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Mobile Payments in India – Easy! (With IMPS)


There’s a new way to pay people. If you have a mobile phone (who doesn’t) and a bank account with about nine banks, you can transfer money from your account to anyone else’s account, directly, cheaply and instantly.

The National Payments Corporation of India (NPCI) has a (relatively) new offering – the Interbank Mobile Payment Service (IMPS). You can use this for mobile based cash transfers from an account to an account.

Forget the jargon. Let me tell you what I did.

Shyam (my co-founder at MarketVision) gave me a 7 digit “MMID”, that he obtained by going to ICICI Bank’s Mobile Banking portion of the web site, downloading their iMobile application onto his phone, and using it to ask for an MMID. Importantly, he did it on the same phone that was registered with ICICI Bank as his phone number.

I, on the other hand, went to HDFC Bank’s Mobile Banking site, and downloaded their ngPay application on to my Nokia E63. I used my mobile number and they quickly generated an access password (which I changed) and then I used my regular netbanking access to access an “Mobile to Mobile transfer”.

(Note: I used my wireless lan to do this but you could use GPRS as well)

I entered Shyam’s phone number, MMID and the amount – below Rs. 100 – and hit OK/Confirm/Really confirm (yeah, three levels). Then something remarkable happened.

The money left my account instantly. I called Shyam, and he checked his bank account. It had reached instantly.

This is the fastest money transfer I have ever seen, at this micro level of payment.


I haven’t yet been charged fees, but it seems the IMPS backbone charges just Rs. 0.10 per transaction. For a Rs. 100 transaction, this works out to be 0.1% – beat that, Master card and Visa!

“Wow! Can I pay you?”

Of course. I’m currently having trouble getting my MMID from the bank (you don’t need an MMID to pay, only to receive) but when I do I’ll post it up. This makes for interesting ideas!

How do they do it?

NPCI already runs the National Financial Switch (NFS) which is the backbone of all interbank transcactions (which is how you can get your ICICI bank balance from an Axis Bank ATM).

For the IMPS, they just use the NFS to transfer money over. When you send, the system probably validates that it has been initiated from the same mobile registered with the bank, and the application demands your userid/password. At the receiver end also it must probably validate that the money goes into the MMID/Account combination.

Your money is secure, since you need both an MMID and a phone number to send, and the validation ensures the money goes from account to account – no middlemen.

No middlemen makes it really cheap! You can see how this can dramatically impact our lives – use our mobile phone to pay, low charges for both sending and receiving, and no cash-carrying hassles. And even better, a great payment system for Indian customers to buy!

How is the MMID Useful?

You have to give your MMID and phone number to the person that needs to pay you. The MMID is not your account number; it’s just an ID that they use to link to the eventual beneficiary account. You can’t really do much damage with an account number anyhow, and you can do even lesser damage – not a single thing that I can imagine – with your MMID.

Why have an MMID? Why not just give a phone number? Because it’s the two levels of security – you can easily mistype a mobile number, but it’s tough to mistype both a/c and MMIDs.

Currently the MMID is 7 digits, but that’s just 1 crore accounts; I imagine they’ll have to up the number of digits soon. Expect to be told of new “prefixes”.

What are the limits?

According to the RBI, a phone application that uses encryption can be used to transfer upto Rs. 50,000 per day. For non-encrypted usage – some banks might open up such transfers using SMS, later perhaps – the limit is Rs. 5,000.

Can there be fraudulent usage?

Of course. First, your mobile number needs to be stolen – either you lose your SIM card or your phone.

Before you report the loss to your bank, the thief needs to use your phone to access that payment application. Then the thief needs to hack into your Netbanking and get your user id, PIN, password and the like, because that is what you need to get to the mobile money transfer application.

And then, he needs to initiate the transaction, get money into his account, take out the money and run like hell. If you report a problem, they might return your money if it’s still in the receiver’s account.

It’s possible. Just not very likely.

Yet, there is an issue – if someone forces you to download a phishing application that looks like the apps like iMobile and ngPay. But that’s not an issue with mobile money transfer; it’s an issue with mobile banking in general.

Can this spread?

Yes, of course. Imagine low-cost payments, person to person, secure, cheap, and extremely fast.

In fact, think about it.

  • Flipkart or an online site could use it as a payment method. It’s cheaper than Paypal, credit cards or even cheques. I would offer discounts if you used this method!
  • Giving money to your friends or family is now that much simpler, and instant. Of course for this NEFT and RTGS exist, but not with this kind of speed.
  • Carrying cash has been a pain. Imagine you hire a carpenter and he will charge you Rs. 10,000 for a job, that ends up going well into the evening. You give him the money, but he’s going to have to walk in the dark, and could be mugged for it; plus, cash is unwieldy – small denominations are bulky,  and for large denomination notes people don’t give change. It’s a great replacement for cash – and the “instant” nature of the SMS’es received (the receiver doesn’t need GPRS or an application) ensures everyone’s informed and happy.
  • Cheques bounce. Money transfers don’t. That’s some security.
  • You could even choose to pay shops and stores, but for large stores there is a problem in the non-standardization of SMSes and payment entries. But there is a technical solution, though it involves issues with training POS agents and middleware connectivity. (This is obscure, I’ll leave it out of the blog)
  • This can revolutionize small payments where it’s not efficient to use cards, cheques or even NEFT. Think of the Rs. 5 transfer. IMPS based transfer is a massively scalable solution.

The GPRS costs need to come down, but even with GPRS it’s not very expensive. Some banks might provide this using SMS as well.

I’ll post more charts later. On usage, growth and where all it’s possible. But this is incredible.

Contact me (deepakshenoy at gmail) if you’d like to get in touch about this. Building a more comprehensive report on this subject.


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