New Waves in the Digital Payment Environment
As the digital payment environment continues to show promising growth in India, it is probably time to take a look at a new wave that has been fast emerging. Perhaps the trends are inclining towards what we can refer to as ‘Instant Payment’ systems that will help drive in more digital transactions. What if we can have a single interoperable payment method for all financial transactions? This will include the coming together of banks, phone network operators, financial institutions, payment processing firms, and the like.
Take for example the recently-introduced instant payment system, which was launched by a well-known Fintech company - Financial Software and Systems (FSS). This new payment interface will work using a ‘central pay system’. This new system will enable the building of cost-effective payment interfaces to encourage more speedy, safe, and hassle-free payments. This can be used for both domestic and international payments.
In the recent past, the Unified Payments Interface (UPI) has become quite a popular method used for cashless payments. UPI is a type of system that allows any bank account holder, whose bank is part of the UPI network, to link multiple savings accounts and make payments using a single app. Launched in 2016, the system has seen has seen unprecedented growth in the recent months. In February 2018 alone, the number of UPI transactions stood at a whopping 171.4 million. This is an increase by 13.50% from the last month - January.
The NPCI is also trying to make the user experience more friendly by integrating the QR code with the UPI platform. Apart from this, ICICI’s pockets application is also looking at including sound-based payment solutions. This will help customers make payments to any merchant in the proximity using a smartphone.
The other pro is that the sender does not have to go through the whole hassle of registering a beneficiary and then wait for the beneficiary to be activated. Fund transfers and payments can be made directly using what is referred to as, the Virtual Payment Address (VPA). VPA is just like an email ID and all a sender has to do is key in this address to initiate a fund transfer. This also helps the users maintain confidentiality as far as bank account-related information is concerned.
Some of the main features that will be made available through this type of payment system includes:
In the recent years, there has definitely been a boom in the digital payments sector. The environment too has been very favourable because many international players such as Amazon and Google have entered the digital payment movement in India.
According to recent reports, the total value of digital payments in the country stands at an aggregate of about USD 200 billion. It is expected that the growth numbers will reach USD1 trillion by 2023. This growth is expected to be led by the surge in the mobile payments network.
Take for example the recently-introduced instant payment system, which was launched by a well-known Fintech company - Financial Software and Systems (FSS). This new payment interface will work using a ‘central pay system’. This new system will enable the building of cost-effective payment interfaces to encourage more speedy, safe, and hassle-free payments. This can be used for both domestic and international payments.
In the recent past, the Unified Payments Interface (UPI) has become quite a popular method used for cashless payments. UPI is a type of system that allows any bank account holder, whose bank is part of the UPI network, to link multiple savings accounts and make payments using a single app. Launched in 2016, the system has seen has seen unprecedented growth in the recent months. In February 2018 alone, the number of UPI transactions stood at a whopping 171.4 million. This is an increase by 13.50% from the last month - January.
Trying something new
The National Payments Corporation of India (NPCI), one of the main bodies behind the UPI interface, has been trying to come out with innovative payment methods. Recently, the body has been exploring opportunities to bring in ‘sound-based payments’. In order to bring this system is place, testing is being carried out with firms such as PhonePe, UltraCash, and ToneTag.The NPCI is also trying to make the user experience more friendly by integrating the QR code with the UPI platform. Apart from this, ICICI’s pockets application is also looking at including sound-based payment solutions. This will help customers make payments to any merchant in the proximity using a smartphone.
Whats makes UPI unique
Beside being available on a 24/7 basis and on all 365 days in a year, the main advantage that UPI offers is interoperability. This means that a user with savings accounts in two different banks can use a single platform for all financial transactions. Also, unlike a mobile wallet, there is no need to recharge or ‘add money’. For each transaction made, the money is automatically debited from the remitter’s account in a safe and secure manner.The other pro is that the sender does not have to go through the whole hassle of registering a beneficiary and then wait for the beneficiary to be activated. Fund transfers and payments can be made directly using what is referred to as, the Virtual Payment Address (VPA). VPA is just like an email ID and all a sender has to do is key in this address to initiate a fund transfer. This also helps the users maintain confidentiality as far as bank account-related information is concerned.
More About FSS’s Instant Payment System
The main objective behind the instant payments network is to ramp-up the payments environment by creating a ‘central infrastructure’. FSS will work using a Financial Messaging Gateway and integrate with a wide range of payment service providers (PSPs). This basically means that there will be rails created that will work on a real-time basis. The suit of offerings that will be given out include risk management, transaction settlement, clearing, connectivity, and dispute management.Some of the main features that will be made available through this type of payment system includes:
- 24-hour payment facility
- Facility to make payments even on bank holidays
- Instant settlement
- Simple payment interface
- Digital growth
According to recent reports, the total value of digital payments in the country stands at an aggregate of about USD 200 billion. It is expected that the growth numbers will reach USD1 trillion by 2023. This growth is expected to be led by the surge in the mobile payments network.
Here is a look at some of the other payment methods that are available:
IMPS: Immediate Payment Service or IMPS is a real-time electronic fund transfer system that can be used on a 24/7 basis and on all 365 days in a year. The main convenience in this method of money transfer is that transfers are seamless and the money is credited instantly.
NEFT/RTGS: National Electronic Funds Transfer (NEFT) and Real TIme Gross Settlement (RTGS) can also be used to send money via electronic transfer using the internet banking facility available with your respective bank.
Mobile Banking: Mobiles have made banking more and more accessible in the recent years. This has helped many people do banking transactions at the convenience of their home and at any time of the hour without worrying about the banking working hours.
Unstructured Supplementary Service Data (USSD) /*99#: The main aim behind the launch of the USSD service is to help those sections of the society that do not have access to banking, integrate themselves into the mainstream. Transactions can be made using this facility even without an internet connection or a smartphone. The various services that can be availed include balance enquiry, fund transfer and mini statement.
IMPS: Immediate Payment Service or IMPS is a real-time electronic fund transfer system that can be used on a 24/7 basis and on all 365 days in a year. The main convenience in this method of money transfer is that transfers are seamless and the money is credited instantly.
NEFT/RTGS: National Electronic Funds Transfer (NEFT) and Real TIme Gross Settlement (RTGS) can also be used to send money via electronic transfer using the internet banking facility available with your respective bank.
Mobile Banking: Mobiles have made banking more and more accessible in the recent years. This has helped many people do banking transactions at the convenience of their home and at any time of the hour without worrying about the banking working hours.
Unstructured Supplementary Service Data (USSD) /*99#: The main aim behind the launch of the USSD service is to help those sections of the society that do not have access to banking, integrate themselves into the mainstream. Transactions can be made using this facility even without an internet connection or a smartphone. The various services that can be availed include balance enquiry, fund transfer and mini statement.
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