A project report on

Immediate Payment Service

for
Kotak Mahindra Bank

In partial fulfillment of the requirements of

Post Graduation Diploma in Business Management

conducted by

Rizvi Academy of Management

under the guidance of

Prof. Imran Kazi

Submitted by
Nayeem I. Lakdawala

PGDBM
Batch: 2013 2015.

CERTIFICATE

This is to certify that, Mr. Nayeem I. Lakdawala pursuing Post Graduation

Diploma in Business Management from Rizvi Academy of Management bearing roll
number P009 and specializing in Finance has successfully completed the project titled
IMMEDIATE PAYMENT SERVICE

under the guidance of Prof. Imran Kazi in partial fulfillment of the requirement of Post
Graduate Diploma in Business Management by Rizvi Academy of Management for the
academic year 2013 2015.

Prof. Imran Kazi

(Project Guide)

Prof. Umar Farooq

Dr. Kalim Khan

2 | Page

(Academic Coordinator)

(Director)

3 | Page

STUDENT DECLARATION

I hereby declare that the dissertation submitted in partial fulfillment of requirement for
the award of PGDBM to Rizvi Academy of Management in my origin of work and has
not been submitted for award of any other degree of diploma fellowship or for similar
title or prizes.

I further certify that I have no objection and grant the rights to Rizvi Academy of
Management or Mumbai University to publish any chapter / projects if they deem fit in
journals or magazines or newspapers without any permission.

Place: Mumbai

Name: Nayeem I. Lakdawala

Class: PGDBM (2013 2015)

Signature:

4 | Page

ACKNOWLEDGEMENT

A successful and satisfactory completion of any significant task is the outcome of

invaluable aggregate contribution of differential personnel pulls in radial direction,
explicitly or implicitly.

I ascribe my success in this venture to my guide Professor Imran Kazi for his
scholarly guidance, constant encouragement and untiring patience, I had the privilege to
accomplish this entire work as a reflection of his thoughts, ideas, concept and above all
his modest efforts.

I am grateful to all the staff members of Rizvi Academy of Management, for giving
me the encouragement and all necessary facilities for carrying out this project work.

Also I would like to thank our director Dr. Kalim Khan who has provided us with the
necessary infrastructure and guidance in the course of the project.

Last but not the least, I am thankful to all those who indirectly extended their cooperation. Without their help this project would not have been in the current shape.

Nayeem I. Lakdawala
5 | Page

IMMEDIATE
PAYMENT
SERVICE

6 | Page

EXECUTIVE SUMMARY
IMPS offers an instant, 24X7, interbank electronic fund transfer service through mobile
phones. IMPS facilitate customers to use mobile instruments as a channel for accessing
their bank accounts and put high interbank fund transfers in a secured manner with
immediate confirmation features.
Currently majority of interbank mobile fund transfer transactions are channelized through
NEFT mechanism. Under NEFT, the transactions are processed and settled in batches,
hence are not real time. Also, the transactions can be done only during the working hours
of the RTGS system.
IMPS service helps you access your Bank Account and transfer funds instantly. The
beneficiary account is credited immediately when a Fund Transfer request is made
through your Mobile phone / Internet Banking. This service is available 24x7, throughout
the year including Sundays and any bank holiday.
IMPS Person-to-Person (P2P) funds transfer requires the Remitter customer to make
funds transfer using Beneficiary Mobile Number and MMID. Both Remitter as well as
Beneficiary needs to register their mobile number with their respective bank account and
get MMID, in order to send or receive funds using IMPS.
There may be cases where Remitter is enabled on Mobile Banking, but Beneficiary
mobile number is not registered with any bank account. In such cases, Remitter shall not
be able to send money to the Beneficiary using Mobile Number & MMID.
Hence on the merit of the feedback received from the banking community as well as to
cater the above mentioned need, the IMPS funds transfer has been made possible using
Beneficiary account number and IFS code as well, in addition to Beneficiary mobile
number and MMID.
IMPS fund transfer can either happen either by using mobile number and MMID or
through IFS code and account number or through National Unified USSD Platform or
through ATM / Internet Banking channel.
The RBI has now started promoting IMPS in order to serve their objective of
electrification of payments.

7 | Page

INDEX
Sr.No.
1

Introduction to Payment Systems in India

Pg.No
.
1

2
2.1
2.2
2.3
2.4
2.5

New Initiatives by RBI on electronic payments and their justification

Paper-based Payments
Electronic Payments
Other Payment Systems
Introduction to National Payments Corporation of India (NPCI)
Oversight of Payment and Settlement Systems

2
2
3
6
7
8

3
3.1
3.2
3.3

Introduction to IMPS
Background
Overview
Objectives

9
9
9
10

4
4.1
4.2
4.3
4.4
4.5

Parties Involved / Types of transfer

IMPS Funds Transfer - Person to Person (P2P)
IMPS Merchant Payments
IMPS Funds Transfer through Account Number / IFSC
National Unified USSD Platform (NUUP)
IMPS Funds Transfer through ATM / Internet Banking channel

11
11
12
16
17
20

5
5.1
5.2
5.3
5.4
5.5
5.6
5.7

Topic

Process of IMPS
Transaction Through Mobile Banking
Transaction Through SMS Banking
OTP generation through mobile banking application
OTP generation through SMS
Make Payment Using OTP
Flow For Customer Initiated Transactions
Flow For Merchant Initiated Transactions

21
21
22
23
23
24
25
26

Benefits

27

Future of IMPS

28

Conclusion

32

Bibliography

34

8 | Page

9 | Page

TABLE OF CONTENTS

Chp. No.

