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All about m-commerce and secure transactions

By Probir Roy
February 15, 2010 13:57 IST
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Mobile commerce (m-commerce) is basically an extension of e-commerce on the mobile phone which enables consumers to make payments for goods and services directly from their mobile phones. This gives the consumer the benefit of making payments from anywhere without the hassle of physically being present at a store, standing in a line or turning on a PC to transact online.

m-commerce replaces wallet
An m-commerce consumer has the flexibility to use the mobile phone as a replacement to a wallet and make payments at a physical location, online or even remotely. Users can buy movie and flight tickets, pay utility bills, recharge their prepaid mobile balances, book hotels and cars, send gift vouchers and even donate to charity directly from their mobile phones thereby eliminating the process of using credit cards for online shopping, thus making the transaction far more secure.

The payments can be made by authenticating payments through mobile services providers using the mobile phone via SMS, GPRS, BREW and IVR.
The only difference between e-commerce and m-commerce is that while e-commerce is limited to PC users with an internet connection, m-commerce can use technologies as simple as SMS and IVR among other things therefore being available to the entire mobile carrying population. With mobile penetration at 10 times of the PC penetration, and expected to become one billion by 2012, it won't be long before India will become a very large player in the m-commerce  space -- explaining why many people see m-commerce akin to e-commerce on steroids!

Easy payments
The main benefit is the convenience of making a payment from anywhere in addition to providing an additional layer of security over existing banking instruments. The mobile payment solution not only provides a comprehensive platform with a vast ecosystem of online and physical merchants, travel and entertainment verticals, billers and banks accessible from any handset or operator, it ensures utmost simplicity while factoring in high security standards across the entire transaction life-cycle.

Secure transactions
Security is a major issue addressed by m-commerce as its service provides complete security in transactions -- PCI DSS 1.2, PA-DSS and Union government's Cert-IN certified. These are the most stringent security standards adopted by the global payments industry. Mobile transactions through the service providers add an additional layer of security enabling a customer to make a purchase without ever revealing any sensitive information.

Every transaction is authorised with a four digit PIN which is punched into the customer's mobile phone over an automatic, secure IVR call-back and there is no manual intervention whatsoever. This process ensures that there is complete control and security and practically eliminating the chances for frauds. Even if the mobile were to get stolen there is so no way that one can misuse the account without the PIN.

RBI hikes transaction limit
A year from its issue of a set of guidelines for mobile banking transactions, the RBI has provided a fertile environment for mobile payments by revising the guidelines and raising the transaction limit to Rs 50,000 per day for purchase of goods and services from the earlier cap of Rs 10,000. To facilitate the use of mobile phones for remittances of cash, RBI has even allowed banks to provide fund transfer services from the accounts of their customers for delivery in cash to the recipients.

Easy fund transfer
The disbursal of funds to receiver can be facilitated at automated teller machines (ATMs) or through business correspondents appointed as agents by the banks. The maximum value of such transfers is capped at Rs 5,000 per transaction and customers can remit a maximum of Rs 25,000 per month through this service.

The new guidelines mean that the process of P2P money transfer will become even faster and easier. As the receiver no longer needs to have a bank account as a pre-requisite, he or she can simply collect cash at the nearest bank or business correspondent. This opens the market up in terms of the number of people you can transfer money to in an instant as one is no longer limited to intra-bank transfers.

The mobile payment solutions provider has always been an advocate of using the SMS as the transaction authorisation protocol for all financial transactions over the mobile. On the financial inclusion side, if we go strictly by Dr Raghu Raman's recommendations of creating a National Electronic Financial Inclusion System (NEFIS), then the backbone of such a system would be in its ability to carry out small value transactions (Rs 100) at limited transaction cost (sub Rs 1). And, the only way that can be done on a mass acceptable basis is via SMS, which is the single most pervasive feature in the mobile technology revolution, cutting across all SECs, geographies, handset vendors, MNOs, etc.

A recent RBI relaxation allowing for sub Rs 1,000 transactions without recourse to end-to-end encryption, is recognition that usage of basic mobile technology for inclusive activities is critical for mass and quick adoption.

The author is the co-founder and executive director, PayMate, a mobile payment solutions provider.

Illustration: Rediff Archives

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Probir Roy