A major co-operation between banks in India is seeing the roll-out of a huge mobile payments system in the country. Backed by 10 banks (at the moment) through the National Payments Corporation of India (NPCI), the Interbank Mobile Payment Service (IMPS) is a way to transfer small amounts of money between bank accounts using either SMS or mobile apps.
How does it work?
The entire service is hung around Mobile Money Identifiers (MMIDs). These are seven-digit security numbers which are issued by the banks to accounts holders. In order to transfer money, you need both a mobile phone number and an MMID. The NCPI and the banks involved in the transfer all check these numbers to ensure the security of the transfer.
The system itself works through either SMS or mobile application. You can initiate a transaction using either – but the recipient doesn’t need to have an application in order to get the money. This means that anyone with a mobile phone that can send or receive SMS can use IMPS.
This system isn’t intended for massive transactions. There’s a daily limit of 1,000 rupees per day (that’s around €16) for regular transactions through SMS. Transactions by mobile app can be securely encrypted, so you can transfer over €800 per day that way. Even so, the main use for the service is small payments – groceries, taxis, etc.
What we think?
Seeing something like this rolled out gives me hope that other countries will pay heed. In order for a mobile payments system to really work, it could use the co-operation of a lot of large bodies. Frankly, either operators or banks will do. What’s important is that it is available to a huge number of people, is easy to use, and is based on technology that everyone will have.
Basing the system on SMS, but giving people the option to use an application if they want, is something of a master stroke. It caters to both the high-end market and the (much larger) regular phone market.