RBI Bullish On Mobile Transactions

RBI Governor Dr Y.V. Reddy told newspersons that banking using the mobile phone is currently being tested at the Institute for Development and Research in Banking Technology (IDRBT), reports The Hindu Businessline. He believes that mobile telephony will make financial transactions ‘quicker, safer and cheaper’, and the RBI will push mobile banking only when there are sufficient safeguards in place, including ‘know-your-customer norms.’

That’s encouraging since one of the main issues that I see regarding electronic payments is that there could be instances where the ‘know-your-customer’ (KYC) norms are bypassed and electronic payments could then be misused. Electronic payments need to be tied in with banks. Sucheta Dalal has mentioned similar issues with e-payments here.
The RBI governer was particularly bullish on the smart card technology for mobile payments, which is strange: At an e-payments conference a couple of months ago, Aravind Pai of NXP SemiConductors had told me that RFID payments are far more secure than any other mode of m-payment. However, Bruce Schneier, writing for the Washington Post, disagrees. How easy is it to replicate smart cards, or steal information from them? While it is true that enabling mobile transactions could make up for the low credit card penetration in India and also enable easy micro-payments, one certainly needs to be sure of the security issues related to the technology before pushing it. Personally, I’d be more comfortable with credit limits on mobile payments to minimise possible damages.
Related:
– Bruce Schneier: The ID Chip You Don’t Want in Your Passport
– Sucheta Dalal: E-wallets useful, but can be risky, too
– Sucheta Dalal: Regulation must keep pace with markets
PayMate To Roll Out SMS Payment With Restaurants

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