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Union Budget 2022 laid the foundation and gave a blueprint of the economy for the next 25 years – from India at 75 to India at 100, with the focus on fast-tracking the economy, providing opportunities to businesses, and creating six million new jobs.

 

Among the range of significant announcements, the reforms on Digital currency finally caught everyone’s attention.

 

With the tremendous increase in transactions of virtual digital assets worldwide, the Indian Government in the Budget 2022 has proposed to launch digital rupee by the central bank in FY 2022-23. It also plans to tax income from digital asset transfers at 30%.

 

The introduction of these reforms clearly is a big boost to the digital economy. The government providing the basic infrastructure and rails for CBDC will lead to a more efficient and cheaper currency management system. All this will eventually lead to elimination of cash to a great extent and promote all such digital assets in future.

 

Further to increase its adoption in future, the regulatory authorities should incentivize players/stakeholders in the payments ecosystem for building the required infrastructure.

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CBDC: Analyzing the nascent experience in China, Nigeria, and Sweden

The Reserve Bank of India (RBI) will debut the Digital Rupee in the Financial Year 2022-23, according to the Hon’ble Finance Minister of India’s Union Budget Speech on February 1, 2022. Meanwhile, China’s e-Yuan, currently in pilot mode, had its global premiere at the Beijing Winter Olympics 2022 when most foreign athletes got to experience a Central Bank Digital Currency (CBDC) for the first time. However, the Bahamas and Nigeria were among the first to establish CBDCs. Given that recent economic sanctions against Russia have granted governments additional reasons to implement alternative payment systems, such as CBDCs, it’s more vital than ever to understand and evaluate the experience of a few countries that are already ahead of the curve.

 

 

Source: https://www.atlanticcouncil.org/cbdctracker/

 

But, before we go any further, you need to familiarize yourself with what a CBDC is, as well as its pros and cons – read up on our previous blog post. Additionally, a few key terms can help in laying the groundwork:

  • Possible Use Cases: A CBDC can be issued for either Retail purposes, implying that it can be used for all transactions by the public, or Wholesale, suggesting that it can only be used for bank-to-bank transactions and settlement. A Wholesale CBDC is expected to improve efficiency in large-value interbank settlements while also being programmable. A Retail CBDC is projected to promote a far broader cause of financial inclusion, bolster digital economies, and improve the efficiency of retail payment systems.
  • Architecture: A CBDC can have one of three legal structures:
Payment Facilitators Direct Liability of
Central Bank Financial Intermediaries
Central Bank Direct CBDC NA
Financial Intermediaries Hybrid CBDC Synthetic CBDC

 

A Direct CBDC may cause financial disintermediation because commercial banks and non-banks will have no participation in its operation, but a Synthetic CBDC may limit monetary policy permeability and increase the risk of financial instability. A hybrid CBDC, on the contrary, is based on a time-tested paradigm in which both the central bank and financial intermediaries play active roles in the delivery of financial services while also promoting innovation.

  • Infrastructure: Depending on how the security and verification aspects of transactions are defined, a CBDC can be built on a centrally controlled database or distributed ledger technology, which saw a breakthrough with crypto assets.
  • Access: A CBDC can be accessed and used to make payments using either an account-based system, similar to our bank accounts, or digital tokens, which are more like physical cash. A fundamental distinction between the two is that, unlike an account-based CBDC, a digital token can retain the anonymity of cash.

 

Any central bank would strive to support the advantages of both physical cash (anonymity, settlement upon payment) and electronic payment systems (low cost, efficient and difficult to counterfeit), regardless of which mix of the above is chosen to construct a CBDC.

Let’s look at what it’s been like on the ground. We chose three countries to highlight out of the many that are experimenting with CBDC: China because it was the first to publicly announce its CBDC ambitions and has covered a lot of ground; Nigeria, because it is the largest country by population to have formally launched its CBDC; and Sweden, because of its unique objectives and differentiated design.

 

China’s e-CNY (under pilot):

 

Use Case Architecture Infrastructure Access
Retail Hybrid CBDC Centralized Management Account-based

China started working on the CBDC in 2014 and has been testing e-CNY pilots in cities across the country since December 2019. Given the early start and China’s stated desire to promote Yuan internationalization, it was widely assumed that e-CNY would hasten the process. However, all such speculations were dispelled by the People’s Bank of China’s (PBOC) research paper, which was published in July 2021. It said categorically that e-CNY is intended to “bolster the domestic economy, promote financial inclusion and make monetary and payment systems more efficient”. Meanwhile, e-CNY had been successfully tested across several use cases aligned with its objectives. By the end of June 2021, e-CNY transaction volume had already clocked 70.75 million, with a total value of RMB 34.5 billion (~$5.4 billion)!

