Project on IMPS (Immediate Payment Service)

8/9/2019 Project on IMPS (Immediate Payment Service)

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A project report on

Immediate Payment Service

for

Kotak Mahindra Bank

In partial fulfillment of the requirements of

Post Graduation Diploma in Business Management

conducted by

Rizvi Academy o Management

under the guidance of

Pro! Imran Kazi

Submitted by

"ayeem I! #akda$ala

PGDBM

Batch: !"# $ !"%&


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%&R'I(I%A'&

'his is to certify that( )Mr! "ayeem I! #akda$ala)pursuing Post Graduation

Diploma in Business Management from *i+,i Academy of Management bearing roll

number P!!- and speciali+ing in .inance has successfully completed the project titled

*IMM&DIA'& PA+M&"' S&R,I%&-

under the guidance of Prof& Imran /a+i in partial fulfillment of the requirement of Post

Graduate Diploma in Business Management by *i+,i Academy of Management for the

academic year !"# $ !"%&

Pro! Imran Kazi

0Project Guide1

Pro! .mar (aroo/ Dr! Kalim Khan

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S'.D&"' D&%#ARA'I0"

I hereby declare that the dissertation submitted in partial fulfillment of requirement for

the a3ard of PGDBM to *i+,i Academy of Management in my origin of 3or4 and has

not been submitted for a3ard of any other degree of diploma fello3ship or for similar

title or pri+es&

I further certify that I ha,e no objection and grant the rights to *i+,i Academy of

Management or Mumbai 5ni,ersity to publish any chapter 6 projects if they deem fit in

journals or maga+ines or ne3spapers 3ithout any permission&

Place: Mumbai

7ame: 7ayeem I& 8a4da3ala

2lass: PGDBM 0!"# $ !"%1

Signature:

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A%K"01#&DG&M&"'

A successful and satisfactory completion of any significant tas4 is the outcome of

in,aluable aggregate contribution of differential personnel pulls in radial direction(

e9plicitly or implicitly&

I ascribe my success in this ,enture to my guide Proessor Imran Kazi for his

scholarly guidance( constant encouragement and untiring patience( I had the pri,ilege to

accomplish this entire 3or4 as a reflection of his thoughts( ideas( concept and abo,e all

his modest efforts&

I am grateful to all the staff members of Rizvi Academy o Management( for gi,ing

me the encouragement and all necessary facilities for carrying out this project 3or4&

Also I 3ould li4e to than4 our director Dr! Kalim Khan3ho has pro,ided us 3ith the

necessary infrastructure and guidance in the course of the project&

8ast but not the least( I am than4ful to all those 3ho indirectly e9tended their co

operation& ;ithout their help this project 3ould not ha,e been in the current shape&

7ayeem I& 8a4da3ala

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IMM


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&2&%.'I,& S.MMAR+

IMPS offers an instant( ?@( interban4 electronic fund transfer ser,ice through mobile

phones& IMPS facilitate customers to use mobile instruments as a channel for accessing

their ban4 accounts and put high interban4 fund transfers in a secured manner 3ith

immediate confirmation features&

2urrently majority of interban4 mobile fund transfer transactions are channeli+ed through

7


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I"D&2

Sr!"o! 'opic Pg!"o

!

3 Introduction to Payment Systems in India 3

4 "e$ Initiatives 5y RBI on electronic payments and their 6ustiication 4

&" Paperbased Payments

&


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'AB8< . 27'


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PSS Act as 3ell as the Payment and Settlement System *egulations( !!F framed there

under came into effect from August "( !!F& In terms of Section ? of the PSS Act( no

person other than the *eser,e Ban4 of India 0*BI1 can commence or operate a payment

system in India unless authori+ed by *BI& *eser,e Ban4 has since authori+ed payment

system operators of prepaid payment instruments( card schemes( crossborder inbound

money transfers( Automated 'eller Machine 0A'M1 net3or4s and centrali+ed clearing

arrangements&

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2hapter

"&1 I"I'IA'I,&S B+ RBI 0" &%'R0"I% PA+M&"'S A"D

'?&IR @.S'I(I%A'I0"

