The Hindu Business Line : Mobile money transfer awaits Govt nod

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Mumbai Feb 27 Should a taxi-driver in Mumbai wish to send money to his family in a village in say Uttar Pradesh, he may soon be able to use his mobile for a same-day remittance.

The sender "tops up" his mobile phone with money, similar to "topping up" one's prepaid account. He then forwards the amount using the SMS facility and the receiver gets a PIN-like number on his mobile. The receiver can redeem this for cash at the prepaid distribution points of mobile service providers.

With the number of mobiles (at over 160 million) far exceeding the number of bank branches in the country (70,000-plus), mobile remittance, both domestic and international, can facilitate fund transfers, especially micro fund transfers in under-banked areas, say mobile operators.

Regulation awaited

Many of them have already developed and tested their money remittance applications, and now only need regulatory clearance for it.

"Banking regulations currently do not allow cash for exchange of another `unit' such as `airtime' in the case of mobiles," said Mr Mahesh Prasad, President, Applications & Solutions Group, Reliance Communications; his company, he says, has readied and tested the application. "Only the banks and Indian Post (through money orders) are currently allowed such transfers."

"We could do it by partnering a bank. But then the customer would have to have a bank account and go to that bank to get money. There is a multitude of issues," said Mr Prasad. RCom is also looking at international remittance, as its Reliance India Call card has a network of distributors overseas.

In true mobile remittance, the receiver need not go to the bank but only to prepaid outlets or distributors of the mobile service provider for the cash.

Bharti Airtel recently tied up with State Bank of India for mobile remittance, and is pilot testing it at a few villages in India. "We need regulatory approvals, this is going to take some time," said a spokesperson for the company.

Bharti Airtel tied up with SBI at the recent 3GSM World Congress in Barcelona, where the Mobile Money Transfer (MMT) service, which allows remittance of money across international borders through the SMS facility, was launched. Vodafone, which has agreed to buy Hutchison Essar in India, also tied up with Citibank Corp for international money remittance.

Security highlights

According to operators, security will in fact be the distinctive feature of mobile transactions. "The best thing about the telecom and mobile industry is that every transaction can be logged, tracked and retrieved. There is an audit trail of every leg of transaction," Mr Prasad said.

Another area that RCom is working on is the transformation of the phone itself into a credit card. "The phone is rich with software so by itself it functions like a plastic," said Mr Prasad. RCom is talking to credit card companies for such a facility.

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Mobile money transfer awaits Govt nod