Topic

Pg. No.

5
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
7
7.1
7.2
7.3
7.4

Process of IMPS
Transaction Through Mobile Banking
Transaction Through Mobile Banking
Transaction Through SMS Banking
OTP generation through mobile banking application
OTP generation through SMS
Make Payment Using OTP
Flow For Customer Initiated Transactions
Flow For Merchant Initiated Transactions
Future of IMPS
Trends in mobile banking application users
Trends in mobile banking transactions
Total number of transactions over last twelve months
Total amount transacted per month
Chapter 1

21
21
22
23
23
24
25
26
28
29
29
30
31

INTRODUCTION TO PAYMENT SYSTEMS IN INDIA

The central bank of any country is usually the driving force in the development of
national payment systems. The Reserve Bank of India as the central bank of India has
been playing this developmental role and has taken several initiatives for Safe, Secure,
Sound, Efficient, Accessible and Authorized payment systems in the country.
The Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), a
sub-committee of the Central Board of the Reserve Bank of India is the highest policy
making body on payment systems in the country. The BPSS is empowered for
authorizing, prescribing policies and setting standards for regulating and supervising all
the payment and settlement systems in the country. The Department of Payment and
Settlement Systems of the Reserve Bank of India serves as the Secretariat to the Board
and executes its directions.
In India, the payment and settlement systems are regulated by the Payment and
Settlement Systems Act, 2007 (PSS Act) which was legislated in December 2007. The
10 | P a g e

PSS Act as well as the Payment and Settlement System Regulations, 2008 framed there
under came into effect from August 12, 2008. In terms of Section 4 of the PSS Act, no
person other than the Reserve Bank of India (RBI) can commence or operate a payment
system in India unless authorized by RBI. Reserve Bank has since authorized payment
system operators of pre-paid payment instruments, card schemes, cross-border in-bound
money transfers, Automated Teller Machine (ATM) networks and centralized clearing
arrangements.

11 | P a g e

Chapter 2

NEW INITIATIVES BY RBI ON ELECTRONIC PAYMENTS AND

THEIR JUSTIFICATION

The Reserve Bank has taken many initiatives towards introducing and upgrading safe and
efficient modes of payment systems in the country to meet the requirements of the public
at large. The dominant features of large geographic spread of the country and the vast
network of branches of the Indian banking system require the logistics of collection and
delivery of paper instruments. These aspects of the banking structure in the country have
always been kept in mind while developing the payment systems.

2.1

Paper-based Payments

Use of paper-based instruments (like cheques, drafts, and the like) accounts for nearly
60% of the volume of total non-cash transactions in the country. In value terms, the share
is presently around 11%. This share has been steadily decreasing over a period of time
and electronic mode gained popularity due to the concerted efforts of Reserve Bank of
India to popularize the electronic payment products in preference to cash and cheques.
Since paper based payments occupy an important place in the country, Reserve Bank had
introduced Magnetic Ink Character Recognition (MICR) technology for speeding up and
bringing in efficiency in processing of cheques.
Later, a separate High Value Clearing was introduced for clearing cheques of value
Rupees one lakh and above. This clearing was available at select large centers in the
country (since discontinued). Recent developments in paper-based instruments include
launch of Speed Clearing (for local clearance of outstation cheques drawn on corebanking enabled branches of banks), introduction of cheque truncation system (to restrict
physical movement of cheques and enable use of images for payment processing),
framing CTS-2010 Standards (for enhancing the security features on cheque forms) and
the like.
While the overall thrust is to reduce the use of paper for transactions, given the fact that it
would take some time to completely move to the electronic mode, the intention is to
reduce the movement of paper both for local and outstation clearance of cheques.

12 | P a g e

2.2

Electronic Payments

The initiatives taken by RBI in the mid-eighties and early-nineties focused on

technology-based solutions for the improvement of the payment and settlement system
infrastructure, coupled with the introduction of new payment products by taking
advantage of the technological advancements in banks. The continued increase in the
volume of cheques added pressure on the existing set-up, thus necessitating a costeffective alternative system.

Electronic Clearing Service (ECS) Credit

The Bank introduced the ECS (Credit) scheme during the 1990s to handle bulk and
repetitive payment requirements (like salary, interest, dividend payments) of corporates
and other institutions. ECS (Credit) facilitates customer accounts to be credited on the
specified value date and is presently available at all major cities in the country.
During September 2008, the Bank launched a new service known as National Electronic
Clearing Service (NECS), at National Clearing Cell (NCC), Mumbai. NECS (Credit)
facilitates multiple credits to beneficiary accounts with destination branches across the
country against a single debit of the account of the sponsor bank. The system has a panIndia characteristic and leverages on Core Banking Solutions (CBS) of member banks,
facilitating all CBS bank branches to participate in the system, irrespective of their
location across the country.