'he *eser,e Ban4 has ta4en many initiati,es to3ards introducing and upgrading safe and

efficient modes of payment systems in the country to meet the requirements of the public

at large& 'he dominant features of large geographic spread of the country and the ,ast

net3or4 of branches of the Indian ban4ing system require the logistics of collection and

deli,ery of paper instruments& 'hese aspects of the ban4ing structure in the country ha,e

al3ays been 4ept in mind 3hile de,eloping the payment systems&

4!3 Paper5ased Payments

5se of paperbased instruments 0li4e cheques( drafts( and the li4e1 accounts for nearly

E! of the ,olume of total noncash transactions in the country& In ,alue terms( the share

is presently around ""& 'his share has been steadily decreasing o,er a period of time

and electronic mode gained popularity due to the concerted efforts of *eser,e Ban4 of

India to populari+e the electronic payment products in preference to cash and cheques&

Since paper based payments occupy an important place in the country( *eser,e Ban4 had

introduced Magnetic In4 2haracter *ecognition 0MI2*1 technology for speeding up and

bringing in efficiency in processing of cheques&

8ater( a separate Cigh >alue 2learing 3as introduced for clearing cheques of ,alue

*upees one la4h and abo,e& 'his clearing 3as a,ailable at select large centers in the

country 0since discontinued1& *ecent de,elopments in paperbased instruments include

launch of Speed 2learing 0for local clearance of outstation cheques dra3n on core

ban4ing enabled branches of ban4s1( introduction of cheque truncation system 0to restrict

physical mo,ement of cheques and enable use of images for payment processing1(

framing 2'S!"! Standards 0for enhancing the security features on cheque forms1 and

the li4e&

;hile the o,erall thrust is to reduce the use of paper for transactions( gi,en the fact that it

3ould ta4e some time to completely mo,e to the electronic mode( the intention is to

reduce the mo,ement of paper $ both for local and outstation clearance of cheques&

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4!4 &lectronic Payments

'he initiati,es ta4en by *BI in the mideighties and earlynineties focused on

technologybased solutions for the impro,ement of the payment and settlement systeminfrastructure( coupled 3ith the introduction of ne3 payment products by ta4ing

ad,antage of the technological ad,ancements in ban4s& 'he continued increase in the

,olume of cheques added pressure on the e9isting setup( thus necessitating a cost

effecti,e alternati,e system&

Electronic Clearing Service (ECS) Credit

'he Ban4 introduced the


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Electronic Clearing Service (ECS) Debit

'he


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*'GS is a funds transfer systems 3here transfer of money ta4es place from one ban4 to

another on a Jreal timeJ and on JgrossJ basis& Settlement in Jreal timeJ means payment

transaction is not subjected to any 3aiting period& JGross settlementJ means the

transaction is settled on one to one basis 3ithout bunching or netting 3ith any other

transaction& nce processed( payments are final and irre,ocable& 'his 3as introduced in

!!? and settles all interban4 payments and customer transactions abo,e K la4h&

Clearing Corporation of ndia !imited (CC!)

22I8 3as set up in April !!" by ban4s( financial institutions and primary dealers( to

function as an industry ser,ice organi+ation for clearing and settlement of trades in

money mar4et( go,ernment securities and foreign e9change mar4ets&

'he 2learing 2orporation plays the crucial role of a 2entral 2ounter Party 022P1 in the

go,ernment securities( 5SD $I7* fore9 e9change 0both spot and for3ard segments1 and

2ollaterised Borro3ing and 8ending bligation 02B81 mar4ets& 22I8 plays the role ofa central counterparty 3hereby( the contract bet3een buyer and seller gets replaced by

t3o ne3 contracts bet3een 22I8 and each of the t3o parties& 'his process is 4no3n as

)7o,ation& 'hrough no,ation( the counterparty credit ris4 bet3een the buyer and seller is

eliminated 3ith 22I8 subsuming all counterparty and credit ris4s& In order to minimi+e

these ris4s( that it e9poses itself to( 22I8 follo3s specific ris4 management practices

3hich are as per international best practices& In addition to the guaranteed settlement(

22I8 also pro,ides non guaranteed settlement ser,ices for 7ational .inancial S3itch

0Inter ban4 A'M transactions1 and for rupee deri,ati,es such as Interest *ate S3aps&

