We’ve written about IMPS – India’s Instant Payment Service – in the past. In 2011, I made an “instant” payment to my friend Shyam. I hit send on my machine and it was on his netbanking immediately – and this is between two different banks!
IMPS has changed substantially. First, more banks offer it now. There are 84 banks that offer it, versus a handful in 2011.
Second, the concept has expanded. From the basic structure of using a “Mobile Identifier” or MMID, which you had to get from your bank, you can now use IMPS to transfer to any other bank account, using the IFSC Code and Account number.
This is brilliant. I’ve been paying my household help using this concept. The money is transferred instantly, so they can see the money in the account immediately – if they are at an ATM, they can get the balance right there and then.
Third, they even map accounts using the Aadhaar number. So you can pay someone by just mentioning their Aadhaar number, if they have linked it to a bank account. This is beyond powerful – it can change the entire ecosystem of small payments.
Fourth, merchants can even “request” payments now. Many banks (Yes bank is one of them) allow you to generate a One Time Password on your phone, and you can place that with a merchant who can use it to charge the exact amount. I have actually used this to make an LIC payment (LIC supports this concept). Why are merchant payments different? They need a lot more information that you will otherwise get in an IMPS transaction, which a single “reference” field is useless for).
And finally, you can use IMPS on any phone – no smartphone required. Just dial *99# and you can use the return instructions to make transfers. (See participating banks and telcos)
The Cost Is Attractive
What does IMPS cost? To the bank, it’s a mere Rs. 0.25 per transaction charged by NPCI. Many banks simply absorb the cost (it probably costs them more to charge you for it!).
It’s been growing!
IMPS has grown substantially, with transaction amounts going up 5x in the last year, to about 10,000 cr. per month.
This is quite an interesting field. IMPS will be absolutely HUGE going forward. We are looking forward to great implementations, such as:
- Instant payment of auto/taxi fares through apps – since the amount isn’t known, they can use OTP based payments
- Investing in Mutual funds as “SIP” but with varying amounts, with IMPS based quick payments
- Paying merchants in shops by just connecting through your phone – with, of course, appropriate protection and two-factor auth
- Quick transfer of money from one place to another; intra-country remittances can be instant
- With ultra low costs, the IMPS system can be used for even micro-lending and on-the-spot lending
This will easily replace wallets, if banks got their act together. Soon, it seems, we will have a Unified payment system architecture where anyone (including non-banks) can integrate into this awesome network. It’s way better than anything else out there – it’s instant, it’s safe, and it’s reliable.
What are your experiences with it?
