In the next two months, services that allow you to make secure online payments through your mobile phones are expected to take off in many parts of the country.
Unfortunately, these innovative methods of payments are being devised to work around the government’s failure to come up with an Electronic fund transfer policy. Currently, one cannot transfer money on the Internet at par with global standards. For example, one can transfer money to another account of the same bank but not to accounts in other banks.
This lack of government policy on e-transactions is a major impediment in the growth of e-commerce and mobile commerce in the country. A report by Assocham says that by the end of 2007-2008 e-commerce will account for Rs 5.5 crore. “The sector is witnessing nearly 100 per cent growth every year,” says Deepa Thomas, Spokesperson, e-bay India.
The lack of security over the Internet is causing concern. “Indians feel very insecure about credit card transactions on the Internet. A secure policy will give users more security and eliminate frauds,” says Manish Agarwal, VP, marketing, Rediff.com.
This fear of online transactions has prompted players to look at cellphones for options. “We are launching India’s first mobile payment service where one can pay for anything online through their mobile phones,” says Akshay Sharma, VP, Marketing, Paymate, a new website that uses SMS to validate online payments and make them safer. “But we cannot get people to transfer money to each other through their phones due to governmental restrictions,” he adds.
A senior Finance Ministry official said, “without an electronic fund transfer bill that defines the stakeholders and fixes responsibility, having a Paypal kind of money transfer in India is impossible.” Paypal is a service in the USA where one transfers money through email. It works on the E-wallet concept that allows anyone with a valid e-mail ID to send and receive money.
A registration on the e-purse provider’s website creates an electronic account or e-purse to which you transfer money from your bank account. The e-purse could then be used to make purchases on the Net, or simply transfer money to ‘anyone, anywhere’ in the world.
While the money showed up as an electronic credit in the e-purse, it was actually credited into the current account that the service provider had with a clearing and settlement bank. The transactions would be conducted through Real Time Gross Settlement (RTGS) systems to ensure immediate fund transfers.