22I8 is also pro,iding a reporting platform and acts as a repository for ,er the 2ounter0'21 products&

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4!7 0ther Payment Systems

"re#paid "ayment Systems

Prepaid instruments are payment instruments that facilitate purchase of goods and

ser,ices against the ,alue stored on these instruments& 'he ,alue stored on such

instruments represents the ,alue paid for by the holders by cash( by debit to a ban4

account( or by credit card& 'he prepaid payment instruments can be issued in the form of

smart cards( magnetic stripe cards( internet accounts( internet 3allets( mobile accounts(

mobile 3allets( paper ,ouchers( etc&

Subsequent to the notification of the PSS Act( policy guidelines for issuance and

operation of prepaid instruments in India 3ere issued in the public interest to regulate the

issue of prepaid payment instruments in the country&

'he use of prepaid payment instruments for cross border transactions has not been

permitted( e9cept for the payment instruments appro,ed under .oreign


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3here the customerLs account gets debited 3ithout actual disbursal of cash( the *eser,e

Ban4 has mandated recrediting of such failed transactions 3ithin " 3or4ing day and

mandated compensation for delays beyond the stipulated period& .urthermore( a

standardi+ed template has been prescribed for displaying at all A'M locations to facilitate

lodging of complaints by customers&

'here are o,er fi,e la4h PS terminals in the country( 3hich enable customers to ma4e

payments for purchases of goods and ser,ices by means of credit6debit cards& 'o facilitate

customer con,enience the Ban4 has also permitted cash 3ithdra3al using debit cards

issued by the ban4s at PS terminals&

'he PS for accepting card payments also include online payment gate3ays& 'his facility

is used for enabling online payments for goods and ser,ices& 'he online payment are

enabled through o3n payment gate3ays or third party ser,ice pro,iders called

intermediaries& In payment transactions in,ol,ing intermediaries( these intermediaries act

as the initial recipient of payments and distribute the payment to merchants& In suchtransactions( the customers are e9posed to the uncertainty of payment as most merchants

treat the payments as final on receipt from the intermediaries& In this regard safeguard the

interests of customers and to ensure that the payments made by them using

*

0technically referred to as card not present 027P1 transactions1( *eser,e Ban4 mandatedthat all 27P transactions should be additionally authenticated based on information not

a,ailable on the card and an online alert should be sent to the cardholders for such

transactions&

4!9 "ational Payments %orporation o India

'he *eser,e Ban4 encouraged the setting up of 7ational Payments 2orporation of India

07P2I1 to act as an umbrella organi+ation for operating ,arious *etail Payment Systems

0*PS1 in India& 7P2I became functional in early !!-& 7P2I has ta4en o,er 7ational

.inancial S3itch 07.S1 from Institute for De,elopment and *esearch in Ban4ing

'echnology 0ID*B'1& 7P2I is e9pected to bring greater efficiency by 3ay of uniformity

and standardi+ation in retail payments and e9panding and e9tending the reach of both

e9isting and inno,ati,e payment products for greater customer con,enience&

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4!; 0versight o Payment and Settlement Systems

,ersight of the payment and settlement systems is a central ban4 function 3hereby the

objecti,es of safety and efficiency are promoted by monitoring e9isting and planned

systems( assessing them against these objecti,es and( 3here necessary( inducing change&

By o,erseeing payment and settlement systems( central ban4s help to maintain systemic

stability and reduce systemic ris4( and to maintain public confidence in payment and

settlement systems&

'he Payment and Settlement Systems Act( !! and the Payment and Settlement Systems

*egulations( !!F framed there under( pro,ide the necessary statutory bac4ing to the

*eser,e Ban4 of India for underta4ing the ,ersight function o,er the payment and

settlement systems in the country&

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2hapter #

I"'R0D.%'I0" '0 IMPS

7!3 Background

2urrently majority of interban4 mobile fund transfer transactions are channeli+ed through

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Anytime( any3here ser,ice

Safe secure

Simple easy to use

?#E% a,ailability

Instant confirmation to sender and recei,er

7!7 056ectives

'o enable ban4 customers to use mobile instruments as a channel for accessing

their ban4s accounts and remit funds

Ma4ing payment simpler just 3ith the mobile number of the beneficiary

'o subser,e the goal of *eser,e Ban4 of India 0*BI1 in electronification of retail

payments

'o facilitate mobile payment systems already introduced in India 3ith the *eser,e

Ban4 of India Mobile Payment Guidelines !!F to be interoperable across ban4s

and mobile operators in a safe and secured manner

'o build the foundation for a full range of mobile based Ban4ing ser,ices&

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2hapter ?

