Exclusively Banked Universal Money Management by Phones.
(Originally published in March 2002)
Introduction: Universal money management using phone, a path breaking state of the art idea to enable all sorts of day to day money transactions through phones is envisaged as a service that is handled by few special purpose exclusive banks located in the country to accelerate ‘Financial Inclusion’ of all especially in lower economic strata and as an effective tool for supporting their Micro Finance needs, across the country.
Money through Mobile (mTm), is just an acronym used herein that explain in short, the idea, features, products, services, the technology involved, the business aspects, benefits and advantages it can provide to society as a whole with a vision that in nearest future Mobile and Fixed devices systems and networks will get converged and phones become simple tools that would provide ease and comfort and improved life style for everyone; young and old, from ultra rich to the extreme poor in the country.
1. Money through Mobile (mTm) is different from Mobile Banking.
Money through Mobile (mTm) system as proposed herein is not to be confused with Mobility in Banking service or service of e-banking using Mobile phones on various means of transport as being currently provided by banks as ‘Mobile Banking’.
‘Money through Mobile’ (mTm) system is transparent to regular Banks and Banking industry.
All transactions in mTm service involving Banks, Post Offices and other Financial institutions will be in the same position and functional level, using same technology, product and features, at par with that available to all mTm users and mTm service providers.
2. Virtual money is better handled by Virtual banking system.
Most banks, both Public and Private have its limitations to take care of the needs of the huge un-banked population in the lower social and economic strata across the country. Naturally, huge volume of low value accounts eventually would lead most banks to collapse due to severe HR constraints and gross customer dissatisfaction for no fault of the banks.
It is therefore, that the system as proposed herein can be termed and treated as an autonomous “VIRTUAL BANK” exclusively set up to handle all sorts of Money Management using Phones across the networks allover the country with minimum human interface. Call it a ‘MTM BANK’ or whatever.
In fact MTM technology system that handle all sorts of money transactions using phones by itself can function as an exclusive Virtual Bank incorporated with required supporting banking mechanism in it to handle its clients’ needs transparently without much human intervention at its day to day operation level.
3. Universal nature of mTm system:
The system proposed in essence is universal in nature as it can provide service across disparate Telecom systems, both Mobile as well as Land line, currently serviced by various Telecom service providers and also for those who does not own a phone, across the country without involvement of any BANK or access to INTERNET.
Also the proposal herein has taken into consideration of the constraints and limitations regarding absence of conducive eco-system such as non availability of regular power supply, non-reach of Telecom network and INTERNET in rural and remote areas.
3.1. Money through Mobile (mTm) will not disrupt Banking Industry.
There is this biggest worry that most Pay-by-Phone systems and services will be disruptive to Banking industry. From the foregoing it can be seen that Money through Mobile (mTm) as envisaged herein will not be. In fact it provides solutions to prevent Banking industry and Nation’s economy being disrupted by fast mushrooming e-money services.
4. No need to wait for digitization everywhere that may take many years to happen.
The idea is to roll out the MTM project, beginning at places where the minimum needed eco system is readily available and then expand to other areas.
There is nothing known as ‘perfect’ in planning. It is pragmatic to use contemporary Technology, Systems, Products and Services to start with and always with an eye on the future. People in the lower economic and social strata are available everywhere more so in current urban areas.
Therefore, plans of Financial Inclusion of people in the lower social and economic strata such as mTm shall be taken up in Urban areas, its suburbs, towns and villages where minimum required infrastructure, power supply and telecom facilities are readily available, and then move towards remote areas as the needed eco system and the environment are made ready without waiting for digitization of entire country. Till such time, these areas could also to be covered with improvised systems with short term solutions and products as explained below.
5. Use Satellite links for connectivity of mTm systems in remote areas.
Government should make use of already achieved high density telephone coverage to implement the system in the Urban, suburban and rural areas where ever telephone connectivity is already there. In remote places where there is no telecom facility, mTm services can be provided with mTm Franchisee outlets using MTM Set-top boxes or specially designed TABLETS with connectivity to mTm system and service through Satellite links. For those who do not have phones, service can be rendered through public call phone systems in Post offices, Panchayat and village offices, mTM franchisee outlets and agents etc.
6. With Aadhaar in place, DBT using mTm will be the biggest game changer: mTm can enable Direct Benefit Transfer DBT of payments under various Government’s various welfare schemes without middle way systems and agencies.
With Aadhaar linked with mTm system, it is possible to provide mTm service and DBT to mTm account of people who do not own a phone through mTm Franchisees, Public call phones provided in Post offices, Panchayat offices etc.
DBT can help to scrap or replace in a phased manner most of the subsidies that will be a big step towards reviving nation’s economy.
Also mTm Service can be provided without waiting for Aadhaar.
Making Aadhaar a pre-requisite for ensuring ‘Financial Inclusion of poor’ will be like putting the cart before the horse. It is impractical and meaningless to wait for years to become Aadhaar made available to everyone everywhere to commence the service. Aadhaar is after all an Unique Universal ID that can be provided from a pre-allocated reserved numbering pool at the implementation stage and later upgraded as a biometric tool instead of waiting years to ensure Aadhaar given to all beneficiaries across the country as a pre-condition to implement Direct Benefit transfer DBT & Direct Cash Transfer of benefits, MNREGA payments and payment in lieu of subsidies to beneficiaries.
7. Money Management using phone has great potential to infuse liquidity.
Management of money through phones, both Mobile and Fixed ones, can greatly boost nation’s economy and as well can generate huge income for Government, considerably reduce need to print currency and reduce the malice of Black Money. It is time Government / RBI take necessary steps to mobilize, regulate and tap this great potential to revive Indian economy.
