The IMPS (inter-bank mobile payment service) launched by the NPCI (National Payments Corporation of India) in November is progressing by leaps. On 4 May, NPCI announced that the Reserve Bank of India (RBI) has approved merchant payments to be routed through this channel.

So you can use IMPS to pay utility bills, shop at retail outlets, pay fees such a school fees and insurance premiums and make donations to institutions registered with the system and have an MMID (mobile money identity). IMPS is currently restricted to remitting money from one person to another. Besides, you will also be able to initiate fund transfers though IMPS through an ATM or through net banking. Currently fund transfers through IMPS can be initiated only through mobile phones.

This is likely to take longer as banks will have to adapt their ATMs and online banking sites to offer these services. Says A.P. Hota, managing director and CEO, NPCI, “Since this is a payment gateway, security is the prime concern and hence it will require several rounds of testing and approvals before it can go live.”

Says Sanjay Sharma, managing director and CEO, IDBI Intech Ltd, “Banks will have to develop a technology to link their net banking and ATMs to the IMPS network. While going live through net banking will be easier, enabling the ATM machines should take anything between two to eight weeks.” Once this takes off, it will not be necessary for the sender to be registered for IMPS and have an MMID. “The customer’s identity will be authenticated when he keys in his username and IPIN or inserts the card in the ATM and keys in the PIN number,” says Hota. The receiver, however, needs to be registered and have an MMID. Merchant payments, on the other hand, will be rolled out sooner. As soon as the merchant establishment signs up for IMPS with its bank and is assigned an MMID, it will be ready to accept payments through this route.

In its annual monetary policy review for FY12 released on Wednesday, RBI raised the limit for unencrypted transactions—done via SMS—from the earlier Rs 1,000 to Rs 5,000. RBI also announced that mobile-based semi-closed prepaid instruments issued by companies such as Airtel Money would be treated on a par with other semi-closed payment instruments, thus raising the limit for them from Rs 5,000 to Rs 50,000, subject to conditions. The regulator issued guidelines on Thursday to this effect.

The new developments will benefit not just registered clients, but all bank account holders who go live with IMPS. Said Sharma, “Consumers will now be able to do even low-value money transfers and payments instantly, 24x7.”

To know how the new services work and how else transaction will become simpler, watch this space.

harshada.k@livemint.com