Regional ECS (RECS)

Next to NECS, RECS has been launched during the year 2009.RECS, a miniature of the
NECS is confined to the bank branches within the jurisdiction of a Regional office of
RBI. Under the system, the sponsor bank will upload the validated data through the
Secured Web Server of RBI containing credit/debit instructions to the customers of CBS
enabled bank branches spread across the Jurisdiction of the Regional office of RBI. The
RECS centre will process the data, arrive at the settlement, generate destination bank
wise data/reports and make available the data/reports through secured web-server to
facilitate the destination bank branches to afford credit/debit to the accounts of
beneficiaries by leveraging the CBS technology put in place by the bank. Presently RECS
is available in Ahmedabad, Bengaluru, Chennai and Kolkata
13 | P a g e

Electronic Clearing Service (ECS) Debit

The ECS (Debit) Scheme was introduced by RBI to provide a faster method of effecting
periodic and repetitive collections of utility companies. ECS (Debit) facilitates consumers
/ subscribers of utility companies to make routine and repetitive payments by mandating
bank branches to debit their accounts and pass on the money to the companies. This
tremendously minimizes use of paper instruments apart from improving process
efficiency and customer satisfaction. There is no limit as to the minimum or maximum
amount of payment. This is also available across major cities in the country.

Electronic Funds Transfer (EFT)

This retail funds transfer system introduced in the late 1990s enabled an account holder
of a bank to electronically transfer funds to another account holder with any other
participating bank. Available across 15 major centers in the country, this system is no
longer available for use by the general public, for whose benefit a feature-rich and more
efficient system is now in place, which is the National Electronic Funds Transfer (NEFT)
system.

National Electronic Funds Transfer (NEFT) System

In November 2005, a more secure system was introduced for facilitating one-to-one
funds transfer requirements of individuals / corporates. Available across a longer time
window, the NEFT system provides for batch settlements at hourly intervals, thus
enabling near real-time transfer of funds. Certain other unique features viz. accepting
cash for originating transactions, initiating transfer requests without any minimum or
maximum amount limitations, facilitating one-way transfers to Nepal, receiving
confirmation of the date / time of credit to the account of the beneficiaries, etc., are
available in the system.

Real Time Gross Settlement (RTGS) System

14 | P a g e

RTGS is a funds transfer systems where transfer of money takes place from one bank to
another on a "real time" and on "gross" basis. Settlement in "real time" means payment
transaction is not subjected to any waiting period. "Gross settlement" means the
transaction is settled on one to one basis without bunching or netting with any other
transaction. Once processed, payments are final and irrevocable. This was introduced in
2004 and settles all inter-bank payments and customer transactions above ` 2 lakh.
Clearing Corporation of India Limited (CCIL)
CCIL was set up in April 2001 by banks, financial institutions and primary dealers, to
function as an industry service organization for clearing and settlement of trades in
money market, government securities and foreign exchange markets.
The Clearing Corporation plays the crucial role of a Central Counter Party (CCP) in the
government securities, USD INR forex exchange (both spot and forward segments) and
Collaterised Borrowing and Lending Obligation (CBLO) markets. CCIL plays the role of
a central counterparty whereby, the contract between buyer and seller gets replaced by
two new contracts - between CCIL and each of the two parties. This process is known as
Novation. Through novation, the counterparty credit risk between the buyer and seller is
eliminated with CCIL subsuming all counterparty and credit risks. In order to minimize
these risks, that it exposes itself to, CCIL follows specific risk management practices
which are as per international best practices. In addition to the guaranteed settlement,
CCIL also provides non guaranteed settlement services for National Financial Switch
(Inter bank ATM transactions) and for rupee derivatives such as Interest Rate Swaps.
CCIL is also providing a reporting platform and acts as a repository for Over the Counter
(OTC) products.

15 | P a g e

2.3

Other Payment Systems

Pre-paid Payment Systems

Pre-paid instruments are payment instruments that facilitate purchase of goods and
services against the value stored on these instruments. The value stored on such
instruments represents the value paid for by the holders by cash, by debit to a bank
account, or by credit card. The pre-paid payment instruments can be issued in the form of
smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts,
mobile wallets, paper vouchers, etc.
Subsequent to the notification of the PSS Act, policy guidelines for issuance and
operation of prepaid instruments in India were issued in the public interest to regulate the
issue of prepaid payment instruments in the country.
The use of pre-paid payment instruments for cross border transactions has not been
permitted, except for the payment instruments approved under Foreign Exchange
Management Act,1999 (FEMA).