PAR'I&S I",0#,&D : '+P&S 0( 'RA"S(&R

'he participants or IMPS $ill 5e as ollo$s

*emitter 0Sender1

Beneficiary 0*ecei,er1

Ban4s

7ational .inancial S3itch $ 7P2I

(ollo$ing are the types o IMPS services

IMPS .unds 'ransfer Person to Person 0PP1

IMPS .unds 'ransfer through Account 7umber 6 I.S2

IMPS Merchant Payments

7ational 5nified 5SSD Platform 0755P1

'his ser,ice is brought to you by 7ational Payments 2orporation of India 07P2I1 in

collaboration 3ith Member Ban4s&

9!3 IMPS (unds 'ranser C Person to Person P4PE

9!3a Getting Started

*egister mobile number 3ith respecti,e ban4

Generate MMID& MMID 0Mobile Money Identifier1 is digit number( to be

issued by the Ban4 to the customer upon registration

Get MPI7& MPI7 is Mobile Ban4ing PI7 $ secret pass3ord $ to be used by

customer during transaction for authentication and security Do3nload mobile ban4ing application or use SMS 6 5SSD facility as pro,ided by

the Ban4 to ma4e payment

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9!35 Sending money

Initiate IMPS transaction using Ban4 mobile ban4ing application or SMS 6

5SSD facility pro,ided by Ban4

2ustomer needs to enter beneficiary mobile number( beneficiary MMID(

Amount and MPI7 for initiating transaction& 2ustomer shall recei,e

confirmation SMS for the transaction initiated

9!45 Receiving money

*egister your mobile number 3ith your account in the Ban4 Get MMID from the Ban4

Share your mobile number and MMID 3ith sender

As4 the sender to send money

9!4 IMPS Merchant Payments

9!4a 0vervie$

IMPS Merchant Payments 0PM $ Persontomerchant1 ser,ice allo3s customers

to ma4e instant( ?( interban4 payments to merchants or enterprises ,ia mobile

phone& IMPS enables mobile ban4ing users a facility to ma4e payment to

merchants and enterprises( through ,arious access channels such as Internet(

Mobile Phone( I>*( SMS( 5SSD&

2ustomer can ma4e payment to any 4ind of merchant using IMPS merchant

payments ser,ice:

"& Mobile topup 6 D'C topup

& Insurance premium payment

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#& nline shopping

?& ,erthecounter payments

%& .ees payments to schools 6 colleges 6 uni,ersities

E& 5tility Bill payments

& 'ra,el 'ic4eting

'he 4ey features of IMPS merchant payments ser,ice are as follo3s:

"& Instant Interban4 fund transfer

& Merchant needs to get onboard IMPS net3or4 3ith one Ban4& 2ustomer of

any Ban4 in the IMPS merchant net3or4 can ma4e payment to merchantthrough IMPS

#& 2on,enient and timesa,ing

?& Anytime( any3here ser,ice

%& Safe secure

E& ?#E% a,ailability

& Instant confirmation to sender and recei,er

9!45 Getting started

2ustomer needs to be a mobile ban4ing user of their respecti,e Ban4& 2ustomer

needs to do the follo3ing in order to get started:

"& *egister mobile number 3ith the account in the respecti,e Ban4

& Get MMID& MMID stands for Mobile Money Identifier and is digit number

that is pro,ided by Ban4 to customer& 'his number is used to identifycustomer Ban4 and is lin4ed to the account number& 'he combination of

mobile number and MMID is unique for the particular account( and customer

can lin4 same mobile number 3ith multiple accounts in the same Ban4( and

get separate MMID for each account

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#& Get MPI7& MPI7 is Mobile PI7( a secret pass3ord that is pro,ided by Ban4

to customer& 2ustomer needs to authenticate transaction using MPI7

?& Do3nload mobile ban4ing application or use SMS 6 5SSD facility pro,ided

by the Ban4& In order to perform IMPS transactions( customer needs to

do3nload mobile ban4ing application or use SMS 6 5SSD facility pro,idedby the Ban4

