The Department of Post (DoP) has entered into an an agreement with BSNL to offer money remittance services or money orders through mobile phones.  BSNL will be responsible for developing a new software as per the needs of the DoP. The trial of the said services will run for a period of 6 months in Punjab, Bihar, Delhi and Kerala Circles. The rollout of the pilot is expected in August-September 2012.

A DoP spokesperson told the Economic Times that the post office will give commission to BSNL for each transaction, depending on the amount of the money transferred. The service will be such, that upon completion of the transaction, the receiver will get an SMS on his mobile phone mentioning the details of the transaction with a unique code which he can show at the nearest post office branch to redeem the cash.

The tie-up was announced last year: We’ve been hearing about this since more than an year, now. It appears that the negotiations between the two departments might have been stalled by some disagreement or due to bureaucratic processes. As we had mentioned, this is essentially an extension of India Post’s Instant Money Order service, and BSNL appears to be only a technology provider/enabler and not a Banking Correspondent. Users need not be BSNL customers to use the service. Media reports had indicated that a pilot for the service would be conducted in Punjab and Bihar.

Under the pilot, select post offices were to be equipped with mobile phones with a special application, which will facilitate the process. Senders would  need to visit these post offices, deposit the amount and give the receiver’s details. After this, they would get a 16 digit transfer code on his mobile phone, which they would need to send to the recipient via SMS. The recipient can claim the money at a nearby post office, by showing the transaction code and verifying his identity. Similar to the Instant Money Order service, the maximum limit for transaction was set at Rs 50,000, and commission charges of 5% were to be levied. We’re not sure if the terms of the service remain the same or changes have been introduced. The Department of Post had said at that time, that it intended to connect all 1,55,000 post offices, across the country, for core post office operations and introduce a Savings bank, for which clearances were being sought.