Mobile Banking System

Mobile phones as a medium for providing banking services have been attaining increased
importance. Reserve Bank brought out a set of operating guidelines on mobile banking
for banks in October 2008, according to which only banks which are licensed and
supervised in India and have a physical presence in India are permitted to offer mobile
banking after obtaining necessary permission from Reserve Bank. The guidelines focus
on systems for security and inter-bank transfer arrangements through Reserve Bank's
authorized systems. On the technology front the objective is to enable the development of
inter-operable standards so as to facilitate funds transfer from one account to any other
account in the same or any other bank on a real time basis irrespective of the mobile
network a customer has subscribed to.

ATMs / Point of Sale (POS) Terminals / Online Transactions

Presently, there are over 61,000 ATMs in India. Savings Bank customers can withdraw
cash from any bank terminal up to 5 times in a month without being charged for the
same. To address the customer service issues arising out of failed ATM transactions
16 | P a g e

where the customer's account gets debited without actual disbursal of cash, the Reserve
Bank has mandated re-crediting of such failed transactions within 12 working day and
mandated compensation for delays beyond the stipulated period. Furthermore, a
standardized template has been prescribed for displaying at all ATM locations to facilitate
lodging of complaints by customers.
There are over five lakh POS terminals in the country, which enable customers to make
payments for purchases of goods and services by means of credit/debit cards. To facilitate
customer convenience the Bank has also permitted cash withdrawal using debit cards
issued by the banks at POS terminals.
The POS for accepting card payments also include online payment gateways. This facility
is used for enabling online payments for goods and services. The online payment are
enabled through own payment gateways or third party service providers called
intermediaries. In payment transactions involving intermediaries, these intermediaries act
as the initial recipient of payments and distribute the payment to merchants. In such
transactions, the customers are exposed to the uncertainty of payment as most merchants
treat the payments as final on receipt from the intermediaries. In this regard safeguard the
interests of customers and to ensure that the payments made by them using
Electronic/Online Payment modes are duly accounted for by intermediaries receiving
such payments, directions were issued in November 2009. Directions require that the
funds received from customers for such transactions need to be maintained in an internal
account of a bank and the intermediary should not have access to the same.
Further, to reduce the risks arising out of the use of credit/debit cards over internet/IVR
(technically referred to as card not present (CNP) transactions), Reserve Bank mandated
that all CNP transactions should be additionally authenticated based on information not
available on the card and an online alert should be sent to the cardholders for such
transactions.

2.4

National Payments Corporation of India

The Reserve Bank encouraged the setting up of National Payments Corporation of India
(NPCI) to act as an umbrella organization for operating various Retail Payment Systems
(RPS) in India. NPCI became functional in early 2009. NPCI has taken over National
Financial Switch (NFS) from Institute for Development and Research in Banking
Technology (IDRBT). NPCI is expected to bring greater efficiency by way of uniformity
and standardization in retail payments and expanding and extending the reach of both
existing and innovative payment products for greater customer convenience.
17 | P a g e

2.5

Oversight of Payment and Settlement Systems

Oversight of the payment and settlement systems is a central bank function whereby the
objectives of safety and efficiency are promoted by monitoring existing and planned
systems, assessing them against these objectives and, where necessary, inducing change.
By overseeing payment and settlement systems, central banks help to maintain systemic
stability and reduce systemic risk, and to maintain public confidence in payment and
settlement systems.
The Payment and Settlement Systems Act, 2007 and the Payment and Settlement Systems
Regulations, 2008 framed there under, provide the necessary statutory backing to the
Reserve Bank of India for undertaking the Oversight function over the payment and
settlement systems in the country.

18 | P a g e

Chapter 3

INTRODUCTION TO IMPS

3.1

Background

Currently majority of interbank mobile fund transfer transactions are channelized through
NEFT mechanism. Under NEFT, the transactions are processed and settled in batches,
hence are not real time. Also, the transactions can be done only during the working hours
of the RTGS system.
In the above context, NPCI has carried out a pilot on mobile payment system initially
with 4 member banks viz. State Bank of India, Bank of India, Union Bank of India and
ICICI Bank in August 2010. Yes Bank, Axis Bank and HDFC Bank have joined this pilot
in month of September, October and November 2010 respectively. Immediate Payment
Service (IMPS) public launch happened on 22nd November 2010 by Smt. Shyamala
Gopinath, DG RBI at Mumbai and this service is now available to the Indian public.
IMPS offers an instant, 24X7, interbank electronic fund transfer service through mobile
phones. IMPS facilitate customers to use mobile instruments as a channel for accessing
their bank accounts and put high interbank fund transfers in a secured manner with
immediate confirmation features.
This facility is provided by NPCI through its existing NFS switch.
The eligible criteria for the Banks who can participate in IMPS is that the Bank
should have approval from RBI for Mobile Banking Service.