7.1. Implementing Universal Virtual Money Management using phones can bring in Tax free regime.
India has a Billion phones (Mobile plus Landlines) and growing. With an average transaction of Rs.10,000 per month per phone, the monthly virtual money transaction will be about Rs. 10 L Cr (Rs. 10 Trillion) Assuming that virtual money transactions and re-transactions happen on an average of 30 times a month, it will be Rs. 300 L Cr per month that amounts to Rs. 3600 L Cr (Rs. 3600 Trillion), annual.
Hypothetically, collecting a 1% transaction charge on the amount transacted in every instance of a payment, Government can fetch an annual revenue of Rs. 36 L Cr (Rs. 36 Trillion) that is more than twice the India’s 2015-16 annual budget expenditure outlay of Rs. 17.78 L Cr. (Rs. 17.78 Trillion) and much more without burdening people with any tax at all. It may be seen that the Central annual Budget amount above when broken down to per capita based on country’s population works out to about Rs.40 which is less than current #BPLindex. There was much hue and cry that Tendulakar formula on #BPLindex is too low. Facts being so, what sort of development can be realized with this is anybody’s guess.
By going virtual, money become a much higher dynamic resource, more so when almost every money transaction happen virtually with ease and comfort, the number of transactions and the revenue earned by it would grow multifold to Rs.200 L Cr to anywhere, say Rs. 400 L Cr (400 trillion) and more making it possible to realize much needed drastic increase in Government’s budget outlay and/or reduced transaction charge from 1% mentioned above to 0.5% or as low as 0.2% or so keeping balance between revenue and expenditure as needed from time to time and also enhancing contribution to States.
Please see a write up on this in the link http://wp.me/p1ZsI2-Ku
and a presentation on this in the link http://wp.me/p1ZsI2-4g
8. mTm has potential of large employment generation.
What need to be done, is to create exclusive Virtual bank as shown in the schematic above, to handle all forms of money management using phones and to regulate, mobilize and exploit its great potential for the benefit of the people.
There are about 650,000 villages in the country. mTm service would be able to provide jobs on an average of 20 persons in every village as mTm Franchisee and mTm authorised agents, that is about 1.3 Crores of jobs.
There are 150,000 Post offices of which 89% are in rural areas. Department of posts can be given banking license and entrusted with setting up of exclusive virtual mTm bank with BSNL. The huge surplus human resource in Department of Telecom, Department of Posts, BSNL/MTNL could be used as mTm franchisees, authorised agents, technical O&M and logistics of MTM system across the country that can save BSNL from liquidation.
9. All forms of Money Management using phones must be regulated.
Setting up of disparate Money management systems, product and services by various parties without any regulatory arrangement will not deliver desirable results especially for Financial Inclusion and empowerment of people in the lower strata across the country.
Over and above, the various methods and procedures involved are likely to have adverse impact on economy due to various reasons as mentioned below.
Unless regulated, virtual money businesses can gobble up real money.
The fast mushrooming Virtual Money businesses can gobble up real money disrupting nation’s economy. For example printing and supplying money coupons by various money management service providers can end up as a parallel economy that can interfere with country’s economy. This aspect shall be thought of and actions to avoid such situation to be taken by Government without delay.
The way out is that like physical Currency, responsibility of Virtual money also shall rest with Government. The Virtual money needed for such business shall be generated by RBI in the form of encoded and encrypted and pre-authenticated Packets of ‘Data bytes’ as a Universal ‘Money as Data’ (MAD) Wallet’ with distinctive UR code for each Wallet that can be allotted to users and any alterations of the value of money in the MAD Wallet can be done only with RBI’s authentication in its every transaction. Every mTm user is given unique code and authentication to use virtual money at the time of registration. The system is such that every virtual money transaction undergoes the authentication process by RBI via the payment gateway ie mTm system to initiate and complete the transaction.
Money for all Prepaid or Postpaid money coupons or payment through other sources for passed on to RBI for allocation MAD Wallets of containing the amount received in each account. These MAD Wallets will be stored in User’s phone or other devices shall be fail proof and tamper proof with no scope of creation of counterfeit. Such a system shall have records and statistics and other information of entire virtual money transactions in the country.
Therefore, government should take immediate steps to bring in exclusively banked money management service under regulatory controls through National Payments Corporation of India (NPCI) under the ambit of RBI.
If the government desire to keep it under the control of RBI, a solution to resolve the impasse between Government and Telecom Service providers is to have an exclusive virtual banking system associated with the mTm service provider that is set up as a 3rd party system by the consortium of Telecom Service providers.
Virtual Money, sure way to eradicate terrorism.
The whole world is reeling under the threat of various forms of terrorism. Moving over to Virtual Money universally is the most effective way to eradicate terrorism. Once every money transaction done only in virtual form and under the watch and control of Governments across the world, it will toll the death bells of end of terrorist organizations and outfits. This is the one and the only way to end terrorism of all sorts in the world. Hope the world look into this closely.
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Please read the detailed article and power point presentation in the above links wherein I have explained in detail how this could be realized without difficulty.
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Abraham Paul. P.
Freelance Consultant ICT/ICN. Owner and CEO Future Communication Networks (FCOMNET) / Ex. VP (TS) SIEMENS ICN, Germany / Director TRG, TS&SC, SIEMENS ICN RHQ, Dubai, / G M & SMT-TBG, BPL Mobile India, / TES (A) DOT India.
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