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TRAI kicks off QoS for Mobile Money

V&D story led Trai issue a consultation paper on QoS of financial services using mobile phones, giving
a new ray of hope
Akanksha Singh
Thursday, November 25, 2010

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With Trai's consultation paper focused on delivery of

financial services using mobile phones, V&D impact
brought in ray of hope. VOICE&DATA brought into
limelight the mobile banking scenario in the world and
what can be the suitable solutions to expand this sector
and make it successful in India in our October issue. In
the same month-end, Trai has come out with a
consultative paper to seek people’s views on how to Current Issue
make mobile transactions secure.

The Consultation Paper clearly indicates that

notwithstanding the expansion of banking services in
the rural areas, a significant segment of the rural
population remains uncovered by formal banking
arrangements. Forty percent of the population in India is
unbanked. Of those who are banked, a major chunk of
the population is still under-banked, creating an
opportunity in both financial and telecom sectors.

The exponential growth of telephone services as well as Click here to book your copy
improved technology have opened the door for the mobile phone to be used as an instrument for
banking operations. Mobile telephony has evolved as a platform for future innovations that can have now
long ranging socio-economic benefits for India. Mobile banking is one such innovation. Using the
existing network and base to offer financial services in backward regions is certainly a boon for India
which has over 60% population living in rural and backward areas, more so because of infrastructure
challenges in rural areas, manpower crunch as well as increased operational costs. For example, a bank
has to invest a significant amount of money to start a bank branch. Also, the ATM penetration in rural
areas is not that high, with only 40 ATMs per million people in India.

The telecom regulator said that the telecom operators may have to sign an agreement with the banks
to guarantee delivery of the service, the security of the message over the air and also encryption of the
data which could be stored in the mobile phone. The customers should have the facility to view his
account whenever he wants. An inter-ministerial group on mobile banking had recommended creation of
mobile linked accounts by the banks. According to the group a mobile consumer should be able to
deposit and withdraw cash, transfer funds, and able to see the balance.

Also, with so much being talked about the Mobile transactions and Trai moving a step forward, banks
have also realised the gravity of this sector too.

Recently, A New service is launched for money transactions through mobile phones. Consumers will now
be able to transfer money from their accounts to any other account in the country using their
cellphones via the National Payment Corporation of India's (NPCI) Inter-bank Mobile Payment Service
(IMPS). The facility was inaugurated by Shyamala Gopinath, deputy governor, RBI.

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Till now, the transfer of money through mobile phones was only allowed if both the sender and the
receiver held accounts with the same bank . The major advantage of IMPS is that a customer does not
have to use a computer or an internet-enabled phone to transfer funds.

NPCI managing director and chief executive officer A P Hota said, 'It is India's first instant, real-time,
24x7 fund transfer facility in the retail payment sector.'

According to Reserve Bank of India guidelines, using this service, a consumer is allowed to carry out a
transaction of not more than Rs 50,000 per day. India is the world's fastest-growing mobile market and
adds 15 to 20 million new cellular users every month. The country, with a population of over 1.2 billion,
already has over 600 million mobile connections.

As of now, seven banks including HDFC , ICICI, AXIS and SBI have gone live with the system. Seven
more banks are in the process of activating the service and 22 others are expected to join the network
soon. Explaining how the system works, Hota said, ''Both the receiver and sender of the money should
have mobile numbers and hold accounts with their banks. They will both have to register with their
bank(s) to secure a seven-digit mobile money transfer identifier number (MMID). With the help of these
two numbers, the payer will be able to transfer the amount in the payee's account in real time.

It is a very positive sign of of how the business correspondent model launched by the Reserve Bank of
India four years ago is gaining traction. It is a win-win situation for all concerned. Banks are also
spotting the opportunities. Banks are able to reach remote areas without incurring the heavy expenses
that opening a branch entails. For the customers, it means a safe place to keep their money, an easier
access to loans and a proof of identity by way of their bank cards. With Banks coming in action now,
we can hope for a better system to accelerate M banking growth in India.

Operators, banks and specialist companies are gradually getting themselves organized to operate
mobile banking services.

'Implementing a banking system through mobile phones is something whose significance has become
apparent to consumers as well as the government (given the Consultation Papers by TRAI) It would
perhaps be necessary that the service providers are able to offer service level agreements (SLAs) which
give guarantee of delivery, good throughput, promptness of delivery, security of messages sent over
the air as also encryption of the data that will be stored in device for later / off-line analysis by the
customer. The methods such as IVR (Interactive Voice Response), SMS (Short Message Service), WAP
(Wireless Application Protocol), USSD (Unstructured Supplementary Service Data) and standalone
mobile applications are key options for mobile banking and delivery around these will need to be of a
significant standard,†says Manoranjan Mohapatra,CEO Comviva. VOICE&DATA explored how viable,
practical and successful Trai's suggestion in the consultation paper can prove to be.