3.2

Overview

IMPS (Immediate Payment Service) allows customers to make instant, 24*7, interbank
payments to individuals, or merchants / enterprises via mobile phone and other channels
(Internet or ATM).
The key features of IMPS are as follows:

Instant Interbank fund transfer

Convenient and time-saving

19 | P a g e

Anytime, anywhere service

Safe & secure

Simple & easy to use

24*7*365 availability

Instant confirmation to sender and receiver

3.3

Objectives

To enable bank customers to use mobile instruments as a channel for accessing

their banks accounts and remit funds

Making payment simpler just with the mobile number of the beneficiary

To sub-serve the goal of Reserve Bank of India (RBI) in electronification of retail

payments

To facilitate mobile payment systems already introduced in India with the Reserve
Bank of India Mobile Payment Guidelines 2008 to be inter-operable across banks
and mobile operators in a safe and secured manner

To build the foundation for a full range of mobile based Banking services.

20 | P a g e

Chapter 4

PARTIES INVOLVED / TYPES OF TRANSFER

The participants for IMPS will be as follows:

Remitter (Sender)
Beneficiary (Receiver)
Banks
National Financial Switch NPCI

Following are the types of IMPS services :

IMPS Funds Transfer - Person to Person (P2P)

IMPS Funds Transfer through Account Number / IFSC

IMPS Merchant Payments

National Unified USSD Platform (NUUP)

This service is brought to you by National Payments Corporation of India (NPCI) in

collaboration with Member Banks.

4.1

IMPS Funds Transfer Person to Person (P2P)

4.1a

Getting Started

Register mobile number with respective bank

Generate MMID. MMID (Mobile Money Identifier) is 7-digit number, to be
issued by the Bank to the customer upon registration
Get M-PIN. M-PIN is Mobile Banking PIN secret password to be used by
customer during transaction for authentication and security
Download mobile banking application or use SMS / USSD facility as provided by
the Bank to make payment

21 | P a g e

4.1b

4.2b

4.2

Sending money
Initiate IMPS transaction using Bank mobile banking application or SMS /
USSD facility provided by Bank
Customer needs to enter beneficiary mobile number, beneficiary MMID,
Amount and M-PIN for initiating transaction. Customer shall receive
confirmation SMS for the transaction initiated

Receiving money
Register your mobile number with your account in the Bank
Get MMID from the Bank
Share your mobile number and MMID with sender
Ask the sender to send money

IMPS Merchant Payments

4.2a

Overview

IMPS Merchant Payments (P2M Person-to-merchant) service allows customers

to make instant, 24*7, interbank payments to merchants or enterprises via mobile
phone. IMPS enables mobile banking users a facility to make payment to
merchants and enterprises, through various access channels such as Internet,
Mobile Phone, IVR, SMS, USSD.
Customer can make payment to any kind of merchant using IMPS merchant
payments service:
1. Mobile top-up / DTH top-up
2. Insurance premium payment
22 | P a g e

3. Online shopping
4. Over-the-counter payments
5. Fees payments to schools / colleges / universities
6. Utility Bill payments
7. Travel & Ticketing

The key features of IMPS merchant payments service are as follows:

1. Instant Interbank fund transfer
2. Merchant needs to get on-board IMPS network with one Bank. Customer of
any Bank in the IMPS merchant network can make payment to merchant
through IMPS
3. Convenient and time-saving
4. Anytime, anywhere service
5. Safe & secure
6. 24*7*365 availability
7. Instant confirmation to sender and receiver

4.2b

Getting started

Customer needs to be a mobile banking user of their respective Bank. Customer

needs to do the following in order to get started:
1. Register mobile number with the account in the respective Bank
2. Get MMID. MMID stands for Mobile Money Identifier and is 7-digit number
that is provided by Bank to customer. This number is used to identify
customer Bank and is linked to the account number. The combination of
mobile number and MMID is unique for the particular account, and customer
can link same mobile number with multiple accounts in the same Bank, and
get separate MMID for each account
23 | P a g e

3. Get M-PIN. M-PIN is Mobile PIN, a secret password that is provided by Bank
to customer. Customer needs to authenticate transaction using M-PIN
4. Download mobile banking application or use SMS / USSD facility provided
by the Bank. In order to perform IMPS transactions, customer needs to
download mobile banking application or use SMS / USSD facility provided
by the Bank
5. Perform transaction using mobile banking application or SMS / USSD facility

4.2c

Working of IMPS

There are two ways in which IMPS merchant payment (P2M Person-tomerchant) transaction can be performed:
1. Customer initiated transaction (P2M PUSH)
2. Merchant initiated transaction (P2M PULL)

Customer initiated transaction (P2M PUSH)

