New Delhi: Mobile Wallet, a M-Commerce solution, which enables advanced banking and payment services by using mobile phones is being developed by leading banks and mobile-commerce solutions providers in India. Mobile wallet is expected to bring in more security and reliability to the new payment system involving mobile phones. The application will be downloadable unlike the SMS based service, which doesn't require any special setup.

Mobile phone based payment service presents a greater potential than internet based service. Rahul N Bhagat, Executive Vice-President retail banking, HDFC Bank said, "There are 33 million GPRS-enabled mobile phone users against 11 million internet users in our country this represents a massive potential of rich-client-based mobile banking applications. HDFC Bank is also looking at setting up a mobile wallet service very soon."

Mobile banking needs a more robust and reliable platform than the SMS based service, if the system has to take off in a big way. Text based services like SMS are convenient, but they pose big risks and are easily vulnerable to manipulation and security attacks. "A service like mobile wallet is the need of the hour", said Arvind Kathpalia, head technology and finance operations Kotak Mahindra Bank.

Mobile Wallet is a JAVA based downloadable application, that can be used on a GPRS enabled phone. The phone will contain the details of owner's credit card and the application will initiate a payment or transaction securely and verified by a PIN, which can be used only for one time.

Reserve Bank of India, RBI had also stated a need for alternate modes of banking, which would bring in more people into mainstream banking. It had mentioned the examples of Philippines and Mexico, which already have such systems in place. This has led to a lot of banks and mobile commerce vendors coming together to offer mobile remittance facility. Six leading private sector banks and Obopay, an US-based mobile solutions provider have launched a  peer-to-peer and peer-to-merchant payment mechanism. This tie-up will enable mobile payments through a secured SMS path and connect the banks through their existing ATM network.

Currently, mobile banking in India is limited to SMS alerts and other enquiries. The SMS alert a customer receives when an amount is debited from his account or charged to his credit card helps him verify the accuracy of the transaction. If any such transaction is unauthorized, he can call the bank and stop the transaction.