Skip to main content

Mobile Payments

Banks have launched services that will allow account holders to transfer Rs 50,000 a day

You can use your mobile to transfer money from your bank account to another. Last week, several large banks have started offering this service with the help of a government body, National Payments Corporation of India (NPCI).

Called as Instant Mobile Payment System (IMPS), the technology does not require phones to be internet-enabled. The transfers are done by using short message service (SMS).

Until now, the transfer of money through mobile phones was possible only if both the sender and the receiver held accounts with the same bank.

NCPI's platform, for the first time, enables users to transfer money between accounts of different banks.

As of now, seven banks, including HDFC Bank, ICICI Bank, Axis Bank and State Bank of India, 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.

To start transferring money from your account, you will first need to register with your bank. The bank will provide you a Mobile Money Identifier (MMID) and a Mobile PIN (MPIN).

The part that requires getting used to is formatting of text message. There are pre-defined text message formats that you need to type while transferring money.

IMPS is a step further to the existing methods of remitting cash, which include wire transfers, Real Time Gross Settlement (RTGS. This is also the fastest mode of transferring money at present. NPCI claims the transaction would be done in 15-20 seconds. The service eliminates a person directly handling cash while saving on transaction costs and time.

CHARGES

At present, banks are offering this service for free. However, most of them have said that they would apply a small fixed charge in future, like in case of internet/online banking. For internet-based fund transfers, most of the bank levy around Rs 5 each transaction for amount up to Rs 1 lakh.

Even at this rate, the transactions would be cost effective. The total cost of completing the transaction depends on charges for sending the text message and the fee bank will apply for each transaction. Your bank may also charge you fee, either one-time or annually to avail this service.

For transferring `1,000, a person, the cost could be 0.7 - 1 per cent of the amount. However, these are fixed costs and would turn lower if the amount is high.

Using this service, you can transfer up to `50,000 each day, according to the Reserve Bank of India's guidelines. The norms also state that transactions up to `1,000 does not require encryption.

SECURITY

NPCI's platform act as intermediary between sender's and receiver's bank. Bankers claim that this system is foolproof and secure because all it involves from the sender's end is a text message in defined format.

FUTURE

At the moment, few banks are ready to roll out the services to their customers. As more banks offer this service, a person can use this system for smaller-ticket size transactions like monthly payments to maids and drivers. It would also save on frequent trips to the bank for deposit and withdrawal.

However, the system's success would depend on its eventual ease of transaction capability, its promise of a transaction in real time.

ADVANTAGES:

Easy to use, Requires no special handset

Remittance on real-time basis making it the fastest system to send and receive money

No physical cash handling. Saves on time required to visit bank

Safe and more credible, as managed by a government body

DISADVANTAGES:

Sender and receiver both need a bank account, unlike money transfer through post offices

Both sender and receivers bank should be a part of the system

Requires documentation to start the service that may discourage unorganised sector

Large transfers not possible as now. It has a cap of `50,000

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now