Un­leash­ing Tech to Move Money: Keep the Rules Sim­ple

The Economic Times - - Money - SU­GATA GHOSH

In less than a fort­night, a new tech­nol­ogy that nei­ther banks nor their cus­tomers are fully pre­pared for will be tested. A per­son with an ac­count in one bank can down­load the app of an­other bank to send money to her friend hav­ing an ac­count in a third bank and pre­fer­ring to use the app of a fourth bank. A shop­keeper can ‘pull’ money from buy­ers’ ac­count — just as he swipes a credit or debit card af­ter a pur­chase — by us­ing his hand­held de­vice once the cus­tomer clicks ‘yes’; (today, buy­ing a movie ticket or a book us­ing mo­bile wal­lets are ‘push’ trans­ac­tions that buy­ers ini­ti­ate to move money to mer­chants’ ac­counts and not the other way round).

Up to ₹ 1 lakh of such fund trans­fers will be pos­si­ble from a cell phone us­ing Uni­fied Pay­ment In­ter­face (UPI). De­vel­oped by the Na­tional Pay­ments Cor­po­ra­tion of In­dia, UPI — the new tech­nol­ogy — prom­ises to trans­fer funds from one bank ac­count to an­other with just a click on a mo­bile app.

Any­one trans­fer­ring funds will have to type in ei­ther the 12-digit Aad­haar num­ber or a vir­tual ad­dress of the per­son to whom the money is be­ing sent. Sim­i­larly, the mer­chant pulling money from a cus­tomer’s bank ac­count will have to ask for the Aad­haar num­ber or the cus­tomer’s vir­tual ad­dress (pro­vided by the banks).

About 20 banks have agreed to par­tic­i­pate on the UPI plat­form. Many are un­sure how this would turn out: whether banks with more at­trac­tive and user-friendly apps start poach­ing cus­tomers — surely, a bank whose app is down­loaded would closely track cus­tomer ex­pen­di­ture and soon start lur­ing them with of­fers and deals; whether shrink­ing float of banks would fur­ther shrivel; whether cus­tomers would find the mode of pay­ment via UPI as sim­ple as us­ing mo­bile wal­lets (that have grown fiercely).

But the dis­rup­tive force that UPI prom­ises would be fully un­leashed if users have the choice to type in the mo­bile num­ber in­stead of the Aad­haar num­ber or the vir­tual ad­dress (like XYZ@SBI.com) that the bank of­fers. Mo­bile num­bers are eas­ier to re­mem­ber and manynum­ber­swouldbe­storedin the con­tact list in the phone. The RBI has, how­ever, dis­al­lowed the use of cell phone num­bers to move mon­ey­inUPI.

Since mo­bile num­bers change, a large num­ber of cell phone users have pre­paid con­nec­tions, and tel­cos of­ten re­cy­cle a num­ber once a user sur­ren­ders it, the reg­u­la­tor, per­haps, felt that Aad­haar or a vir­tual ad­dress would be a more se­cure and sta­ble pay­ment op­tion. Also, some buy­ers may be un­will­ing to share mo­bile num­ber with mer­chants do­ing a pull trans­ac­tion; it could also be in­tended to pop­u­larise Aad­haar. The reg­u­la­tor in­tends to al­low the use of mo­bile num­bers for UPI trans­ac­tions at the later date.

But this in some way could be lim­it­ing the scope of UPI. No one re­mem­bers the Aad­haar num­ber; even fish­ing it out from the wal­let to ei­ther read out or key in the 12-digit num­ber is cum­ber­some; on the other hand, the vir­tual ad­dress would only add to the long list of log-ins and pass­words that have to be mem­o­rised. This is per­haps one of the rea­sons why ‘Im­me­di­ate Pay­ment Ser­vice’ (or IMPS) — an in­stant, in­ter-bank, elec­tronic fund trans­fer ser­vice has been slower to catch on. To use IMPS one has to re­mem­ber a seven-digit num­ber known as the mo­bile money iden­ti­fier.

If NPCI and banks have to lever­age on UPI’s po­ten­tial, they would have to map the mo­bile phone num­bers of cus­tomers and fig­ure out ways sooner than later in al­low­ing them for pay­ments. Sti­fling Basel rules on main­te­nance of min­i­mum cap­i­tal and un­set­tling new tech­nolo­gies have made life dif­fi­cult for banks. Things can only be­come tougher in the days to come. If dig­i­tal money and mo­bile bank­ing are the new games, it may be prof­itable to keep the rules sim­ple and user-friendly.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.