National Payment Corporation of India (NPCI) has extended its Interbank Mobile Payment Service (IMPS) to merchants in a bid to facilitate micro payments for service transactions at a cost of 25 paisa per transaction.
"There are around 10 million kirana stores, but the total number of point of sales terminals in India is less than seven lakhs. IMPS will facilitate micropayments over the counter electronically" said A P Hota, MD & CEO, NPCI. The Person-to-merchant (P2M) service could potentially see customers going cashless to facilitate daily payment needs for shopping at common hot spots like kirana stores.
NPCI’s website states that SBI, Union Bank of India, Kotak Mahindra Bank, ICICI Bank, HSBC Bank, Canara Bank, Standard Chartered Bank and Yes Bank are currently participating in IMPS merchant payments. Other public and private sector banks including Axis Bank, HDFC Bank, Citibank, Bank of Baroda and IDBI Bank are either in the testing or development phase for IMPS merchant payments.
Customers of any participating bank will need to register themselves with their bank’s IMPS network. Merchants will be required to register with a single participating bank and avail access to its IMPS network.
P2M services can be availed 24/7 and virtually anywhere as long as parties have access to required information including one time passwords (OTP), Mobile Money Identifier (MMID), Mobile PIN (M-PIN), amount and the payment reference.
Registered mobile users will be able to make payments of up to Rs. 5,000 for transactions initiated via SMS. High value transactions of up to Rs. 50,000 can be initiated by accessing mobile banking apps.
Services including mobile recharges, insurance premium payments, utility bill payments, DTH top ups and ticketing payments were already accessible on the IMPS merchant payments platform.
With extension of the platform’s services to over-the-counter (OTC) payments, customers will effectively be able to make cashless transactions as long as they, and the merchant, are registered on the IMPS network.
Services like IMPS will potentially bring in more walk-ins for merchants and reduce chances of forgoing customers because of lack of change. These services can also pose as mode of payments which are potentially cumbersome from taxation and inventory management perspectives in the initial ‘change-over’ period.
There will certainly be a section of the population who will prefer carrying notes and coins as opposed to remembering and punching in a string of numbers including MMID, M-PIN and OTP.
However the tech-savvy and mobile friendly Indian will happily venture out to the neighbourhood kirana shop to pay for milk and bread via P2M. Mobile facilitated OTC transaction like IMPS pose to be a savior in classic situations where a grocery shop is closer than an ATM.
As the mobile user base in India grows leaps and bounds it is likely that the concept of cashless shopping will be welcomed by the masses. Commentators will wait with bated breath to see if it remains an alternative mode of payment or has the potential to transform itself into a primary payment mode for the billion plus population.
What’s your take? Can IMPS micropayments become popular and go mainstream?