Buy fund units using credit cards

Share market is quite, fund houses are busy in making new arrangements, that is searching for alternate payment gateways that will help individuals in making mutual fund investments, which could not have been possible if there has been movement in the share market.

Some of the bigger players among the fund houses are working out the plan to roll out the services whereby credit cards and mobile payments can be used in favor of mutual fund investments.

M N Srinivasu director of BillDesk that facilitates the payments channel for mutual funds among many other industries points out, “At least two players are almost ready to offer payments via credit cards.”

The cost of transaction is the main hurdle for mutual funds for not been able to accept credit card payments.

If transaction is allowed through credit card then mutual funds would have required paying 2% to the credit card company for each transaction, as against around 2.25% to the broker.

It is being considered that fund houses have been asking for reduced costs as the credit card industry will be benefited in terms of number and value of transactions.

It seems the cost may be the factor for life insurance companies for not promoting the credit card payment channel. Currently only few of life insurance companies are using this channel.

Other than credit cards, payments using mobile phones are also being taken into consideration for an entry into the fast-growing mutual fund industry. Talks are being held between mobile payments provider mChek and several fund houses, and according to Sanjay Swamy, chief executive officer of mChek atleast some of them are set to announce the launch of this facility within few weeks.

Meanwhile insurance companies such as ICICI Prudential Life Insurance and Reliance Life Insurance have already allowed mobile payments for their customers, while soon a foreign insurance giant is expected to roll out the facility.

It is just one-time payments in general insurance, made via credit cards and has gone down considerably.

In case of mutual fund and insurance sectors, the credit card or mobile payments may or may not necessarily be first-time payments. But still it is to be seen how fund houses manage with the stringent KYC requirements that mutual fund regulators ask for.