Friday, October 28, 2005

SBI and Airtel launched Mobile Cheque Payments at IITB

SBI and Airtel launched Mobile Cheque Payments at a small function at KReSIT IIT Bombay yesterday. The technology is provided by

We were there for the high point in a grad student's life - free food as immortalised in the
PhD comic strips :). However, there we met an old department colleague who now works in ALittleWorld. She gave us a demo of what the whole thing was about and explained the technology behind it all.

The Transaction: A customer eats food at a restaurant or shops for grocery. The following replaces the need for cash or a credit/debit card. The merchant sends a money request through a special mChq menu in his cell phone detailing the amount, customer's cell number, and merchant's PIN. The customer gets a message via his own special mChq menu which he approves. A confirmation message is sent to the merchant and the transaction is through. All this happens at the speed of text messaging. The customer's cell number can be protected by a 15-digit proxy in case she cares about not giving out her cell number.

The Technology: The merchant and customer need augmented SIM-cards. The merchant needs a cryptographic SIM-card which houses his digital certificate for
non-repudiation purposes. The customer needs a variation of the normal SIM-card which has the mChq menu and facility for loading in money via his SBI account.

What this means for us: For now, Airtel is offering this SIM change at no extra cost, maintaining the existing number for both the merchant and the customer. In any case the SIM change is about 40 Rs. for the customer and 150 Rs. for a crypto-SIM for the merchant. Airtel has exclusive license on this in Mumbai for now. In December, the exclusivity ends and at least Orange and MTNL are jumping on to the band wagon. I am surprised there hasn't been too much publicity. Apparently this is already running in Delhi. So, if two friends install crypto-SIMs on their cell phones, they can actually dial each other and ask for a mobile loan ;).

Loading money from your SBI account onto your phone may sound tedious right now. However, once fully implemented and other players join the fray, the customer mChq menu will have (is already implemented) a choice of where to pay the merchant request from. There is a choice of bank accounts, credit cards. Money can be loaded online.

The technology involved is very similar to the Smart Card system pilot-tested about 6 years ago at IIT Bombay. Recommendations were made to RBI, IDRBT joined in, and e-commerce at small scales like smart cards and mChq like thingies has become a national standard.

I like all this. Things are being facilitated. Whether people will accept all this is besides the point. There are obvious issues here like:
1) "Do I need all this? My cell phone will become unnecessarily important now." True, but that didn't stop technology in the past. And all this seems fairly secure which is of paramount importance once money is involved.
2) "Who will adopt all this? Isn't cash/credit-card easier?" Maybe. I don't have an opinion on the matter. You will be surprised at how many shopkeepers in Powai have already accepted this. Powai shopkeepers are super progressive: first smart cards and now this, all before nearly anyone else in the country :)