Banks to offer Mobile Payment Services in India

Mumbai - 28 July 2008

With the rapid growth in the number of mobile phone subscribers banks have been exploring the feasibility of using mobile phones as an alternative channel of payments. The Reserve Bank of India, on 12th June 2008, released draft guidelines for mobile payments in India. Final Guidelines are expected to be issued by RBI in the first fortnight of August 2008. Thereafter, a mobile phone owner will be able to transfer money from his bank account to the bank account of another person using his mobile phone.

Aiming at long-term goal, the RBI has said, that the framework would be such so as to enable transfer of funds from account in one bank to any other account in the same way or any other bank on a real time basis irrespective of mobile network of the customer. Banks can also use SMS-based facilities to perform small-ticket payments up to Rs1,500, as per the draft guidelines.

Few banks have already started offering mobile payment services to their customers without waiting for the release of RBI's Guidelines. While RBI has no objection for use of mobile channel to provide basic services such as mobile alerts for credit or debit entry, balance enquiry etc. which are in the nature of providing information, due care needs to be taken for permitting the channel for customers to initiate payment instructions.

There are a number of attendant issues and therefore, Reserve bank of India has advised banks to keep on hold their mobile payment services till issuance of the final Guidelines.

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