Cheques have been the preferred method for making payments in India. Cheques suffer from two drawbacks – one is the cost involved – on an average processing a single cheque costs a bank around Rs. 50. The other problem is the delay in receiving payments.
Banks who wanted to reduce their cost of processing transactions offered the NEFT services, where a customer could make payments over the internet. Currently, majority of inter bank electronic funds transfer transactions are channelized through NEFT. Under NEFT, the transactions are processed and settled in batches, not real time. Also, the transactions can be done only during the working hours of the RTGS system.
However, with the arrival of IMPS, banks have a low cost, easily available channel to offer payment services. There are more mobile devices in India than there are internet connections or even bank accounts. India has over 600 million mobile phone users – and the numbers are growing every month. All these mobile phone users make and receive payments every day. The need of the hour is to combine the two to provide the easiest, most convenient payment channel to the customer – an instant mobile payment service.
The National Payment Corporation of India has launched the Interbank Mobile Payment Service (IMPS) in November 2010. The IMPS offers an instant, 24X7, inter bank electronic fund transfer service through mobile phones. IMPS facilitates customers to use mobile instruments as a channel for accessing their bank accounts securely and with immediate confirmation features.