The Reserve Bank of India has issued draft guidelines on mobile payments, a few highlights from the 12 page document below:

Mobile Payment has been defined as ‘information exchange between a bank and its customers for financial transactions through the use of mobile phones. Mobile payment involves debit/credit to a customer’s account’s on the basis of funds transfer instruction received over the mobile phones.’

--- Only banks licensed and supervised in India can offer mobile payment services

--- Only INR based services should be provided

--- The RBI guidelines on Know Your Customer would be applicable to customers opting for mobile based banking services

The RBI has proposed dividing mobile banking into two levels. The basic level comprises of information such as balance enquiry, SMS alerts for credit or debit statuses and other information providing services. The second level would deal with financial transactions such as payments and transfers. Since the level of risk in the first level is lower, differential levels of registration could be applied. However, registration for any level of service is mandatory.

Considering KYC norms for mobile banking will be applied by the RBI and not the TRAI or DoT is a considerable advancement of security issues considering the norms followed by banks and financial institutions are more stringent than those for telcos. However, there is no clearance on which body will mandate mobile banking regulations for telcos. If mobile payments have to take off there will have to be interoperability between data gathered by both banks and telcos, if not a different set of norms for telcos offering users mobile banking facilities. Furthermore, its already a problem having a mobile number linked in as a universal identity across various accounts. Throw in mobile number portability, multiple bank accounts and multiple layers of KYC verification in and you cross the thin red line from security issues to privacy issues.

Technology and security standards and more details in the draft here.