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News : Prepaid Credit Card UK
Use credit cards, buy fund units
Monday, 19 May , 2008, 08:28
Mumbai: While the bulls were on a holiday, fund houses were busy making arrangements, which they couldn’t have done with the bulls being around. One of them is extending the alternate payment gateways that will help individuals in making mutual fund investments.
Fund houses, at least some of the bigger players, are in advanced stages of rolling out services whereby credit cards and mobile payments could be made in favour of mutual fund investments.
“At least two players are almost ready to offer payments via credit cards,” said M N Srinivasu, director of BillDesk that facilitates the payments channel for mutual funds among many other industries.
The cost of transaction has been the hurdle for mutual funds not being able to accept credit card payments.
Mutual funds would have required to pay 2% to the credit card company for each transaction, as against around 2.25% to the broker.
It is learnt that fund houses were asking for reduced costs as the credit card industry would be benefited in terms of number and value of transactions.
The costs seem to be the factor, maybe for life insurance companies for not promoting the credit card payment channel. The channel is currently available with some life insurance companies.
Apart from credit cards, payments using mobile phones are set for an entry into the fast-growing mutual fund industry. Mobile payments provider mChek is in talks with several fund houses, and at least a couple of them are set to announce the launch of this facility within few weeks, according to Sanjay Swamy, chief executive officer of mChek.
Insurance companies such as ICICI Prudential Life Insurance and Reliance Life Insurance have already enabled mobile payments for their customers, while a foreign insurance giant is expected to roll out the facility soon.
In general insurance, the payments via credit cards have gone down well as they are just one-time payments.
In mutual fund and insurance sectors, the credit card or mobile payments may or may not necessarily be first-time payments. It remains to be seen how fund houses cope with the stringent KYC requirements that mutual fund regulators ask for.
Source: http://sify.com/
