Dig­i­tal Pay­ments: Act II

With in­creased in­ter­net pen­e­tra­tion, mer­chant ac­cep­tance net­work is try­ing to catch up with newer meth­ods of dig­i­tal pay­ments.

Business Today - - SECTOR REPORT FINTECH - By Deepika Asthana Pho­to­graph by Reuben Singh

THE IN­DIAN ECON­OMY has tra­di­tion­ally been dom­i­nated by cash, but with in­creas­ing in­ter­net pen­e­tra­tion and ris­ing avail­abil­ity of smart­phones, many In­dian con­sumers have shifted to dig­i­tal pay­ment modes. There are now var­i­ous ways to make on­line pay­ments and trans­fers — credit card, debit card, Net bank­ing, bank trans­fer modes, e-wal­lets, and Uni­fied Pay­ments In­ter­face (UPI) BHIM. Ac­cord­ing to Deepak Chand­nani, Manag­ing Di­rec­tor, World­line South Asia and Mid­dle East and Manag­ing Di­rec­tor MRL Pos­net, “There are two parts to this in­no­va­tion – the fron­tend and the back­end. The fron­tend is the form fac­tor and the back­end is the tech­nol­ogy that en­ables the pay­ments. On the fron­tend, the av­enues for a per­son to make pay­ments are ex­pand­ing from cards to mo­bile phones. On the back­end, tech­nol­ogy is en­abling real-time in­ter- op­er­a­ble pay­ments, es­pe­cially on the mo­bile.” In­tro­duc­tion of these dig­i­tal modes has made trans­ac­tions con­ve­nient for cus­tomers, mer­chants and ven­dors. “While cash and dig­i­tal can co- ex­ist and thrive, dig­i­tal pay­ments have been grow­ing at a faster clip over the last few years,” says Ravi B. Goyal, CMD, AGS Trans­act Tech­nolo­gies, an on­line pay­ment sys­tems provider. For wider ac­cep­tance, both ends of the sys­tem — fron­tend and back­end — have to de­velop.


Apart from cards, Net bank­ing, bank trans­fer op­tions and e-wal­lets, a new method of dig­i­tal pay­ment has emerged and is gain­ing strength. The gov­ern­ment’s Bharat In­ter­face for Money (BHIM) mo­bile app al­lows for trans­ac­tions us­ing the UPI. BHIM al­lows users to send or re­ceive money to or from UPI pay­ment ad­dresses, or to non-UPI based ac­counts by scan­ning a QR code with ac­count num­ber and In­dian Fi­nan­cial Sys­tem Code (IFSC) or Mo­bile Money Iden­ti­fier (MMID) code. Un­like mo­bile wal­lets (such as

Paytm, Mo­biKwik, mPesa, Air­tel Money, etc.) that hold money, the BHIM app is only a mech­a­nism of trans­fer. Trans­ac­tions on it are in­stant and can be done 24*7. BHIM al­lows users to check the cur­rent bal­ance in their bank ac­counts and to choose which ac­count to use for trans­ac­tions. Users can also have more than one pay­ment ad­dress. If the 12- digit Aad­haar num­ber is listed as a pay­ment ID, bio­met­ric au­then­ti­ca­tion or a prior reg­is­tra­tion with the bank or UPI is not needed.

Two more pay­ment meth­ods gain­ing pop­u­lar­ity are Near Field Com­mu­ni­ca­tion ( NFC) tech­nol­ogy and QR code-based sys­tems. But these re­quire re­tail­ers to ei­ther up­grade or in­stall new de­vices to gel with these new tech­nolo­gies. “In­dia has nearly 1 mil­lion ter­mi­nals that sup­port NFC-based con­tact­less card pay­ments. In­dia has rapidly be­come one of the largest con­tact­less card-ac­cept­ing mar­kets in Asia. More than a dozen prom­i­nent ac­quir­ing banks in In­dia have de­ployed ap­prox­i­mately 1 mil­lion con­tact­less card-read­ing de­vices in ev­ery­day ac­cep­tance lo­ca­tions across the coun­try,” says Shailesh Paul, Vice Pres­i­dent and Head of Mer­chant Sales and So­lu­tions In­dia and South Asia for Visa. How­ever, he does ac­knowl­edge that con­tact­less cards are fac­ing chal­lenges in scal­ing up.

While the Re­serve Bank of In­dia (RBI) gave its go-ahead for NFC-based con­tact­less card pay­ments in late 2015, there are still only about 20 mil­lion cards in cir­cu­la­tion. Hence, cre­at­ing aware­ness around us­age

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