DIGITAL PAYMENTS

INTRODUCTION Payments are made using payment instruments. Cash for example, is a payment instrument. So too are cheques. Digital/ Cash Less: Every instrument other than cash(Non Cash) and which does not rely on paper(Non Paper) for its transaction. Simply in other words, transaction that mainly use Electronic medium are considered as Digital.

UNIFIED PAYMENT INTERFACE(UPI) A Unified Payment Interface (UPI) is a single window mobile payment system launched by the National Payments Corporation of India (NPCI). The system is designed to provide a simple, secure and convenient “single interface” to enable sending and receiving of money using smart phones through a "single identifier" which can be a virtual address like an email ID, mobile number or Aadhaar number (like the Social Security Number). It eliminates the need to enter bank details or other sensitive information each time a customer initiates a transaction.

Mobile Authentication How does it work? Registration Download a UPI app of your bank. Register with your account details and create a virtual ID with your name or phone number. One-time process Online Purchase Add the item to be purchased to your cart. Go to payment options and select Payment through UPI Provide only your Virtual ID to the merchant. Mobile Authentication You will receive a pop-up window on your phone’s UPI app requesting your approval for online purchase. Enter the secure pin A confirmation of successful payment will be sent on your phone.

Why is it better? UPI eliminates the need to share your name, your bank account number, IFSC code, or bank branch. UPI also eliminates the use of physical tools like debit cards. It also eliminates the need to use multi-step processes like net-banking, which are prone to phishing due to insecure frameworks. It is a very simple application and can be used by anyone. The authentication is instant and secure and can be initiated anywhere. It opens up the pathway for a completely cashless digital society. The UPI (as it stands now) is the foundation for future innovations to make all transactions more fluid, natural and secure.

Challenges that prompted the need for UPI The number of non-cash transactions per person per year is only 6. This is bad because cash transactions are often hard to trace. Cashless transactions can be tracked, eventually eliminating black money from society. Only a fraction of retailers (6 lakh) in India have card payment facilities. The biggest sufferers in these are local and small shops. However, the ubiquity and ever-falling prices of smart phones is making it an attractive and convenient option to facilitate transactions Of the six lakh villages in the country, fewer than one lakh villages have banking services (as of May 2011). Financial inclusion has also been hard to achieve. It is only through recent innovations like Direct Benefits Transfer (DBT) and Pradhan Mantri Jan Dhan Yojana (PMJDY) that financial inclusion has become a reality. There are more than 150 million smart phone users in the country, a number set to more than triple within 5 years. Here was a readymade solution that wasn’t being addressed

E-Wallets E-wallet is a type of electronic card which is used for transactions made online through a computer or a smart phone. Its utility is same as a credit or debit card. An E-wallet needs to be linked with the individual's bank account to make payments. 

How do they work? First of all, as it is a Wallet, we have to load money into that for using our money online. We can load money from various sources. 1) Debit Cards/Credit Cards/ Prepaid Cards 2) Directly from Bank Accounts using internet Banking 3) Requesting money from Parents, Relatives and Friends

What they can be used for? Digital wallets enable you to pay your electricity bill, telephone bill, recharge of prepaid mobile, booking of bus and movie tickets etc. It is safe, easy to use and fast. You don’t have to carry your leather wallet full of credit and debit cards. Every time you don’t have to put your credit card details to every payment which is actually minimizing the risk of exposing your credit card details to every merchant. When you pay through these wallets you will get cash back according to the offers it runs.

Semi-Closed e-wallets Types of E-Wallets Closed e-wallets These are wallets issued by an entity for facilitating the purchase of goods and services from it. These instruments do not permit cash withdrawal or redemption. Hence, RBI approval is not required for issuing them. E.g. Cab services, e-commerce and mobile companies create e-wallets for making payments towards purchase of products from them /for usage of their services Semi-Closed e-wallets These are wallets which can be used for purchase of goods and services, including financial services at merchant locations establishments which have a specific contract with the issuer to accept them. These wallets do not permit cash withdrawal or redemption by the holder. Open e-wallets These are wallets which can be used for purchase of goods and services, including financial services like funds transfer at any card accepting merchant locations [point of sale (POS) terminals] and also permit cash withdrawal at ATMs / Banking Correspondents (BCs). However, cash withdrawal at POS is permitted only up to a limit of Rs.1000/- per day subject to the same conditions as applicable to debit cards (for cash withdrawal at POS).

PoS (Point of Sale) The “point” where a transaction is finalized or the moment where a customer tenders payment in exchange for goods and services. Any form of payment can be , used such as cash, debit cards, credit cards, mobile payments and even bitcoin. Types of PoS 1) Physical PoS 2) M-PoS 3) V-PoS

Installation of Physical PoS Terminal 1 Open / identify current account for transactions Fill in the application form(online/ at the branch) Identify type of PoS required ( landline/ GPRS) Submit Following documents: 1)Proof of business (any one) 3)Photo identity proof 4)Financial Period 2) Proof of address Acceptance of MDR by merchant Execution of Merchant Establishment Agreement 2 3 4 5 6

M- PoS Speed up check-out and return lines. Using mobile POS keeps your customers moving through the check-out line as efficiently as possible even during sales rush times. Using mPOS can also avoid back-ups at the sales registers due to returns. Improve customer satisfaction and help avoid lost sales with mPOS solutions. Cashiers become sales consultants. Improve customer service with mPOS. It enables your salespeople to better inform consumers. Helping your customers make faster purchasing decisions can drive higher revenues. Drive sales in different parts of your store. You can sell to customers anywhere in your store using mobile POS in new ways. Hold an in-store demonstration to promote a product or service and then close the deal when your customers are excited and ready to buy. Always know price and availability. Customers get frustrated when there is a question about a price or availability of an item and a store employee doesn’t have the tools to provide a quick answer. 

V-PoS Security: VPOS meets the strictest security standards and complies with the highest international standards set by the eCommerce industry for processing, handling and transferring confidential data and information. Speed: Authorization and authentication of purchases is made in real timethe payment is accepted in a few seconds and the customer can check the online purchase price once the transaction has been accepted. Versatility: VPOS is a multicurrency and multilingual platform, it accepts most credit cards, integrates with all financial entities and adapts to any activity or sector. Functionality and effeciency: With VPOS, purchases can be made hours a day, 365 days a year from anywhere in the world with internet connection.

Barriers to Digital Payments Digital Payments: Barriers to trying Inertia of Non-cash methods Habit to use cash Lack of compelling value proposition Complexity of using Incentive/ offers from other methods Fraud/ hidden charges Reach

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