Some distinguishing features of the e-CNY system are:

  • Allows those without bank accounts to enjoy basic financial services
  • Supports offline payments
  • Supports ‘managed anonymity’ despite embracing an ‘account-based’ access model – small-value payments are expected to be anonymous

According to PBOC, e-CNY will now be tested across a broader range of use cases, involving all relevant stakeholders in the ecosystem. Prior to the commercial debut, it will expand its research on the influence of e-CNY on monetary policy and financial stability. Furthermore, China is taking an active part in the worldwide CBDC standard-setting, having joined the Multiple CBDC Bridge (mCBDC) headed by the BIS Innovation Hub, where it is jointly exploring various CBDC possibilities with other central banks.

 

Nigeria’s eNaira (launched):

 

Use Case Architecture Infrastructure Access
Retail Hybrid CBDC Distributed Ledger Technology Account-based

Nigeria’s CBDC, eNaira, was launched with much fanfare in October 2021. While the project is still in its infancy, news reports suggest that the initial enthusiasm has waned. Nonetheless, its motivations for introducing eNaira are similar to those of other emerging nations that are likely to be keeping a close eye on the currency’s success. The following are some of the motivations:

  • Promoting financial inclusion – While a bank account is required to use eNaira in the first phase, the second phase is planned to eliminate the requirement
  • Reduce the amount of cash in circulation and, consequently, the cost of processing cash — the eNaira will contain all the characteristics of cash, such as direct claims on the central bank, no interest payable, and so on
  • Enabling direct welfare payout to citizens — eNaira’s account-based capabilities enable welfare funds to be delivered directly to recipients without the risk of theft
  • Increasing tax collection – As the economy becomes more organized as physical cash is phased out, tax revenues are likely to rise
  • Facilitating diaspora remittances — eNaira is supposed to be a more efficient, secure, and cost-effective way to send money back home

In the first phase, eNaira was launched with a few basic functionalities. Depending on input from eNaira users and regular calibration of perceived threats from typical CBDC issues, the Central Bank of Nigeria is projected to gradually introduce many more functions to meet its core objectives.

 

Sweden’s eKrona (under pilot): 

 

Use Case Architecture Infrastructure Access
Retail Hybrid CBDC Distributed Ledger Technology Digital Token

While financial inclusion is a driving force behind e-CNY and eNaira, eKrona is being created to solve a different problem: the decline in cash usage! Yes, the Riksbank, Sweden’s central bank, recognizes that the decline in cash may limit its direct role in the payments ecosystem, making its goal of fostering a secure and efficient payment system more difficult. As a result, the Riksbank started testing eKrona in a closed system with simulated participants (intermediaries like commercial banks), end-users, and payment instruments in 2020. The first part of the pilot’s findings was positive, indicating that digital tokens appear to enhance cash use and hence improve Riksbank’s direct role in controlling the money supply. The Riksbank, nevertheless, recognizes that the pilot must now go on to the next stage, in which it intends to:

  • Integrate with systems of actual participants
  • Create an offline function so that digital tokens can be exchanged without the need for a network
  • Test out various options by storing tokens and their keys in different ways that can be used for a variety of purposes
  • Evaluate and improve the eKrona network’s performance and scalability

The ecosystem of a CBDC will be newly established and will act as an alternative to the existing electronic payment infrastructure, which is a common benefit of having one. The ramifications of the CBDC for monetary policy, financial stability, and financial disintermediation, on the other hand, are still uncertain. Even the legal aspects of a CBDC, which is neither whole cash nor equivalent to a deposit in a bank account, as well as data governance mechanisms, must be thoroughly examined before its use grows.

 

We’ll keep a close eye (with a magnifying glass!) on the various central banks’ evolving experiences. For the time being, we eagerly anticipate the RBI’s next steps on the Digital Rupee, which will detail its objectives, design elements, and commercial launch timeline.

 

References:

CBDCs: an opportunity for the monetary system –  https://www.bis.org/publ/arpdf/ar2021e3.htm

Progress of Research & Development of E-CNY in China – http://www.pbc.gov.cn/en/3688110/3688172/4157443/4293696/2021071614584691871.pdf

eNaira Design Paper – https://www.enaira.gov.ng/about/design

E-krona pilot phase 1 – https://www.riksbank.se/en-gb/payments–cash/e-krona/e-krona-reports/e-krona-pilot-phase-1-report-3/

 

 

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Man wearing smart glasses touching a virtual screen futuristic t

Payments in Metaverse

What is Metaverse?

 

Metaverse is a parallel online world enabling users to create their own virtual worlds, early onset of Metaverse came in 2003 with Second Life. Second Life was and is an online multimedia platform allowing users to create an avatar for themselves and have a second life in an online virtual world.