%& Perform transaction using mobile ban4ing application or SMS 6 5SSD facility

9!4c 1orking o IMPS

'here are t3o 3ays in 3hich IMPS merchant payment 0PM $ Personto

merchant1 transaction can be performed:

"& 2ustomer initiated transaction 0PM P5SC1

& Merchant initiated transaction 0PM P5881

Customer initiated transaction (P2M PUSH)

In the customer initiated transaction 0PM P5SC1( customer initiates transaction

through the Ban4s mobile ban4ing application or SMS facility pro,ided by the Ban4&

'he Ban4 offers )IMPS merchant payments form in the mobile ban4ing application

0this form is a,ailable in )IMPS menu on the main menu of mobile application1 or

SMS synta9 for performing PM P5SC transaction& 2ustomer needs to enter the

follo3ing parameters:

"& Merchant mobile number

& Merchant MMID

#& Amount

?& MPI7

%& Payment *eference

Payment *eference is an optional %! characters field pro,ided& 'his field 3ill be used

to enter the unique reference for the payment( and identifies the transaction to the

merchant& 'he merchant decides 3hat customer 3ill enter in this field& .or e&g& for

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insurance premium payment( customer may need to enter policy number in the

payment reference fieldN for electricity bill payment( it may be consumer number& 'he

synta9 and information to be input in the payment reference field 3ill be decided by

merchant( and communication of the same 3ill be merchant o3nership&

'he SMS synta9 for ma4ing PM P5SC transaction through SMS is as follo3s:

MIMPS OMerchant mobile numberOMerchant MMIDOAmountOM

PI7OPayment *eference to Ban4s long code or short code number&

n initiating transaction as abo,e( customer recei,es the confirmation SMS 3ith

status of transaction shortly&

.or IMPS PM P5SC transaction initiated through SMS( transaction limit is *s

%(!!!6 per day 0for most ban4s1( and for transactions initiated through mobile

ban4ing application( transaction limit is as decided by the Ban4 0*s %!(!!!6 for mostban4s1

Merchant initiated transaction (P2M PULL)

In Merchant Initiated transaction 0PM P5881( the transaction is initiated through

Merchant application 0such as Merchant 3ebsite( ;AP site( I>*( mobile application1&

'he typical steps to follo3 for ma4ing transaction through PM P588 are as follo3s:

"& >isit merchant application such as 3eb site( mobile application( or ;AP site

& Select product 6 ser,ice for 3hich payment is to be made

#& In the payment options a,ailable( choose IMPS

?&


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Pass3ord( as generated by customer1&

'P needs to be generated by customer for each transaction& 'P can be generated

by customer by using mobile ban4ing application or SMS facility as pro,ided by the

Ban4& 'he Ban4 offers )Generate 'P form in the mobile ban4ing application 0this

form is a,ailable in )IMPS menu 3ithin main menu of mobile ban4ing application1

or SMS synta9 for )Generate 'P transaction& 2ustomer needs the follo3ing

parameters

"& MPI7

'he SMS synta9 for )Generate 'P through SMS is as follo3s:

'P OMPI7 to Ban4s long code or short code number&

n initiating transaction as abo,e( customer recei,es the confirmation SMS 3ith

status of transaction shortly&

'he 'P generated as abo,e has follo3ing characteristics:

"& 'P is ,alid for " hour from time of generation

& If 'P is generated through SMS( the transaction limit is *s %(!!!6 and if 'P is

generated through mobile ban4ing application( the transaction limit is as decided

by the Ban4 0*s %!(!!!6 for most ban4s1

#& 'P is ,alid only for one transaction $ Successful or .ailure

?& nly one 'P 0latest generated 'P1 is ,alid at a time

9!7 IMPS (unds 'ranser through Account "um5er : I(S%

9!7a 0vervie$

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2urrently( IMPS PersontoPerson funds transfer requires the *emitter customer

to ma4e funds transfer using Beneficiary Mobile 7umber and MMID& Both

*emitter as 3ell as Beneficiary need to register their mobile number 3ith their

respecti,e Ban4 and get MMID( in order to send 6 recei,e funds using IMPS&

'here may be cases 3here *emitter is enabled on Mobile Ban4ing( but

Beneficiary mobile number is not registered 3ith the Ban4 account& In such cases(

