Even as growth in mobile Value Added Services (VAS) picks up, particularly in the anticipation of upcoming 3G services, M-commerce is one such service that has not taken off in the country. Mobile commerce allows a mobile phone user to make a financial transaction or payment through their mobile phones. Convergence Plus spoke to Chennai-based VAS player Bay Talkitec about the prospects of mobile commerce in India.

Following are the excerpts of an interview with Mr. Anil Sabnis, Senior Vice President - Business Strategies, Bay Talkitec.

CP: What is the current position of m-commerce in India? Do you think that 3G services will boost M-commerce growth?

AS: M-commerce in India is at a nascent stage and only a relatively small percentage of the mobile users are even aware of the availability of such services and those who are aware are concerned about the security issue. Though it has a low perceived value, the practical value of M-commerce has the highest potential among all MVAS. With the coming of 3G services backed up with high bandwidth, speed and efficiency, it will definitely boost the growth of m-Commerce in India.

CP: What is your view of India’s mobile banking norms (that mandate the inclusion of banks as financial intermediaries in transactions)?

AS: The RBI guidelines clearly states the accountability of banks in transactions as it will be a natural extension of the facility for people who have a bank account to exploit the M-commerce market and is not affecting a large population who do not have bank accounts.

As the number of mobile users outpaces the number of people who have bank accounts, the VAS players will only benefit when it caters to all mobile subscribers. Both telecom operators and mobile VAS providers should be allowed to offer payment mechanisms to subscribers not having bank accounts as well which will in turn will benefit the VAS players.

CP: What are the major obstacles preventing widespread use of m-commerce in India?

AS: The key barrier in adoption of M-commerce is the security aspects related to it and also lack of awareness or reach to the large population. Given the backing from RBI (as per RBI guidelines), consumers are expected to overcome the barriers and realize the high practical value of M-commerce. If the security factor is addressed the m-commerce market which is presently confined to low-value transactions (music, picture, ringtones download) will tremendously grow to High-value transactions (credit/debit card transactions). Another obstacle is the unavailability of capable cellular networks which will definitely fade away with the advent of 3G.

CP: How does one feel assured about the security of a mobile transaction?

AS: The technology used for mobile payments must be secure and should ensure confidentiality, integrity, authenticity and non-reputability. Currently, the rights and liabilities of customers availing of mobile payments services are being determined by bilateral agreements between the banks and customers. Considering the banking practice and rights enjoyed by customers in traditional banking, banks’ liability to the customers on account of unauthorized transfer through hacking, denial of service on account of technological failure etc. needs to be assessed and banks providing mobile payments should consider insuring themselves against such risks, as is the case with Internet Banking. Banks are also advised to provide appropriate risk mitigation measures like transaction limit (per transaction, daily, weekly, monthly), transaction velocity limit, fraud checks, AML checks etc. per channel depending on the nature of the security features, risk perception by the bank offering the services and interaction capabilities.

CP: Do you think that m-commerce has a significant future in India?

AS: In years to come money transfers, driven by lack of banking infrastructure seems to be a key service need. M-commerce would be a large growth driver in 2-3 years time. With a lot of companies offering bill payment for utility, services through mobile will help grow M-commerce. The 3G offerings of high bandwidth as well as wireless technologies will boost the industry to a large extent. With technologies such as voice authentication, voice verification, it will make it much easier and secure to allow m-commerce.