M-Payments allow customers to pay for goods and services using their mobile phones instead of cash, checks, or credit cards. Major banks in India offer M-Payment services that allow customers to send money via SMS, Java applications over GPRS, or WAP. The services use technologies like premium SMS, direct mobile billing, mobile web payments, and NFC. Regulations in India require that only banks licensed and physically present in India can offer these services, which must be in Indian rupees and follow KYC and AML guidelines. Customers must register with their bank before using M-Payment services.

1. M Payments
(Regulation & Guidelines)
By-Rajeshwari Raju
Shambhu Singh
Vikas Jain

2. M-Payments
• It’s a payment services operated under financial
regulation and performed from or via a mobile device.
• Instead of paying with cash, cheque, or credit cards, a
consumer can use a mobile phone to pay.
• MPFI is the umbrella organization which is responsible
for deploying mobile payments in India.
• This service is being offered by several major banks in
India.
• Customers send money by SMS, using a Java
application over GPRS, a WAP service or other mobile
communication technologies.

3. Models
• Premium SMS based transactional payments
• Direct Mobile Billing
• Mobile web payments (WAP)
• Contactless NFC (Near Field Communication)

4. Transaction Flow(M-Payments)
Mobile number
of payee
The PIN of payer
The Amount of
money
MMID of payee

5. Regulations in India
• Banks which are licensed and supervised in India and
have a physical presence in India will be permitted to
offer mobile payment services.
• The services should be restricted to only to bank
accounts/ credit card accounts in India which are
KYC/AML compliant.
• Only Indian Rupee based services should be provided.
• Banks may use the services of Business Correspondents
for extending this facility, to their customers.

6. • The guidelines issued by RBI on ‘Risks and Controls in C
&T will equally apply to Mobile payments.
• The RBI guidelines on KYC and Anti Money Laundering
(AML) as prescribed by RBI would be applicable to
customers opting for mobile based banking service.

7. Registration of customers for M-Service
• Banks should offer mobile based banking service only
to their own customers.
• Banks should have a system of registration before
commencing mobile based payment service to a
customer.
• There can be two level of services-
Basic Level
Standard Level

8. Advantages
• Secure
• Convenience
• Easy
• Fast
• Reliable

9. Technology and Security Standards
• The technology used for mobile payments must be
secure and should ensure confidentiality, integrity &
authenticity.
• The information Security Policy of the banks should be
suitably updated and enforced to take care of the
security controls required specially for mobile phone
based delivery channel.

10. • Proper system of verification of the mobile phone
number should be implemented.
• Proper level of encryption should be implemented for
communicating from the mobile handset to the bank’s.
• Use strong encryption for protecting the sensitive and
confidential information of bank and customers in
transit.
• Separate login ID and password should be provided For
WAP and Web.
• The Data Centre of the Bank and Service Providers
should have proper wired and wireless data network
protection mechanisms.

11. Some More Guidelines-
• Inter-operability
• Clearing and Settlement for inter-bank funds transfer
transactions.
• Customer Complaints and Grievance Redressal
Mechanism.
• Board level approval

12. Hurdles in M-Payments Adoption-

14. Challenges for M-Services in India
• Poor levels of literacy are a major problem in India.
• Voice-based solutions.
• Uncomfortable with technology.
• Financial inclusion.
• The mobile services have to be effective in terms of
usability, cost, efficiency, and security for
transactions of all sizes.
• M-payments options should be available even on
low end mobile handsets.

15. Consumer Protection Issues
• Banks must make mandatory disclosures of risks,
responsibilities and liabilities of the customers in doing
business through Mobile phone.
• There must be agreement between the banks and
customers.
• Bilateral contracts between the payee and payee’s bank.
• It would be the responsibility of the service providing
bank, to address the customer grievances.
• The jurisdiction of legal settlement would be within India.

16. Thank You