*emitter shall not be able to send money to the Beneficiary&

As per the feedbac4 recei,ed from Ban4ing community( the IMPS funds transfer

shall no3 be possible using Beneficiary account number and I.S code as 3ell( in

addition to Beneficiary mobile number and MMID&

9!75 1orking o IMPS

In the IMPS menu( a transaction type )IMPS funds transfer $ 'o account number

3ill be a,ailable& .ollo3ing fields need to be entered:

a& Beneficiary account number

b& Beneficiary I.S2 code

c& Beneficiary account type 0optional field1

d& Amount

e& MPI7

f& *emar4s

'he SMS synta9 for ma4ing the transaction through SMS is as follo3s:

OIMPS OBeneficiary account number OBene I.S2 code Oaccount type

OAmount OSMS PI76MPI7 O*emar4s to Ban4s long code or short code

number&

9!9 "ational .niied .SSD Platorm "..PE

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9!9a 0vervie$

7ational 5nified 5SSD Platform 0755P1 offered on a short code --Q is a

ser,ice 3hich 3ould ta4e ban4ing ser,ices to e,ery common man in this country&

'he ser,ice 3ould allo3 e,ery ban4ing customer to access ban4ing ser,ices 3ith

a single number across all ban4s $ irrespecti,e of the telecom ser,ice pro,ider(mobile handset ma4e or the region&

A common platform for all ban4s instead of each ban4 ha,ing to de,elop a

platform is a strategic mo,e by 7P2I to help ban4s and let them focus on

customers to enable this ser,ice 3hile 7P2I manages the technology behind the

platform&

9!95 Beneits o "..P

--Q one number for e,ery Indian to access ban4ing ser,ices&

-! of phones used in the country are GSM phones and this ser,ice

3or4s on all GSM phones irrespecti,e of handset ma4e( cost( operating

system or e,en the telecom ser,ice pro,ider

;or4s on basic ,oice connecti,ity $ unli4e an application GP*S

connecti,ity is not required

'he customer need not do3nload any application on the phone

Ruestion and ans3er dri,en interaction $ simple for e,eryone to

understand

9!9c 1ays to get started

2ustomer requires to mobile ban4ing registered 3ith his6her ban4 by completing

belo3 process:

"& *egister mobile number 3ith respecti,e ban4&

& Generate MMID& MMID 0Mobile Money Identifier1 is digit number( to be

issued by the Ban4 to the customer upon registration&

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#& Get MPI7& MPI7 is Mobile Ban4ing PI7 $ secret pass3ord $ to be used by

customer during transaction for authentication and security&

9!9d 'he $orking o IMPS

"& 2ustomer dials F88from his mobile phone&

& 2ustomer recei,es 3elcome message as *1elcome to "ational .niied

.SSD Platorm or Mo5ile Banking! Please enter your = digit MMID!-

#& 2ustomer enters digit MMID recei,ed from the ban4 and sends the request&

?& 'he ban4 mobile ban4ing menu is displayed on the screen&

%& 2ustomer selects the transaction from the menu and enters the details as

requested in the 755P session to complete the transaction&

E& 2ustomer enters the MPI7 and confirms the transaction&

& 'ransaction is sent to the Issuer Ban4 for processing from 755P Platform&

F& Issuer ban4 completes the transaction and confirms the result on the mobile of

the customer in the session&

-& 2ustomer gets SMS in case of IMPS transaction 3ith the details of the

transaction&

Steps for transaction

"& Balance


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%& Generate 'P

E& *equest 2hec4 Boo4

9!; IMPS (unds 'ranser through A'M : Internet Banking channel

IMPS .unds 'ransfer can be done through A'M and Internet Ban4ing channels as

3ell( in addition to Mobile phones& 'he authentication 3ill be done for the*emitting customers as 02ard A'M Pin1 or 05ser Id Internet Ban4ing

