The coming month of November will see the first 24-hour payment system being launched by National Payments Corp. of India (NPCI) in India. Through this system bank customers will be able to remit money to any account in India for free using their mobile phones.

A.P. Hota, managing director and chief executive of NPCI informed, “RBI (Reserve Bank of India) has permitted only a pilot run with a limited number of banks. Five banks (State Bank of India, ICICI Bank Ltd, Union Bank of India, Bank of India and Yes Bank Ltd) are already live.” He added soon Axis Bank Ltd and HDFC Bank ltd will be joining the system.

In other part of the world mobile funds transfer facility is run by telecom companies, such as in Kenya (M-Paisa), South Africa (Wizitz) and the Philippines (Smart Cash), in the US and UK are intra bank systems.

NPCI interbank mobile payment system (IMPS) will be the first-of its kind which will allow such transactions between individuals that will be made possible through the banks and the mobile services provider.

According to RBI guidelines, there is a limit of Rs 50,000 per day on mobile transactions. The no-frills savings account holders can also access this service.

To access this service the senders will have to register for mobile banking with their banks, whereas both the sender and receiver must obtain a special Mobile Money ID (MMID) from the bank, apart from sharing their mobile numbers with the bank.

Bank will also provide a personal identity number (PIN) to senders, after which they have to download a mobile banking application on their handset.

Bank will send SMS to both the sender and the receiver confirming a transaction.

This is the first time, India’s first and only integrated retail payment system company is handling such major project in which public sector banks have 60% share while remaining part has been equally divided among the two private and foreign banks each.

There is no involvement of RBI in the daily operations of the company, but has a nominee on the board of directors.

Around ten promoter banks have collectively committed Rs 100 crore as share capital for the company, out of the Rs 300 crore equity capital for expansion. Over the next three to four years NPCI is planning to spend Rs.400 crore to introduce new payment mechanisms and for office expansions.

By September 2011 NPCI will be launching its own electronic card payment system on the lines of Visa and MasterCard, for this company is doing surveys to finalize a brand name, Hota said. RuPay and NPCI will be the front runners.