Interbank Mobile Payment Service (IMPS) seems to be gradually gaining ground in India as almost all major banks  have extended the service that enables account holders to access accounts and transfer funds using mobile phones. Since February 2012, around 15 banks have extended the IMPS service to their customer and the number of people adopting the service has gone up significantly.

To fuel the usages of the service IMPS, a fortnight back the National Payments Corporation of India (NPCI) announced extension of IMPS service to merchant payments. Currently, 9 banks including State Bank of India, ICICI, Kotak Mahindra, Axis Bank, HSBC and three others have enabled IMPS based merchant payment. Five banks are in testing phase, while 10 others including HDFC bank are in development phase.

How does IMPS work?

For Customer to customer to transfer, bank account holders need to register with their respective banks first. The bank then issue issues a unique seven digit number called mobile money identifier (MMID) and Mobile Banking Personal Identification Number (MPIN) to the customer.

To facilitate mobile payments, customers need to feed receiver’s mobile number, MMID, the amount to be remitted and MPIN. After the transaction, both parties get SMS confirmation. At present, consumers can transact up to Rs 50,000 through IMPS everyday.

For merchant payment

mobile banking
mobile banking

For merchant payment, there are two types of transactions- customer initiated transaction (P2M or PUSH) and merchant initiated transactions (M2P or Pull). In customer initiated transaction or PUSH, customer initiates transaction through the Bank’s mobile banking application or SMS facility provided by the Bank. Customer needs to feed  parameters such as merchant mobile number, merchant MMID, amount to be remitted, M-PIN and payment reference. Payment Reference is an optional 50 character field provided to enter the unique reference for the payment, and identifies the transaction to the merchant.

In merchant initiated transaction, the transaction is initiated through merchant application such as Merchant website, WAP site, IVR or mobile application. Merchants need to feed credentials such as service for which payment is to be made, customers mobile number, customer MMID and one-time Password(OTP). Customer needs to enter credentials like customer mobile number (as registered with the Bank), MMID (as generated by Bank) and OTP (One-Time Password generated by customer). OTP needs to be generated by customer for each transaction and is only valid for an hour from time of generation. If OTP is generated through SMS, the transaction limit is Rs 5,000 and if OTP is generated through mobile banking application, the transaction limit is as decided by the Bank (Rs 50,000 for most banks)

Growth of IMPS ( for customer to customer transfer)

In November 2010, National Payment Corporation of India (NPCI) had allowed seven banks to enable IMPS to their customer, and within 2 years of its debut around 43 other banks have offered IMPS to their customers. As per NPCI data, more than 40 million customers have generated MMID for enabling transactions over mobile phones. ICICI tops the IMPS usage amongst the banks with more than 16 million MMID issued by it, followed by Axis Bank (7.8 mn), SBI (4.5 mn) and Indian Bank (4.4 mn). Till February 2012, 35 banks had offered IMPS service, facilitated around 13,558 inter banking transactions and 22,997 intra bank transactions. However, the volume of IMPS transactions rose by 140 % within 6 months. In August 2012, the service witnessed 2,02,541 inter bank transaction and 2,82,676 intra bank transactions. The volume of amount processed through IMPS in February 2012 stood at Rs 13.14 crore  and rose by significant 151 % to Rs 32.76 crore in August.

IMPS: Road Ahead

Even though mobile operators in India are not allowed to operate mobile wallets unless they become banking correspondents in partnership with banks, mobile payment in India has been becoming popular through IMPS (customer to customer) service. This can be gauged from the above spate in number of IMPS transactions in last 6 months. Undoubtedly, given the 600 million active mobile users, ease of enabling fund transfer on fingertips and low charges over transactions, the adoption of IMPS is going to get a strong leg up.

With IMPS service now opened to merchant payments, it has potential to do wonders to the way merchants receive payment. Apart from point of sales (POS) payment, IMPS could benefit e-tailers offering Cash on Delivery (COD) s a payment option to a greater extent. IMPS can be used to receive such payments via mobile phone, at the time of delivery and it will reduce the time-cycle for getting the payments for COD orders.

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