Remitting Money Could Soon Be An Sms Away

[Arun 795]

Business Standard

January 17, 2007 09:15 IST

For millions of non-resident Indians, remitting money could soon be an SMS away.

Led by Indian telecom companies like Bharti Airtel under the aegis of the GSM Association - the global body of GSM mobile operators - a unique experiment will be launched in February to make global money transfers through the mobile phone on a common platform a reality.

Over 20 operators from the Philippines, Mexico, Russia, Europe, the US and the UK and big names like Vodafone have been roped in for the pilot project, with commercial launch expected in the next 12 months.

The project, to be christened the "Emerging Markets Money Transfer Project," aims to find a low-cost means of transferring small denominations of money by leveraging mobile technology for the masses.

The mobile-based system could revolutionise the way hundreds of trillions of dollars are transferred. It will allow, say, a textile worker in Dubai to transfer money to his parents in Ahmedabad through a monthly SMS instruction.

The system will work like this. In Dubai, the worker uses the phone company's money transfer service to remit cash from his bank or credit card. All he needs to do is dial his parent's phone number in India and wait for a message to be flashed on his screen that the transfer is complete.

His parents then just need to walk to the nearest phone store, (which is also a money transfer agent and is linked to a bank), and encash the amount. "This will solve the biggest challenge for non-resident workers - how to transfer small amounts of money back to India or their state of origin," said Ashok Juneja, director, Bharti Airtel, who is coordinating the project in India.

Money transfer companies charge as much as $15-20 as commission for a transfer of $100 in India. Given that mobile phone companies already have large distribution networks in place, such transfers at low commission are possible.

GSMA will be working on creating a common technology platform for ensuring inter-portability among operators to make mobile money transfer possible and easier. They will also leverage global volumes of such transfers to get more attractive transaction rates from global banks.

Of course, many regulatory issues need to be tackled before the project can become a reality in India and in other developing countries. Admits Juneja, "There are some issues that need to be sorted out with the Reserve Bank of India."

For instance, operators with their outlets have to become money transfer agents and cash in and cash out have to be allowed.

The RBI is also concerned about ensuring adequate safeguards, including adherence to the know-your-customer (customer identification) norms.