Did you realise your mobile phone can solve your payment issues and save a lot of your time?
While the well-informed exploit well the mobile payment systems, there is still a sizeable population in both banked and unbanked sector that refrain from utilising mobile phone as gateway for payments or financial transactions. Something is stopping so many individuals from using the several modes of engaging into financial transactions. Was it lack of awareness or concern about security?
Mobile financial transaction methods can be identified into five basic modes — SMS, Interactive Voice Response, USSD (Unstructured Supplementary Service Data), Data Connection based (mobile web browser and apps), and Near Field Communications based. Out of these five, the first four methods of mobile payments or mobile financial services have been used and experimented in past couple of years. However, no massive spike in usage of either of the medium has been noted so far.
This may be due to the fact that “mobile phones in India currently are looked upon as frivolous medium. Whether it is organised sector or unbanked sector, there is a strong need about awareness related to the security of mobile finance services available today and in near future,” opines Srinivas Nidugondi, vice president — Mobile Financial Solutions, Comviva which provides mobile value added services.
Neel Chowdhury of Obopay, which claims specialisation in mobile payment systems, has similar thoughts. Chowdhury, vice president and chief marketing officer of Obopay, states, “There is an urgent need for educating masses on mobile banking and demystifying concepts on transacting through mobiles. As a technology provider we are well endowed to help consumers to clear these misconceptions.”
Though many in India today use mobile financial services, we doubt someone would be actually making payments in large amounts using SMS gateway. “Even simple SMS based mobile payment method requires an individual to feed in specific PIN number to proceed with the payment and finally accept the transaction to pay the merchant via bank. In case the confidentiality of PIN number or other details has been shared, it is difficult to spoof a phone number, PIN number and IMEI number of device all together,” added Nidugondi.
While the private sector players roll out services, even the central banking institution of India – Reserve Bank of India also is involved at a major scale when it comes to regulations. Jaivinder Gill, managing director, NCR India, informs, “The RBI has been continuously monitoring the progress of mobile banking solutions in India and its adoption by consumers. As scalability of functions and breadth of such services increase at the mobile channel, the service providers will have to look at securing this channel from all potential points of compromise.”
Also, explaining the fortified system of mobile payments, Neel Chowdhury of Obopay said, “All Obopay accounts are protected against unauthorised transactions and use advanced encrypted security technology whenever possible to prevent unauthorised access to account holder data. When using the Obopay India service, protection against unauthorized use is provided through PIN-based authentication. Users must enter the PIN when sending or requesting money using Obopay India service from their mobile phones. Additionally, all data transmitted via the Obopay India service is protected by advanced security technology against unauthorized access. To provide this level of security, Obopay India uses multiple layers of advanced encryption algorithms so that transmitted data cannot be intercepted or compromised. ”
That clearly hints one thing — if you are sloppy about your personal bank account passwords and PINs then there is very little what such service providers can do to prevent a fraud. Mobile solutions providers have laid down multi-level authentication as well as authorisation involved processes have been laid down where the process takes place through strongly encrypted backend systems.
The SMS and IVR based solutions are best applicable to the unbanked and unorganised sector where as the more organised and matured sectors can utilise the mobile services that based on USSD, Mobile App or web browser, and Near Field Communications. Nidugondi believes that the mobile payments and financial services mix will succeed in India when each essential component in mobile financial services are placed in order and are working together.
Lot of buzz has been created in last couple of months about the Near Field Communications system and the smartphones carrying NFC chip. Near Field Communications chip allows encrypted data exchange at short ranges and consumes less power. Consider this scenario when you could just pay for your lunch at restaurants or for goods purchased at superstore by sampling waving your phone in front of another NFC chip loaded device. No need to carry around much of cash.
Currently the eco-system to spur the best out of NFC is slowly setting up where Reserve Bank of India is playing a crucial role along with TRAI. Chowdhury points out stating, “With companies such as Google, Apple banking on this technology; the future looks bright. But unfortunately this technology is not yet a part of ISO standard. Hence, this results in no protection against eavesdropping and is vulnerable to data modifications which are a great concern when it comes to financial transactions. That said, many analysts are betting big on the NFC industry and has a very positive outlook for the same. They have predicted that NFC will be the one of the greatest catalysts in the growth of mobile banking globally.”
Several solutions to facilitate mobile financial services like payments, remittances, fund transfer, and others, are being developed and in process of roll out at the banks. Handset makers, telecom service providers and banks are working together closely to build an ecosystem with a strong backend to spur the mobile money scene in India.
According to Juniper Research , the mobile payments market is expected to touch $670 billion mark by 2015. At the end of the day, the onus remains on the consumer who is required to protect every detail and confidential information that can be used to facilitate any mobile transaction. In couple of years from now, we may get to see less of actual cash since the mobile payment is evolving.