Subject - Say hello to transparency!
Say hello to transparency!
Everyday we see scams (sometimes even when they are not there) being
exposed in the media, demonstrations, Parliament jams and court
orders. But there is little positive action. What is needed is action
against black money, the driver of all corruption. Are we citizens
ready to move beyond protests and take a small step that could hit at
the heart of black money?
Black money thrives in the cash economy. If we introduce
traceability in financial transactions, it will be difficult to hide.
We can do this using some simple available technologies. It is
possible to carry out all transactions in electronic form, where money
is transferred from the payer’s bank account to the payee’s. The back-
end core banking system of almost all banks allows that. ATM
withdrawals, any-branch banking and internet banking thrive on it. The
internet, however, is used by a small section. Credit card (and debit
card) based payments and transaction could be another way, but have
not caught on much (except for use of debit cards for cash
withdrawals).
But India has over 750 million mobile phone connections, and
growing at 15 million per month. Over 500 million invididuals are
believed to have mobiles. In a few years, mobile telephony could touch
most of India’s adult population. It is now possible to link one’s
mobile phone to a bank account. So, it is possible to carry out most
transactions including money transfer, bill payments, balance enquiry
and checks on past transactions. A bank’s computer uses the caller
line identification (CLI) and a customer’s PIN to authenticate her,
following which any transaction can be carried out using an
application loaded on her phone. End-to-end encryption makes
transactions secure. Transactions are instantaneous: for example, any
payment is notified by sending an SMS to the payer as well as payee.
The Mobile Payment Forum of India, RBI and National Payment
Corporation of India worked with banks, telecom operators and
technology providers to make money transfer possible between customers
of any two banks, any two operators and any two technology providers.
One does not even need the bank account number to make payments, as
the payee’s mobile number and a mobile money ID (MMID) uniquely map to
her bank account.
Mobile payments would make cash redundant. One could pay a
vegetable vendor who displays a mobile number and MMID at the shop.
Similarly, auto fare or kirana shop payments can be made
instantaneously. Money can be transferred whether the recipient is
near or far. Doing so from Mumbai to an Orissa village would now be a
simple matter. A single day amount could be small, say Rs 50, or as
much as Rs 50,000.
Safe, secure, simple, instantaneous, and with a complete list of
payments and receipts in one’s passbook, there is no reason why anyone
would not use this method. Using mobile payments instead of cash could
be our way to bring in traceability and say no to the black money
economy.
Do all banks provide mobileto-mobile payments? About 10 banks do
and another 15 will by the end of next month. Will there be teething
troubles? Sure, but nothing that can’t be handled. Will transaction
charges be too much? Banks and telecom operators can make transactions
below Rs 1,000 free and charge one or two rupees for transactions up
to Rs 10,000. Will SMS come in real time? Telcos can ensure that.
One may argue that many in rural India and some in urban India do
not have bank accounts. With financial inclusion initiatives, no-frill
accounts can be opened quickly. In fact, mobile payments would
incentivise people to open such accounts. Further, telecom operators
are tying up with banks to come up with phone-based pre-paid cards
(mobile wallets) for making payments and transferring money as in
mobile banking. Will illiteracy be a bottleneck? Several banks and
technology providers use mobile voice banking: one just has to speak
to carry out a transaction. So, there may be some hiccups, but there
are technological answers.
Many of us will remember that computerisation of railway
reservations in the 1980s dealt a blow to rampant corruption. As an
example of technology being used to bring in transparency, mobile
payments give us a much bigger opportunity. In due course, we would
demand that government recalls 500 and 1,000 rupee notes and makes it
mandatory for all shops and vendors to accept only electronic
payments. But let us take the initiative. Let us get our MMID and
start making mobile payments instead of using cash. Let shops start
displaying their mobile numbers and MMID. That would be a big
statement against black money.
Everyday we see scams (sometimes even when they are not there) being
exposed in the media, demonstrations, Parliament jams and court
orders. But there is little positive action. What is needed is action
against black money, the driver of all corruption. Are we citizens
ready to move beyond protests and take a small step that could hit at
the heart of black money?
Black money thrives in the cash economy. If we introduce
traceability in financial transactions, it will be difficult to hide.
We can do this using some simple available technologies. It is
possible to carry out all transactions in electronic form, where money
is transferred from the payer’s bank account to the payee’s. The back-
end core banking system of almost all banks allows that. ATM
withdrawals, any-branch banking and internet banking thrive on it. The
internet, however, is used by a small section. Credit card (and debit
card) based payments and transaction could be another way, but have
not caught on much (except for use of debit cards for cash
withdrawals).
But India has over 750 million mobile phone connections, and
growing at 15 million per month. Over 500 million invididuals are
believed to have mobiles. In a few years, mobile telephony could touch
most of India’s adult population. It is now possible to link one’s
mobile phone to a bank account. So, it is possible to carry out most
transactions including money transfer, bill payments, balance enquiry
and checks on past transactions. A bank’s computer uses the caller
line identification (CLI) and a customer’s PIN to authenticate her,
following which any transaction can be carried out using an
application loaded on her phone. End-to-end encryption makes
transactions secure. Transactions are instantaneous: for example, any
payment is notified by sending an SMS to the payer as well as payee.
The Mobile Payment Forum of India, RBI and National Payment
Corporation of India worked with banks, telecom operators and
technology providers to make money transfer possible between customers
of any two banks, any two operators and any two technology providers.
One does not even need the bank account number to make payments, as
the payee’s mobile number and a mobile money ID (MMID) uniquely map to
her bank account.
Mobile payments would make cash redundant. One could pay a
vegetable vendor who displays a mobile number and MMID at the shop.
Similarly, auto fare or kirana shop payments can be made
instantaneously. Money can be transferred whether the recipient is
near or far. Doing so from Mumbai to an Orissa village would now be a
simple matter. A single day amount could be small, say Rs 50, or as
much as Rs 50,000.
Safe, secure, simple, instantaneous, and with a complete list of
payments and receipts in one’s passbook, there is no reason why anyone
would not use this method. Using mobile payments instead of cash could
be our way to bring in traceability and say no to the black money
economy.
Do all banks provide mobileto-mobile payments? About 10 banks do
and another 15 will by the end of next month. Will there be teething
troubles? Sure, but nothing that can’t be handled. Will transaction
charges be too much? Banks and telecom operators can make transactions
below Rs 1,000 free and charge one or two rupees for transactions up
to Rs 10,000. Will SMS come in real time? Telcos can ensure that.
One may argue that many in rural India and some in urban India do
not have bank accounts. With financial inclusion initiatives, no-frill
accounts can be opened quickly. In fact, mobile payments would
incentivise people to open such accounts. Further, telecom operators
are tying up with banks to come up with phone-based pre-paid cards
(mobile wallets) for making payments and transferring money as in
mobile banking. Will illiteracy be a bottleneck? Several banks and
technology providers use mobile voice banking: one just has to speak
to carry out a transaction. So, there may be some hiccups, but there
are technological answers.
Many of us will remember that computerisation of railway
reservations in the 1980s dealt a blow to rampant corruption. As an
example of technology being used to bring in transparency, mobile
payments give us a much bigger opportunity. In due course, we would
demand that government recalls 500 and 1,000 rupee notes and makes it
mandatory for all shops and vendors to accept only electronic
payments. But let us take the initiative. Let us get our MMID and
start making mobile payments instead of using cash. Let shops start
displaying their mobile numbers and MMID. That would be a big
statement against black money.
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