Pass3ord 6 'ransaction pass3ord1 3ith appropriate e9isting t3ofactor

authentication method& Since the transaction 3ould be initiated on A'M 6 Internet

platform( the transaction limits of indi,idual Ban4s for A'M 6 Internet channel

shall apply& IMPS system is used for beneficiary identification and realtime

settlement of transactions&

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2hapter %

PR0%&SS 0( IMPS

;!3 'ransaction through mo5ile 5anking

(igure ;!3 (source : NPCI)

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;!4 'ransaction through SMS


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;!7 0'P generation through mo5ile


;!9 0'P generation through SMS

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(igure ;!; (source : NPCI)

;!; Make payment using 0'P

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(igure ;!< (source : NPCI)

;!< (lo$ o IMPS %ustomer InitiatedE

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(igure ;!= (source : NPCI)

;!= (lo$ o IMPS Merchant InitiatedE

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(igure ;!> (source : NPCI)

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2hapter

(.'.R& 0( IMPS

IMPS is all about digitali+ation& In the ne3 era( 3here e,erything is getting digitali+ed( it

is a great mo,e by 7P2I in collaboration 3ith *BI to introduce such 4ind of a ser,ice&

India is the secondlargest mobile phone user 3ith o,er -!! million users in the 3orld& It

accounted for o,er "! of the 3orlds online population in !""& Also( 3ith more and

more people accessing the ;eb through mobile phones( the Internet user base in the

country is projected to touch ?# million by August !"?( a yearonyear gro3th of F

per cent& According to the Internet And Mobile Association of India 0IAMAI1( the

Internet user base in the country stood at "-! million at the end of Hune( !"#& .or the

3hole year !"#( the Internet user base gre3 ? per cent to "# million( from "%! million

in !"& f the total user base( mobile Internet users accounted for "#! million in !"#( agro3th of about - per cent from EF million in !"&IAMAI e9pects the number of

mobile Internet users to touch "F% million by Hune !"?( accounting for about E per cent

of the Internet user base in the country&

Also( 3ith people no3adays being able to do almost all of their daily routine 3or4

through mobile( this 3ill just be an added ad,antage& Introduction of payment through

mobile and internet( 3ill enable users to complete transactions from 3here,er they 3ish

to and at 3hate,er time they intend to do it& 7either do they ha,e to stand in the long

queues of ban4s branches nor do they ha,e to physically be present at branches and

instead can complete their other 3or4 on the mo,e&

Also( it is quite e,ident that *BI 3ants to ma4e this happen so that there are no branches

physically present any3here& 'he success of IMPS 3ill ha,e *BI achie,e their goal of

electronification of retail payments&

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Belo3 chart 0retrie,ed from *BI1 sho3s the trend of mobile ban4ing application users in

India o,er the years&

(igure =!3 (source : RBI)

IndiaLs central ban4 says mobile ban4ing adoption in the country has been encouraging(

but belo3 e9pectation( due to 4ey factors such as de,ice incompatibility and lac4 of

industry collaboration&

In its halfyearly financial stability report released this 3ee4( the *eser,e Ban4 of India

0*BI1 said mobile could potentially be a 4ey catalyst for e9panding ban4ing ser,ices

across the country( including rural India& ,er %! percent of the population ha,e no

access to financial ser,ices&

'rends in Mobile Ban4ing 'ransactions

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(igure =!3 (source : RBI)

Co3e,er the flipside is that some e9perts are of the opinion that due to technological

limitations in India( mobile ban4ing 3ould not be safe mo,e&


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(igure =!9 (dated: 30thu!" 20#3) (source : ne$t%i!&hat'com)

'herefore( although some factors promise a bright future for IMPS( there are some( as

pointed out abo,e( 3hich promise many hiccups in its progressi,e path& But all in all(

although it 3ill ta4e time but certainly( IMPS 3ill be accepted 3hole heartedly by theIndians& 'he need of the hour for a bright future of IMPS is its aggressi,e promotion by

the *BI and go,ernment&

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2hapter F

%0"%#.SI0"