The consultation paper talks about enhancing the framework prepared by IMG explaining key guidelines
for m-banking like KYC (Know your Customer), cash-in cash-out; small value accounts and micro
finance. In this regard, creating a mobile enabled financial ecosystem requires a paradigm shift wherein
the regulators need to take off their conventional financial regulation glasses and look at the bigger
picture which is the financial inclusion of our fellow countrymen. The need is to create a regulatory
framework that can ensure a perfect balance between financial prudence and a friendly, welcoming,
all-inclusive fiscal service.

According to Ritesh Andley, director, marketing & strategic business ventures, Utiba, 'The framework
put forward in the consultation paper, duly recognizes the power of the mobile phone in bringing about
a social revolution. The framework, which may look overambitious at first glance, is doing what we call
ecosystem building. It is using existing technologies to integrate multiple systems and databases to
create a highly valuable service offering for the masses and enabling access through the mobile
handset. We believe it is a model that should be studied by other developing nations, especially in
Africa and Latin American regions.'

Probir Roy, co-founder, Paymate says,“For India to be a true game-changer market for electronic
payments, the ‘mobile wallet’ has to seen not just purely as telco play as is being made out, Your Opinion Matters
but also something for customers of banks, 3rd party service providers (like PayMate), and large
modern retail format merchants, for the simplest of things whether it be shopping, bill payment or
ticketing.' • Does cloud
computing cast a cloud
Manoranjan mohapatra,CEO Comviva said, 'The TRAI Consultation paper is a step towards forming on the future of IT
clearly delineated framework for making mobile banking a robust network in India. This will facilitate
professionals?
greater interest on part of operators as well as vendors in the offering and will go a long way in making
banking available for the around 700 million unbanked individuals in India.'
• Is your Accounts
Trai emphasized on the safety on mobile banking in its consultation paper. It offers: Payable Solution
working for you? Think
• A simplified common template for the KYC requirements for the Mobile Linked No-Frills Accounts
which is acceptable to all service providers. Again…

• Cash-in/cash-out operations at the front-end involving deposits and withdrawals into Mobile Linked
No-Frills Accounts. BCs (or the sub-agents of BCs) undertaking these operations will perform them on CIOL Services
behalf of all banks.
IT News | IT Jobs | IT Outsourcing
• An Account Mapper that provides linkages between UID No, mobile number and the mobile linked | IT Shopping

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TRAI kicks off QoS for Mobile Money http://voicendata.ciol.com/content/news/110112501.asp

no-frills account details. The Account Mapper is essentially a table which has 3 attributes: UID number,
bank account number (including the branch routing number) and the mobile phone number, (if there is
one) of the account holder. Given a UID or mobile number, it can provide a mobile linked no-frills
account number. Account Mapper will be operated by a trusted entity that will ensure the privacy of
data.

An interoperable central payments switch called REMIT Switch. REMIT will help in executing large
volume of small value transactions across banks in real-time and at low cost. For this purpose, REMIT
will follow standard banking protocols in order to ensure security of transactions. It will use industry
messaging standards such as ISO8583 so that it is compatible with the infrastructure already in use.

Creation of INFAST (Interoperable Infrastructure for Accounting Small Transactions) as an additional

infrastructure for creating and managing mobile linked no-frills accounts. While a single INFAST
repository to be shared by all banks would be ideal, the architecture advanced under this framework
does allow multiple INFAST repositories to evolve and interoperate which will enhance the security of
this system.Â

'For the transactions generated using plain text SMS and USSD, the security of the transaction over the
air can be only as much as ensured by the operator’s environment, which is not exactly tremendous.
However, the system can ensure additional security for the information getting exchanged using an STK
or JME because the applications sitting on the SIM or phone can use 3DES or PKI to encrypt the
information getting exchanged between the handset and the back-end server,†says Ritesh Andley.

'Any method which sees high customer adoption. The most secure network does not mean anything
unless people use it or trust it or benefit from it. All methods are as secure or insecure as any other
retail payments channel,' says Roy.

'Proper bandwidth between different components/integration points such as SMSC, banks needs to
allocated so that the operators don’t face transaction failures. . System has to be highly reliable
and available, so that, even if one service is down, other server can take it without losing the integrity
of the system,' said Manoranjan Mohapatra.

Though the government had been trying to bring financial services to the rural population and the other
disadvantaged sections of society, success has been limited. With this step, we can still hope for a
new ray of revolution and with the responses of this consultation paper further steps can be taken on
the same lines. The consultation paper may result in formulation of new regulations or modification in
the existing regulations and benefit millions of mobile users who are in rural areas but can never again
be considered disadvantaged by the same.

akankshas@cybermedia.co.in

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