Thursday, 28 August 2014

Wallet Services gaining importance as Telecom Companies Agree On Basic Banking Services through SMSes:

Mobile companies have been persuaded by the Modi government to share a slice of their infrastructure to pave the way for basic banking services through cell phones.

Fund transfer, balance inquiry in savings account, change of PIN, mini statement, cheque book request, etc, will be possible with simple text messages from ordinary handsets and without accessing the Internet.

In the past two months, ten telecom companies have signed pacts with National Payments Corporation of India (NPCI), the payments gateway backed by the government, to facilitate the service. It will operate on Unstructured Supplementary Service Data (USSD) channel of the telcos — a simple interactive text messaging system that even allows credit and debit card transactions. However, the current plan is to restrict USSD to basic banking services, including low-value bill payments.

Telecom companies agree on basic banking services through SMSes"The primary reason for the delay in setting up this infrastructure was the apprehension of telcos that their business will be affected if they provide the USSD channel to the banking system. But Trai (Telecom Regulatory Authority of India) was justified in indicating that the communication channel should not be restricted...The service is available to anyone having a mobile phone or bank account," AP Hota, MD & CEO of NPCI told ET. Each transaction will cost the user Rs1.50.

The USSD system can widen the scope of mobile banking transactions from "wallet services" provided by telecom firms through a separate entity. While under wallet services, subscribers can carry out transactions like prepaid mobile charges, utility bill payments and money transfers among other things, the USSD enables inter-bank transactions. For instance, a subscriber of telco A with an account in Bank B can transfer money to a subscriber of telco C having an account with bank D. 
Here, telcos access NPCI's centralised system which is linked to banks.


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