If the 2000s freed you from the tyranny of the knitting-needle bank teller, the next decade will transform your cellphone into a wallet, making cash transactions a thing of the past.
Easy transactions will be the buzzword and the cellphone the repository of cash. In the last week of 2009, the Reserve Bank of India (RBI) increased the amount of money that can be transacted through mobile phones to Rs50,000 every day, up from Rs5,000. This includes funds transfer up to Rs50,000 a day.
This is what life could look like in 2010. Your daughter studying in a far away institute falls in love with the latest model of the pink new scooter. She can text you. You can send the money to her bank account through your mobile phone and she, in turn, can pay the showroom through her cellphone.
Another significant move that the central bank has allowed is withdrawal of cash through a mobile. This has initially been allowed for a limited Rs5,000 through agents and ATMs. This opens up the possibility of every mobile phone-owning small vendor and kirana shop becoming a bank agent.
So, if you want to send money to your mother, who does not own a bank account, you can transfer the money to the mobile phone of the neighbourhood grocer she frequents. The grocer can, in turn, hand her the cash. M-commerce experts say the reference to ATMs in the RBI notification also means that you will be able to use mobile phones in place of ATM or debit cards to access cash.
RBI has also said that end-to-end encryption (a security feature used for online transactions) is not necessary for transactions less than Rs1,000. This means that low-value transactions that banks were not allowing since they were not viable due to high technology costs, will now be possible.
Expect a huge shift to mobile banking from the financially excluded population, though it will take a while before banks and mobile operators make these available and when vendors, like m-commerce sites and conventional shops and malls, gear up to offer these services.
Already 32 banks, including all major public sector, private and foreign banks can offer mobile banking services. ICICI Bank Ltd, Citibank, State Bank of India, HDFC Bank Ltd and Axis Bank Ltd are on the green list, as are all the major telephone networks.
But mass use will have to wait for a seamless transaction interface, where all banks need to connect with all mobile service providers.
Safety does remain an issue that needs to be sorted out. Who is responsible for money stolen off a cellphone—the mobile operator, the bank or the service provider—is still a deep shade of grey. Taken-for-granted facilities such as a stop-payment is yet not available on the mobile banking platform. Once the transaction is approved, there is no going back as banks will not be able to reverse the transaction.
While competition will sort most of these issues out, do be careful with your cell-let (cellphone plus wallet) in 2010.