Un-banked Pay by Phone service to quickly enable ‘Financial Inclusion’ and ‘Micro Finance’ support to people in lower strata across the country.
Introduction: Money through Mobile. The following proposal of Money Through Mobile (MTM) is a path breaking, state of the art Pay by Phone (PBP) idea to enable all sorts of day to day money transactions using phones any time from anywhere in the service area.
- MTM is different from Mobile Banking. At the outset, ‘Money through Mobile’ system proposed herein is transparent to banking industry and services and non-Internet dependent and therefore, is entirely different service and not to be confused with mobility in Banking service or service of e-banking using Mobile phones being currently provided by banks, termed as ‘Mobile Banking’ service.
2. ‘Financial Inclusion’ and ‘Micro Finance’ support to people in the lower strata.
In addition to offering convenient and easy to use ‘Pay by Phone’ service, there is a need to urgently implement non-banking and non- internet dependent solutions to realize Financial Inclusion and provide Micro Finance support to people in the lower social and economic strata. Please see list of features given below.
Money through Mobile (MTM) is a non-Banking Service (NBS) that can quickly accelerate realization of much desired ‘Financial Inclusion’ of people in lower economic strata in both urban and rural areas across the country and will become an effective and user friendly system for supporting their ‘Micro Finance’ needs.
3. MTM is a means to effectively disperse Governments welfare payments to real beneficiaries.
The banks, both nationalized and private are white elephants always with an eye on profit rather than service. Whatever said and done, banks will not be able to effectively serve people in the lower economic strata in urban as well as rural areas. Even with Banking correspondents, formal banking procedures are not user friendly for illiterate and poor customers especially for the Women, Teens and Aged.
Similarly, services of most of the Micro Finance Institutions are also unaffordable to people in the lower economic strata. MTM system will make micro /macro money payment facility available, accessible and affordable to everyone; including people in the lower economic strata at an individual level who is able and eligible to have a phone in urban and rural areas. MTM as envisaged can provide Micro Finance service also to those who do not own a phone.
Money through Mobile (MTM) can be effectively used for sending various government welfare payments various forms of pensions to retired employees, old aged and widows, mentally / physically handicapped etc and money related programs like MNREGA, Right to Food / Education / Health care, through the MTM account of the beneficiaries across the country so that the money is received by the real beneficiaries directly in their MTM account without pilferage and third party intervention and can be transacted using their mobile phones sitting at their homes.
MTM can enable effective usage of Universal id ADHAR. As and when it become ready, Adhar can be used for identification and information needed for KYC of the MTM users which be linked with MTM account number to enable personalized secure transactions to realize Financial Inclusion and Micro Finance services available, accessible by everyone and especially the people in the lower economic strata, both in urban and rural across the country at affordable cost.
4. Success of MTM Pay by Phone service depends on the following aspects:
a) MTM shall be a common centralized system that shall be available, accessible and affordable to all types of customers served by various Service providers across the service area. Disparate systems and networks and end User services at various POS will make it unworkable, inconvenient and confusing.
b) To make the MTM service simple, user friendly, efficient, profitable and effective; it is necessary that MTM subscribers, Utility Service providers, Vendors, Shops, Banks, Post Offices etc involved in MTM service are able to deal with a common MTM service provider for services and accounting and not disparate ones.
c) Since the system involves high volume of very low value money transactions, the service shall be without any additional charge to the end users. Any cost involved on low value transactions and service shall be compensated by profitably deploying the liquidity available to the MTM service Provider as most of the real money remains within the system.
d) Since the success of the system and service depend on it being able to offer universal service anytime, anywhere, for every form of payment; to realize this, the MTM system shall be ideally a common, centralized, stand-alone, third party system that is set up by the consortium of Telecom service providers or by a third party on revenue / profit share basis with the stake holders involved.
5. Un-banked Mobile money management is a must, but need to be regulated.
As explained above, a situation of having disparate Money management systems, product and services by various parties without any regulatory arrangement will not deliver desirable results especially for Financial Inclusion and Micro Finance support for empowerment of people in the lower strata across the country. Therefore, government should take immediate steps to bring un-banked money management service under regulatory controls through National Payments Corporation of India (NPCI) under the ambit of RBI.
6. The reasons why this much wanted ‘Pay By Phone’ services are delayed in India.
It appears that reason for delay in implementation of this power and user friendly service are:-
a. Telecom Service providers either have not understood the dangers of allowing Banking industry to hijack a highly promising Value added service or;
b. Telecom Service Providers are reluctant to come into an agreement between them to have a common universal system that is mandatory to make it a success, owned by a consortium of Telecom providers.
2. The Reserve Bank is unwilling to leave this product out of the ambit of Banking Industry in spite knowing fully well Banks cannot lower itself to the level of providing satisfactory service to the a large percentage of people in the lower economic and social strata.
Instead of going on for years with mere lip service about the need of Inclusive Finance and Micro Finance support to people of lower economic and social strata, Government should come out with bold decision to introduce possible Un-banked Money Management systems such as MTM as suggested here.
If Government feel that it need to be controlled by NPCI under the ambit of RBI, they should decide accordingly, instead of sitting on it for years.
A solution to resolve this impasse between Government and telecom Service providers is to have an exclusive banking system associated with the MTM service provider that is set up as a 3rd party system by the consortium of Telecom Service providers.
Please see more about MTM system and Network, the Technology and Features and Business scope and benefits for various stake holders etc in the link http://wp.me/p1ZsI2-d and Virtual money is better handled by virtual systems. http://wp.me/p1ZsI2-4g
Author: P. Abraham Paul.
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