Update: Probir Roy informs us via email that their contract with Domino’s is still “active and current” and NOT cancelled as reported earlier. We’d noted at the conference that he had said that it had been cancelled, and we stand corrected.

Earlier: The One Time Password (OTP) requirement for mobile payments has “has killed the need for doing instant gratification,” Probir Roy, co-founder of mobile payments company Paymate said at the International Conference on Mobile Law in Delhi last week. “We signed up Domino’s, and after OTP, our transactions fell by 99% , and they cancelled our contract.” Roy contended that the OTP killed the opportunity that high volume-low value transactions which would have helped change consumer behavior, saying that the regulator needed to keep consumer nuances in mind, and not just issues of fraud. “10 million customers have downloaded mobile banking apps, but hardly any use it. There are 17 million MMIDs (mobile money IDs), but only 8000 transactions. You have to ensure that consumer pickup takes place. The rich usage of internet banking has not taken off; the functionality is all there, but most people are using to check balance… Technology shouldn’t be used to make people 100% safe, but allow people to use. Consumer education is key, which is where banks have to play a key role.”

He pointed out that no system is perfect, and even with “chip and Pin card” in the UK and Europe, it’s still 4 billion pounds fraud. “Don’t use guidelines and fraud to stifle growth. Did anyone try and regulate wealth management and NBFCs? You have to let thousand flowers bloom. We’ll stifle mobile commerce this way,” Roy said.

Telco Liability

He pointed out that in case of mobile payments, the liability of telecom operators is vague right now. If a user sends an SMS to make a payment, but it wasn’t sent, who is responsible? He gave his own case, wherein his debit card was stolen and used to make three payments, but the SMS informing him of its usage was delayed, and SMS’ weren’t received in the correct order – “The message for the third purchase came first, and the other two messages came the next day. They said I was roaming. So whose liability is it – the banks or the telcos?”

Remove KYC For Lower Amounts

Roy said that removing Know Your Customer (KYC) norms for lower amounts will help give a fillip to usage, especially rural areas: try high velocity, small ticket transactions, and then see if there is misuse or fraud.

No Review Of OTP Yet

Responding to MediaNama’s question on whether the RBI would take another look at the the One Time Password policy, G. Gopalakrishna, Executive Director of the RBI said that at this point in time, there was no such plan, and that a second level of confirmation is mandated by law.