Mobile telephony is probably the fastest growing technology in India; India is now the fastest growing mobile market in the world with six million new subscribers added every month.
For millions of Indians, mobile phones may be their only gadget and their main method of modern communication. It makes a lot of sense, therefore, to look at using mobile phones in banking and payment services and that's exactly what some companies are doing.
One of the most interesting mobile payments systems comes from Paymate. Like most such services, it's SMS based and enables you to make payments online or across the counter using your mobile.
Paymate has already accumulated a base of 2,500 merchants who use their service. These include prominent portals, newspapers like Indian Express, electronics companies, hotel chains and many others. Taken together, you can use Paymate to buy a vast range of products and services.
To use Paymate, you need a mobile and a credit or debit card account with one of their partner banks (currently, they have only tied up with Citibank but there will soon be more). You don't need GPRS (General Packet Radio Service) or EDGE (Enhanced Data rates for GSM Evolution) connectivity on the phone. The only cost the service involves is the cost of sending the SMS.
Once you have registered for Paymate with the bank, you will receive a PIN (Personal Identification Number) which can and should be changed immediately. This PIN is necessary for making all transactions. This is similar to what you do with your ATM or debit card PIN.
To make a transaction, you need to give your mobile number to the authorised merchant. You will receive an SMS with the merchant's name and the payment amount and also a three letter transaction code. To complete the transaction, you simply need to reply by SMS with the transaction code and your PIN.
Your reply is sent to the bank's computer system which will authenticate the transaction and debit the requisite amount from your account. The process is completely automated; at no point does the merchant receive your credit/ debit card number or your PIN.
In addition to the PIN, Paymate has a number of security features.
For example, you can make transactions only from your own handset. In other words, to make a transaction, another person would need both your handset and your PIN.
If you lose your mobile, you can deactivate your SIM card through your operator and it is no longer possible to make transactions. Finally, there are limits of Rs 5,000 per transaction and Rs 10,000 per day, which limits your losses under the worst case scenario.
In addition to new names like Paymate, big banks like ICICI and HDFC have also moved into mobile banking. They now offer their customers a wide variety of mobile services.
ICICI mobile banking offers two major types of services: Alert Facility and Request Facility. The first allows you to subscribe to SMS alerts which get triggered based on certain events.
For instance, you can subscribe to receive an SMS if there is a credit or debit from your account which is higher than Rs 5,000 (or a higher limit if you wish). Or you might choose to receive an alert if your check bounces.
The request facility allows you to access account information on your mobile as well as execute some basic transactions.
For instance, you can run a balance enquiry or check the last three transactions on your account. You can also request a new cheque book, change your primary account or make bill payments.
HDFC also offers some mobile banking services with a similar set of features. Once again, you send an SMS to the bank number and you will receive a reply with the requested information.
You can obtain account information on all the accounts linked to your customer identification number. You can check your last three transactions, arrange for bill payments as well as stop payment on a cheque.
Mobile banking is at an early stage in India. No doubt, there will be many more players offering their services soon. The range of transactions that can be done with your mobile will grow and there will be all sorts of innovative services that we haven't even though of yet.
Perhaps the day may even come when paper cash will become as obsolete as gold and silver coins.