Transcript Slide 1

Mobile Payments Forum Of India
Regulatory Recommendations and Discussion points
Feb 2008
Regulatory Sub Committee
S.No.
Designation
Name
Organization
1.
Special Invitee
Mr. A.P. Hota
RBI
2.
Member Secretary
Mr.V.Visweswar
IDRBT
3.
Member
Mr. V. Dinesh
Citi Bank
4.
Member
Mr.Pallab Mitra
Bharti Airtel
5.
Member
Mr.Sanjay Bhargava
Eko
6.
Member
Mr.Aditya D. Menon
Obopay
7.
Member
To be decided
IIT Chennai
Sachin Khandelwal
ICICI Bank
Coordinator
Agenda
Introduction
2. Areas for Regulatory Assessment
3. Stakeholders and their expectation
4. Roles and Responsibilities
5. Regulator Framework, Policies and standards
6. Audit and Legal policies
7. Account-based Mobile Payments
8. Other Payment Considerations
1.
Introduction
Increased discussion
around providing
financial services
solutions via
mobile for social
and financial
inclusion.
This in turn will
increase adoption
of these services
making
ubiquitous and
hence successful
over time.
The more
successful
models have
centered
around Stored
value and
remittance
products
To do this successfully
we will be need to
design regulation
that encourages
common standards
and inter-operability;
with a level play field
for all stakeholders
Several examples of mobile
payments and remittances
services being used in
various parts of the world.
Some of these have been
successful (Philippines and
Africa) and others not so
successful
In India, banks, telcos
and other technology
companies, working
together could provide
provide the much
needed platform for
financial reach and
ease.
Areas for Regulatory Assessment
Banks
Telcos
Anti Money laundering
and KYC controls
Anti Money Laundering laws,
KYC regulations,
Regulatory controls
Regulatory controls
Acceptance of deposits by
Telcos,
Application hosting and
Network infrastructure
Correspondent tie-ups
Transaction monitoring
Correspondent tie-ups
Cash payment and
handling infrastructure
Fraud management /
reporting, etc.
Transaction capability and
monitoring
Transaction capability
Bank account opening
and maintenance
Tie-up with merchants
Telco Network for using
domestic money remittances
Third Party Payment
processors
Centralized cross bank
settlement mechanism
Stake Holders Expectations
Consumers :
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Personalized service
Minimal learning curve
Trust, privacy and security
Ubiquitous – anywhere, anytime and any currency
Low or zero cost of usage
Interoperable Solution
Anonymity of payments like cash
Person to person transfers
Merchants :
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Faster transaction time
Low or zero cost in using the system
Integration with existing payment systems
High security
Being able to customize the service
Real time status of the mobile payment service
Minimum settlement and Payment time
Stake Holders Expectations
Telecom Network Providers:
 Generating new income by increase in traffic
 Increased Average Revenue Per User (ARPU) and reduced
churn (increased loyalty)
 Become an attractive partner to content providers
Mobile Device Manufacturers:
 Large market adoption with embedded mobile payment
application
 Low time to market
 Increase in Average Revenue Per User (ARPU)
Stake Holders Expectations
Banks:
 Network operator independent solutions
 Payment applications designed by the bank
 Exceptional branding opportunities for banks
 Better volumes in banking – more card payments and less
cash transactions
 Customer loyalty
Software and Technology Providers:
 Large markets
 More points …….
Stake Holders Expectations
Government :
 Revenue through taxation of m-payments
 Standards
Regulator :
 Expand reach and ease of financial transactions
 Adequate standards
 AML and KYC to be of desired standards
Roles & Responsibilities
Banks
Telcos
Third Party
Payment
processors
Facilitate Money Exchange(
Inter & Intra Bank) through
existing Banking Instruments &
systems
KYC and customer history.
Ability to use Telcos KYC for
financial transactions
External low-cost
hosting for
interoperable solution
Transactional services including
processing and Audit Trail to be
maintained
Full responsibility for fraud
management as per TRAI
guidelines.
Policies enabling
audit and governance
to be framed
Fraud management & KYC
Guidelines to be adhered to
Distribution network to be used
to provide financial services
Fraud management
and checks
Banks to play active role in P2P
and cash-cash payments
External low-cost hosting at
Telco should be explored
Ensure compliance guidelines
are enforced
Setting up of infrastructure for
undertaking Domestic Money
Remittances along with the Bank
Policies enabling audit and
governance of such a model to
be framed.
Roles & Responsibilities
Banks
KYC
Txn ease
Txn cost
Compliance
Frauds
Reach
Telcos
Third Party
Payment
processors
Regulatory Framework suggested
Ride on Existing Guidelines
RBI’s Guidelines and policies on KYC , AML
 Settlement as per existing rules, guidelines &
processes.
 Messaging systems standardisation
 Guidelines for Interoperability between
Stakeholders
 Guidelines Cash In and Cash Out at Telco Outlets
 Usage of Telco’s KYC for P2P Payments
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Regulatory Framework suggested
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Account Opening should be similar to current
process and adhere to existing guidelines
Telco’s role should include providing platform to
initiate transactions and carry the messages to
the bank’s systems
Standardization of the transaction processing
and settlement
Instruction formats for payments, remittances
and Banking
Standards for instructions, interfaces, data
storage & transactions
Regulatory policies and standards
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Standards and guidelines for data exchange
AML for Funds transfer and P2P if outside Bank’s
network & monitoring carried out by the Bank
Sign up for service for Existing or new customer
Transaction: PIN based transactions domestic
remittances
Agent appointment
Audit policy
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Guidelines have to be evolved to ensure
- Customer convenience
- Transaction & Identity security
Transaction Flows between stakeholders to
adhere to existing guidelines & encryption for
security
Ombudsman to Audit systems and process of
stakeholders
Complete audit trail maintenance
Existing networks like NFS, VISA and MasterCard
etc. to be used for transactions
Legal Guidelines
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Financial Transactions monitoring as per
existing Banking regulations.
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Banking Regulation Act
Information Security Act
Evidence Act
Indian Contract Act
RBI Guidelines and Circulars
Negotiable Instruments Act
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Extension of existing Control measures to
Mobile Payments
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Dispute redressal Mechanism to take care of
Stakeholders
Account-based Mobile Payments
Bank Account based Mobile Payments:
 Large customer base between Banks & Telcos
 Collaborate for m-payment solution
 Bank account linked to mobile phone number for
transactions
Credit Card based Mobile Payments:
 Huge Credit card and Mobile Base
 Credit card number is linked to the mobile phone
number for transactions
 Ride on Existing settlement platforms
Account-based Mobile Payments
Telecommunication Company Billing of Mobile
Payments:
 Post Paid Mobile Bill/ Prepaid Topup for exending
creit to customers
 Repayment to Telco
P2P Payments
 Real time money transfers through mobile phones.
 Financial Inclusion
 KYC, AML and frauds risk need to be considered
Other Payment Considerations
To develop a suitable framework to support the
following payments:
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SIM based mobile payment application using SMS
Extension of PayPal for the mobile context
USSD based solution - mPay
Pay-Buy-Mobile
NTT DoCoMo
Suggestions and
Comments …