In the customer initiated transaction (P2M PUSH), customer initiates transaction
through the Banks mobile banking application or SMS facility provided by the Bank.
The Bank offers IMPS merchant payments form in the mobile banking application
(this form is available in IMPS menu on the main menu of mobile application) or
SMS syntax for performing P2M PUSH transaction. Customer needs to enter the
following parameters:
1. Merchant mobile number
2. Merchant MMID
3. Amount
4. M-PIN
5. Payment Reference
Payment Reference is an optional 50 characters field provided. This field will be used
to enter the unique reference for the payment, and identifies the transaction to the
merchant. The merchant decides what customer will enter in this field. For e.g. for
24 | P a g e

insurance premium payment, customer may need to enter policy number in the
payment reference field; for electricity bill payment, it may be consumer number. The
syntax and information to be input in the payment reference field will be decided by
merchant, and communication of the same will be merchant ownership.
The SMS syntax for making P2M PUSH transaction through SMS is as follows:
MIMPS <Merchant mobile number><Merchant MMID><Amount><MPIN><Payment Reference> to Banks long code or short code number.
On initiating transaction as above, customer receives the confirmation SMS with
status of transaction shortly.
For IMPS P2M PUSH transaction initiated through SMS, transaction limit is Rs
5,000/- per day (for most banks), and for transactions initiated through mobile
banking application, transaction limit is as decided by the Bank (Rs 50,000/- for most
banks)

Merchant initiated transaction (P2M PULL)

In Merchant Initiated transaction (P2M PULL), the transaction is initiated through
Merchant application (such as Merchant website, WAP site, IVR, mobile application).
The typical steps to follow for making transaction through P2M PULL are as follows:
1. Visit merchant application such as web site, mobile application, or WAP site
2. Select product / service for which payment is to be made
3. In the payment options available, choose IMPS
4. Enter credentials as follows:
a. Customer mobile number
b. Customer MMID
c. OTP (One-Time Password)
5. The transaction status is displayed on the screen
The customer needs to enter the credentials Customer mobile number (as registered
with the Bank), customer MMID (as generated by Bank) and OTP (One-Time
25 | P a g e

Password, as generated by customer).

OTP needs to be generated by customer for each transaction. OTP can be generated
by customer by using mobile banking application or SMS facility as provided by the
Bank. The Bank offers Generate OTP form in the mobile banking application (this
form is available in IMPS menu within main menu of mobile banking application)
or SMS syntax for Generate OTP transaction. Customer needs the following
parameters

1. M-PIN
The SMS syntax for Generate OTP through SMS is as follows:
OTP <M-PIN> to Banks long code or short code number.
On initiating transaction as above, customer receives the confirmation SMS with
status of transaction shortly.

The OTP generated as above has following characteristics:

1. OTP is valid for 1 hour from time of generation
2. If OTP is generated through SMS, the transaction limit is Rs 5,000/- and if OTP is
generated through mobile banking application, the transaction limit is as decided
by the Bank (Rs 50,000/- for most banks)
3. OTP is valid only for one transaction Successful or Failure
4. Only one OTP (latest generated OTP) is valid at a time

4.3

IMPS Funds Transfer through Account Number / IFSC

4.3a

Overview
26 | P a g e

Currently, IMPS Person-to-Person funds transfer requires the Remitter customer

to make funds transfer using Beneficiary Mobile Number and MMID. Both
Remitter as well as Beneficiary need to register their mobile number with their
respective Bank and get MMID, in order to send / receive funds using IMPS.
There may be cases where Remitter is enabled on Mobile Banking, but
Beneficiary mobile number is not registered with the Bank account. In such cases,
Remitter shall not be able to send money to the Beneficiary.
As per the feedback received from Banking community, the IMPS funds transfer
shall now be possible using Beneficiary account number and IFS code as well, in
addition to Beneficiary mobile number and MMID.

4.3b

Working of IMPS

In the IMPS menu, a transaction type IMPS funds transfer To account number
will be available. Following fields need to be entered:
a. Beneficiary account number
b. Beneficiary IFSC code
c. Beneficiary account type (optional field)
d. Amount
e. M-PIN
f. Remarks
The SMS syntax for making the transaction through SMS is as follows:
<IMPS> <Beneficiary account number> <Bene IFSC code> <account type>
<Amount> <SMS PIN/MPIN> <Remarks> to Banks long code or short code
number.

4.4

National Unified USSD Platform (NUUP)

27 | P a g e

4.4a

Overview

National Unified USSD Platform (NUUP) offered on a short code *99# is a

service which would take banking services to every common man in this country.
The service would allow every banking customer to access banking services with
a single number across all banks irrespective of the telecom service provider,
mobile handset make or the region.
A common platform for all banks instead of each bank having to develop a
platform is a strategic move by NPCI to help banks and let them focus on
customers to enable this service while NPCI manages the technology behind the
platform.

4.4b

4.4c

Benefits of NUUP
99# one number for every Indian to access banking services.
90% of phones used in the country are GSM phones and this service
works on all GSM phones irrespective of handset make, cost, operating
system or even the telecom service provider
Works on basic voice connectivity unlike an application GPRS
connectivity is not required
The customer need not download any application on the phone
Question and answer driven interaction simple for everyone to
understand

Ways to get started

Customer requires to mobile banking registered with his/her bank by completing

below process:
1. Register mobile number with respective bank.
2. Generate MMID. MMID (Mobile Money Identifier) is 7-digit number, to be
issued by the Bank to the customer upon registration.
28 | P a g e

3. Get M-PIN. M-PIN is Mobile Banking PIN secret password to be used by

customer during transaction for authentication and security.

