MUMBAI, JUNE 12: Considering the level of interest among commercial banks to provide services to their consumers on their mobile phones, the Reserve Bank of India (RBI) has decided to make such transactions more secure and convenient.

In its draft guidelines issued on Thursday, the apex bank has stipulated that only such banks which are licensed and supervised in India and have a physical presence here will be allowed to offer mobile payment services to residents of India. The services should be restricted only to bank accounts/ credit card accounts in India which are know-your-customer (KYC) and anti money laundering (AML) norms compliant.

Mobile payment involves debiting or crediting to a customer’s account on the basis of funds transfer instruction received over the mobile phones. The RBI has said that only rupee based services would be allowed. Banks may use the services of business correspondents for extending this facility, to their customers. Banks should offer mobile based banking service only to their own customers. There should be a system of registration before commencing mobile based payment service to a customer.

There can be two levels of mobile based banking service — the first or basic level is in the nature of information like balance enquiry, SMS alert for credit or debit, status of last five transactions, and many other information providing services and the second or standard level in the nature of financial transactions such as payments, transfers and stop payments.

RBI has stipulated that prior registration of the customers would be necessary irrespective of the type of service requested. For the standard level service one time registration should be done through a signed document. The technology used for mobile payments must be secure and should ensure confidentiality, integrity, authenticity and non-repudiability. When a bank offers mobile payments service, it may be ensured that customers having mobile phones of any network operator should be in a position to request for service. Restriction, if any, to the customers of particular mobile operator(s) may be only during the pilot phase.

To ensure inter-operability between banks and between their mobile payments service providers, it is recommended that banks may adopt the message formats being developed by Mobile Payments Forum of India (MPFI). “Message formats such as ISO 8583, which is already being used by banks for switching of ATM transactions, may be suitably adapted for communication between switches where the source and destination are credit card, debit cards or pre-paid cards,” the RBI said.

The long term goal of mobile payment framework in India would be to enable fund transfer from account in one bank to any other account in the same or any other bank on a real time basis irrespective of mobile network a customer has subscribed to. “This would require inter-operability between mobile payments service providers and banks and development of a host of message formats. Banks may keep this objective while developing solution or entering into arrangements with mobile payments solution providers,” it said.