While I have commented on the Indian Central Bank guidelines for mobile banking previously, it does require another look as it seems as if the bank have now confirmed these guidelines. It is not clear if the bank would move to a point where these guidelines will be enforced. If this is the intention my impression is that mobile payment is in a dire position in India as the guidelines do not serve to facilitate mobile payments, but rather to inhibit the growth of this important tool to empower so many people with financial services.My position is based on the following points:
- The fact that the guidelines prohibits the deployment of money remittance services by means of mobile payment. This has been one of the important drivers of mobile payments in other countries and it is not clear why the bank would limit mobile payments in India to be only for Rupee based transactions.
- The limits on the value of transactions and daily limits imposed are so low that it would limit the deployment of services to (for instance) business users and agents. This has been the driver in many countries for the take-up of mobile payment services and it does not make sense to set these limits as this would almost close down these avenues for the growth in mobile banking.
- The fact that all payment services must be available on all mobile networks is also strange as this would remove the incentive of mobile operators to offer mobile centric services to only their subscribers. Mobile operators were major drivers in most countries for the deployment of these services. By removing them from the equation, the RBI have effectively taken a major driver out of the eco-system.
- The need for end-to-end (application level) encryption, basically eliminate the use of USSD, SMS and Browser-based payment solutions. It is only possible to conform to this requirement with SIM-resident applications or Java on the phone. Very few Indian solutions currently offers these options. Is it the intention of the bank that all service providers should change their channel strategy to conform to the guidelines?
- The role of the MPFI and the requirement of them to develop the message formats for the industry is short-sighted as this has not been achieved anywhere. In countries where interoperable mobile payment schemes exist (from Austria to Zambia), these schemes developed out of economic drivers not via established industry bodies.