4.4d

The working of IMPS

1. Customer dials *99# from his mobile phone.

2. Customer receives welcome message as Welcome to National Unified
USSD Platform for Mobile Banking. Please enter your 7 digit MMID.
3.

Customer enters 7 digit MMID received from the bank and sends the request.

4. The bank mobile banking menu is displayed on the screen.

5. Customer selects the transaction from the menu and enters the details as
requested in the NUUP session to complete the transaction.
6. Customer enters the MPIN and confirms the transaction.
7. Transaction is sent to the Issuer Bank for processing from NUUP Platform.
8. Issuer bank completes the transaction and confirms the result on the mobile of
the customer in the session.
9. Customer gets SMS in case of IMPS transaction with the details of the
transaction.
Steps for transaction
1. Balance Enquiry
2. Mini Statement
3. IMPS
4. Generate MMID
29 | P a g e

5. Generate OTP
6. Request Check Book

4.5

IMPS Funds Transfer through ATM / Internet Banking channel

IMPS Funds Transfer can be done through ATM and Internet Banking channels as
well, in addition to Mobile phones. The authentication will be done for the
Remitting customers as (Card + ATM Pin) or (User Id + Internet Banking
Password / Transaction password) with appropriate existing two-factor
authentication method. Since the transaction would be initiated on ATM / Internet
platform, the transaction limits of individual Banks for ATM / Internet channel
shall apply. IMPS system is used for beneficiary identification and real-time
settlement of transactions.

30 | P a g e

Chapter 5

PROCESS OF IMPS

5.1

Transaction through mobile banking

Figure 5.1 (source : NPCI)

31 | P a g e

Figure 5.2 (source : NPCI)

5.2

Transaction through SMS

Figure 5.3 (source : NPCI)

32 | P a g e

5.3

OTP generation through mobile

Figure 5.4 (source : NPCI)

5.4

OTP generation through SMS

33 | P a g e

Figure 5.5 (source : NPCI)

5.5

Make payment using OTP

34 | P a g e

Figure 5.6 (source : NPCI)

5.6

Flow of IMPS (Customer Initiated)

35 | P a g e

Figure 5.7 (source : NPCI)

5.7

Flow of IMPS (Merchant Initiated)

36 | P a g e

Figure 5.8 (source : NPCI)

37 | P a g e

Chapter 6

BENEFITS OF IMPS

Instant money transfer

Internet connection not required

Money can be transferred irrespective of holidays, timings.

No disclosure of bank account details

Time consumption is less when compared to NEFT, RTGS

Instant Interbank fund transfer

Convenient and time-saving

Anytime, anywhere service

Safe & secure

Simple & easy to use

24*7*365 availability

Instant confirmation to sender and receiver

38 | P a g e

Chapter 7

FUTURE OF IMPS

IMPS is all about digitalization. In the new era, where everything is getting digitalized, it
is a great move by NPCI in collaboration with RBI to introduce such kind of a service.
India is the second-largest mobile phone user with over 900 million users in the world. It
accounted for over 10% of the worlds online population in 2011. Also, with more and
more people accessing the Web through mobile phones, the Internet user base in the
country is projected to touch 243 million by August 2014, a year-on-year growth of 28
per cent. According to the Internet And Mobile Association of India (IAMAI), the
Internet user base in the country stood at 190 million at the end of June, 2013. For the
whole year 2013, the Internet user base grew 42 per cent to 213 million, from 150 million
in 2012. Of the total user base, mobile Internet users accounted for 130 million in 2013, a
growth of about 92 per cent from 68 million in 2012.IAMAI expects the number of
mobile Internet users to touch 185 million by June 2014, accounting for about 76 per cent
of the Internet user base in the country.
Also, with people nowadays being able to do almost all of their daily routine work
through mobile, this will just be an added advantage. Introduction of payment through
mobile and internet, will enable users to complete transactions from wherever they wish
to and at whatever time they intend to do it. Neither do they have to stand in the long
queues of banks branches nor do they have to physically be present at branches and
instead can complete their other work on the move.
Also, it is quite evident that RBI wants to make this happen so that there are no branches
physically present anywhere. The success of IMPS will have RBI achieve their goal of
electronification of retail payments.

39 | P a g e

Below chart (retrieved from RBI) shows the trend of mobile banking application users in
India over the years.

Figure 7.1 (source : RBI)

India's central bank says mobile banking adoption in the country has been encouraging,
but below expectation, due to key factors such as device incompatibility and lack of
industry collaboration.
In its half-yearly financial stability report released this week, the Reserve Bank of India
(RBI) said mobile could potentially be a key catalyst for expanding banking services
across the country, including rural India. Over 50 percent of the population have no
access to financial services.
Trends in Mobile Banking Transactions

40 | P a g e

Figure 7.1 (source : RBI)

However the flipside is that some experts are of the opinion that due to technological
limitations in India, mobile banking would not be safe move. Even as India's banking
regulator is promoting internet and mobile banking in a big way, cyber security experts
question Reserve Bank of India's (RBI) intention in doing so. Most Indian banks, they
say, are providing internet banking services without giving much thought to cyber
security, also blatantly disregarding RBI's guidelines on the issue. According to experts,
consumers should be especially wary of mobile banking which can be more dangerous
due to obvious lack of security systems for mobile phones.
An RTI query filed by city-based NGO Cyber Awareness Organization (CAO) recently
even reveals that none of the banks in the country has drafted information security
guidelines which are mandatory as per RBI's guideline on electronic banking. Other
experts say that no bank in the country has even applied for cyber crime insurance.

