Interbank Mobile Payment System: Will it Catalyse Financial Inclusion?

This focus note examines the potential of mobile payment systems to facilitate financial inclusion.

Payment systems providers and mobile network operators are exploring innovative ways of popularizing mobile phone-based financial transactions. Interbank mobile payment system (IMPS) is a service offered by the National Payments Corporation of India (NPCI). The IMPS provides a platform for account holders of participating banks to transfer money to any other account holder in the network.

Currently eight banks, representing about half of the bank accounts in India, are participating in the network while six others are under IMPS certification. The paper states that:

• Present regulations provide ample scope for banks and financial institutions to explore ways to reach out to un-banked and under-banked people;
• Challenges include customer awareness and financial literacy;
• Robust customer complaint redressal mechanism will be essential to take care of failed or erroneous transactions as well as addressing disputes;
• Cooperation and coordination will be required to leverage these technological solutions and create inter-operable solutions that will lead to massive uptake and financial inclusion.