It is often said that 'ime is Money& 'he *BI has sho3n its belief in this by launching the

ne3 feature Immediate Payment Ser,ice 3hich focuses on transferring payments from

one person to the other 3hich is almost as real as indulging in a face to face transaction&

;hene,er money is transferred( more or less( it is al3ays ad,isable that money reaches

the other person as soon as possible& In just a matter of fe3 seconds( money is transferred

from one person to the other by just a fe3 clic4s on your mobile phone& IMPS does just

that and therefore it is indeed a ,ery inno,ati,e step ta4en by *BI& It is sure to change the

entire ban4ing mannerisms in India and ho3e,er it is sure to face many difficulties in its

progressi,e path& 'he main factor being TtrustU on mobile ban4ing applications amongst

Indians& Co3e,er( it 3ould be unfair to not ta4e into consideration the fact that inspite ofall difficulties& IMPS 3ill be a turning point in the ban4ing system of India&

=es( the trend of number of mobile ban4ing application users in India has been

continuously sho3ing an up3ard rise 3hich is a positi,e sign for the *BI yet( it cannot

be ignored that there are fe3 hiccups in the progressi,e path of *BI& 'he only positi,e

3hich fa,ors this product introduced by *BI is the increasing number of mobile

application users in India and also the incremental research and use of technology& But it

3ould be a fair argument that though number of mobile application users using mobile

ban4ing are increasing( but this gro3th is ,ery limited indeed and 3ould certainly be

stagnant at some point as it 3ould ta4e many years or maybe it is possible that the ruralpeople 3ould ne,er be 3illing to use mobile ban4ing for fund transfer because of lac4 of

technical 4no3ledge 3hich ma4es them belie,e that such payment option is ris4y& 'he

central ban4 3as also found quoting in early !"? that although increase in mobile

ban4ing application users is encouraging but it is still belo3 e9pectation&

Moreo,er( to point out some reasons 3hich are not in fa,or of IMPS are firstly( on the

side of some Indian ban4s( there is ignorance about promotion of IMPS& 'hrough

personal research( 3hen ,isited one of the ban4s of India 0not to be named1 3hich is

listed on *BI 3ebsite as one of the ban4s ha,ing registered for IMPS( the employee in

that particular ban4s branch did not 4no3 3hat IMPS is 3hen queried about theprocedure to register for it& Also( there is no effort on the part of *BI or the go,ernment

to promote IMPS through any medium of ad,ertising& Also( India is the most di,ersified

country 3here all sections of society reside& 'herefore( there is a section 3hich is ,ery

tech sa,,y 3hile there are others 3ho are not& 'here are fe3 3ho although 4no3 about

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IMPS and other modes of payment but prefer to be ignorant about it because 3here

money is concerned( many Indians e,en today do not trust completely on technology&

'here is also the older section of society 3hich does not 4no3 anything about mobile

e9cept for the basic feature of ho3 to recei,e and ma4e calls& 'herefore( unli4e other

foreign countries it is impossible for a country li4e India to ma4e all of its ban4ingpopulation use a technology dri,en payment system li4e the IMPS& Co3e,er( I 3ould

li4e to contradict my o3n point by saying that IMPS 3ill surely be a success and almost

all those 3ho ha,e accounts in ban4s and 3ho do transactions on daily basis but there

3ill be a slo3 and steady gro3th of trust in IMPS and people 3ill 3elcome it 3ith open

arms just li4e they ha,e embraced A'Ms&

IMPS 3ill surely be used by almost all of the urban population and maybe by some in

rural areas in India gradually and and this 3ill also help ban4s to operate on minimum

branches and 3ith handful employees and thus reduce cost& By the introduction of IMPS(

the day is not far 3hen ,isiting the branch of a ban4 3ill be a history 0for urban areas1&1elcome the change that India needsH $elcome IMPS!

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BIB#I0GRAP?+

'he *eser,e Ban4 of India( &&&'r%i'or!'in

7ational Payments 2orporation of India( 333&npci&org&in

'he 'imes of India( &&&'timesoindia'indiatimes'com

'he Cindu Business 8ine( &&&'thehindubusinessline&com

7e9t Big ;hat( &&&'ne$t%i!&hat'com

VD7et(&&&'dnet'com

Project on IMPS (Immediate Payment Service)

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