobile were to get stolen there is so no way that one can misuse the account without the PIN.

A year from its issue of a set of guidelines for mobile banking transactions, the RBI has provided a fertile environment for mobile payments by revising the guidelines and raising the transaction limit to Rs. 50,000 per day for purchase of goods and services from the earlier cap of Rs. 10,000. To facilitate the use of mobile phones for remittances of cash, RBI has allowed banks to provide fund transfer services from the accounts of their customers for delivery in cash to the recipients. The disbursal of funds to receiver can be facilitated at automated teller machines (ATMs) or through business correspondents appointed as agents by the banks. The maximum value of such transfers is capped at Rs. 5,000 per transaction and customers can remit a maximum of Rs 25,000 per month through this service.

The new guidelines mean that the process of P2P money transfer will become even faster and easier. As the receiver no longer needs to have a bank account as a pre-requisite, he/she can simply collect cash at the nearest bank/business correspondent. This opens the market up in terms of the number of people you can transfer money to in an instant as one is no longer limited to intra-bank transfers.

On the financial inclusion side, if we go strictly by Dr Raghu Raman’s recommendations of creating a National Electronic Financial Inclusion System (NEFIS), then the backbone of such a system would be in its is ability to carry out small value transactions (Rs 100) at limited transaction cost (sub Rs 1). And the only way that can be done on a mass acceptable basis is via SMS, which is the single most pervasive feature in the mobile technology revolution, cutting across all SEC’s, geographies, handset vendors, MNOs, etc. A recent RBI relaxation allowing for sub Rs 1000 transactions without recourse to end- to- end encryption, is recognition that usage of basic mobile technology for inclusive activities is critical for mass & quick adoption.

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