Also, to add to the delight of RBI, value of IMPS transactions in India has seen a jump of
nearly 22X, signaling a sharp rise in mobile fund transfers in the country. More than 7
lakh transactions worth over Rs 400 cr were carried out using this mechanism in July
41 | P a g e

2013 alone. This when compared to the a total transactions amount of Rs 18.25 cr from
2.80 lakh transactions in August 2012, shows a huge increase in IMPS usage.

Figure 7.3 (dated: 30th Aug, 2013) (source : nextbigwhat.com)

The analytics over the year also provides another interesting insight, that of the growth in
transactions amount over a years time. Back in August 2012 the average transaction
amount was at Rs 645.7, this had nearly increased 9X in a years time to touch Rs. 5818.5
by July 2013.

42 | P a g e

Figure 7.4 (dated: 30th Aug, 2013) (source : nextbigwhat.com)

Therefore, although some factors promise a bright future for IMPS, there are some, as
pointed out above, which promise many hiccups in its progressive path. But all in all,
although it will take time but certainly, IMPS will be accepted whole heartedly by the
Indians. The need of the hour for a bright future of IMPS is its aggressive promotion by
the RBI and government.

43 | P a g e

Chapter 8

CONCLUSION

It is often said that Time is Money. The RBI has shown its belief in this by launching the
new feature Immediate Payment Service which focuses on transferring payments from
one person to the other which is almost as real as indulging in a face to face transaction.
Whenever money is transferred, more or less, it is always advisable that money reaches
the other person as soon as possible. In just a matter of few seconds, money is transferred
from one person to the other by just a few clicks on your mobile phone. IMPS does just
that and therefore it is indeed a very innovative step taken by RBI. It is sure to change the
entire banking mannerisms in India and however it is sure to face many difficulties in its
progressive path. The main factor being trust on mobile banking applications amongst
Indians. However, it would be unfair to not take into consideration the fact that inspite of
all difficulties. IMPS will be a turning point in the banking system of India.
Yes, the trend of number of mobile banking application users in India has been
continuously showing an upward rise which is a positive sign for the RBI yet, it cannot
be ignored that there are few hiccups in the progressive path of RBI. The only positive
which favors this product introduced by RBI is the increasing number of mobile
application users in India and also the incremental research and use of technology. But it
would be a fair argument that though number of mobile application users using mobile
banking are increasing, but this growth is very limited indeed and would certainly be
stagnant at some point as it would take many years or maybe it is possible that the rural
people would never be willing to use mobile banking for fund transfer because of lack of
technical knowledge which makes them believe that such payment option is risky. The
central bank was also found quoting in early 2014 that although increase in mobile
banking application users is encouraging but it is still below expectation.
Moreover, to point out some reasons which are not in favor of IMPS are firstly, on the
side of some Indian banks, there is ignorance about promotion of IMPS. Through
personal research, when visited one of the banks of India (not to be named) which is
listed on RBI website as one of the banks having registered for IMPS, the employee in
that particular banks branch did not know what IMPS is when queried about the
procedure to register for it. Also, there is no effort on the part of RBI or the government
to promote IMPS through any medium of advertising. Also, India is the most diversified
country where all sections of society reside. Therefore, there is a section which is very
tech savvy while there are others who are not. There are few who although know about
44 | P a g e

IMPS and other modes of payment but prefer to be ignorant about it because where
money is concerned, many Indians even today do not trust completely on technology.
There is also the older section of society which does not know anything about mobile
except for the basic feature of how to receive and make calls. Therefore, unlike other
foreign countries it is impossible for a country like India to make all of its banking
population use a technology driven payment system like the IMPS. However, I would
like to contradict my own point by saying that IMPS will surely be a success and almost
all those who have accounts in banks and who do transactions on daily basis but there
will be a slow and steady growth of trust in IMPS and people will welcome it with open
arms just like they have embraced ATMs.
IMPS will surely be used by almost all of the urban population and maybe by some in
rural areas in India gradually and and this will also help banks to operate on minimum
branches and with handful employees and thus reduce cost. By the introduction of IMPS,
the day is not far when visiting the branch of a bank will be a history (for urban areas).
Welcome the change that India needs, welcome IMPS.

45 | P a g e

BIBLIOGRAPHY

The Reserve Bank of India, www.rbi.org.in

National Payments Corporation of India, www.npci.org.in
The Times of India, www.timesofindia.indiatimes.com
The Hindu Business Line, www.thehindubusinessline.com
Next Big What, www.nextbigwhat.com
ZDNet, www.zdnet.com

46 | P a g e