RBI suggests alternatives to two-step online payments

MUMBAI: The Reserve Bank of India (RBI) has indicated several alternatives by which retail payments can be done without two-factor authentication — an issue which resulted in Uber’s run-in with the banking regulator. The alternatives include mobile-to-mobile transactions, tap-and-pay systems and a proposal to do away with two factor authentication provided the bank takes liability for frauds.
“I do not want to speak about the Uber controversy, but this was something that needed to be addressed. We had this issue of card details going abroad and also the second factor authentication was bypassed,” said RBI deputy governor H R Khan. “There is scope for innovation in retail payment. Mobile-to-mobile payments can be used for in-store (face-to-face) transactions. We have also received proposals for tap-and-pay from a few banks, including State Bank of India. We are also looking at whether we can remove second factor authentication for Rs 3,000-4,000-5,000 transactions,” said Khan. He added that the issue was how much liability to fix on the bank.
Khan also said that if there was a pick-up in volume in USSD-based mobile transactions, the issue of the price per transaction could be discussed with the Telecom Regulatory Authority of India. At present, mobile companies charge Rs 1.50 for every USSD session which follows the customer dialling *99#.
Khan was speaking at programme initiated by the State Bank of India where volunteer staff from 385 offices across the country will assist customers in using alternate channels. These include mobile banking, internet banking and ATMs. The bank is opening 1.7 lakh accounts every day and the existing branch infrastructure is coming under strain. “We have around 37 crore transactions every month and only 65% of that takes place through alternate channels. Our objective is to increase this to 85%,” said SBI chairman Arundhati Bhattacharya.

“It is a myth that only the rich use technology in banking. Today, even beggars in the street use mobile phones. Mobile banking costs 2% of branch banking, 10% of ATM and 50% of internet banking,” said Khan.
Technically, even today a customer can walk into a store and transfer funds to a shopkeeper’s account using USSD-based mobile banking. However, bankers say that it is a much more drawn-out process compared to a card swipe. A remitter has to key in their seven digit MMID (mobile banking ID) number, the beneficiary’s mobile number and MMID number or 15-digit account number and IFSC code.