 

Since the prominence of cryptos and blockchain, Metaverse has seen a resurrection. Often described as the first web 3.0 application, wherein users can create avatars in virtual worlds, socialize, shop, bank, play, and do business. To sum “A shared 3D virtual reality world where people play, socialize, work and buy/sell goods and services”

 

Why is Metaverse important?

 

Some of the most important voices have this to say about Metaverse.

 

“An internet you’re inside of, rather than just looking at” – Mark Zuckerberg, Facebook

 

“The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments” – Matthew Ball, Metaverse expert

To sum Metaverse has the potential to be “The NextGen Internet”

 

How does it affect us?

 

Metaverse has taken baby steps in defining how we:

 

Play

  • Multiplayer online games with Virtual Reality etc
  • Multiplayer with friends, family, or even strangers
  • Interactive Gameplay – no more predefined storyline

Socialize

  • Interact with friends, family, colleagues, and strangers via VR, AR
  • Attend Social Event – Create Social events, even marriages
  • New age tourism – boomed during the COVID, VR enhanced real-time tours of some of the best-known places across countries
  • Virtual Activities – VR enhanced Treasure Hunt, etc with Friends and Family

Work

  • Meetings and Team building – Interact with colleagues via VR, and AR across time zones
  • Skilling, training, and workshops – VR enabled training modules for softer to finer skills
  • Distance Assistance – Get help from colleagues in the virtual office
  • Business Development – Customers and Businesses are operating in Metaverse, why should newer businesses not pitch for business deals in Metaverse itself

Transact

  • Purchase – Purchase Virtual items for virtual self, home, office, and business
  • Window Shopping and Business Expos – Customers and Businesses both are in Metaverse, selling and buying
  • Marketing and Advertising – With Millennials living life in Metaverse, businesses are forced to market and advertise themselves in the Metaverse or they will be left out of the mindspace. JP Morgan has recently launched themselves in Metaverse

So what about payments in Metaverse?

 

The Metaverse is an estimated $758 billion opportunity by 2026 as per Report Linker Feb 22, 2022. So, people not only have fun in Metaverse but they are doing real businesses and creating wealth in Metaverse. New world should have new payment rails to conduct businesses.

 

Many platforms rely on traditional payment methods and in-game tokens, but crypto is gaining traction.

 

Traditional platforms use traditional payment methods like VISA/Mastercard cards etc. They also use in-game tokens (but limited to online gaming space use-case) given they are not accepted at other businesses in Metaverse. Blockchain-based platforms transaction is via cryptocurrencies via platform tokens (e.g. Mana for Decentraland, Sand for Sandbox), that can be bought and swapped on exchanges for other major cryptocurrencies like BTC/ETH, hence they are more interoperable, and easier to withdraw.

 

One of the key benefits of crypto payments in the metaverse is that they are borderless. Users and businesses can send and receive payments from anywhere in the world with minimal transaction costs and no wait time.

 

Non-fungible tokens (NFTs) are also gaining popularity as a form of payment. NFTs are digital assets created on blockchain platforms like Ethereum and EOS and are often used as tokens of ownership for digital assets like land, art, and collectibles that are unique. Like cryptocurrencies, NFTs can be easily transferred between users via P2P or exchange-based systems.

 

To sum it up, Metaverse is a new and exciting opportunity and will need new payment methods which are still evolving. Will it be a fad or a robust business, only the future will tell, but it’s definitely worth exploring.

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Evolution and Growth of POS Terminals

There has been a welcome change in the RBI March 22 BANKWISE ATM/POS/CARD STATISTICS report, PG and POS volume are shown separately helping people to understand both landscapes better. 

 

And it clearly states that POS is not going anywhere but is going to further evolve to super POS. As of today, POS can support Swipe, DIP, Tap N Pay, BQR, AEPS, and also card not present scenarios (SMS Pay Links). If allowed payment from other banks/ fintech wallets can also be accepted, I personally feel that other wallets’ acceptance should not be seen as competition but as complementing payments growth in general. 

 

Moreover, today it can host multiple apps like EMI, DCC etc. Below is the last three years growth story in numbers:

 

Month Mar-19 Mar-20 Mar-21 Mar-22
Terminal Count 3,722,229 4,433,973 4,720,077 6,070,142
% Growth 19% 6% 29%

 

POS will further change in shape and size and grow in their thinking capacity. Banks and POS aggregators in acquiring a business with their issuance counterpart/issuing partners can create solutions/algorithms which provide customized offers for the cardholder on the go as per PINCODE, MCC, or other criteria. 

 

And what about business outlets wherein the terminal is deployed? How we can benefit them? It will all depend on the Value Added Services (VAS) delivered by the acquirer. The VAS can be any of the following:

 

  • EMI services either OEM or issuance partner sub-vented
  • Plug & Play platform to create an online store for the merchant
  • ERP integrated with payments
  • Credit facilities based on volume – it can be term loans or revolving line
  • Assisted e-commerce, forget laptop just have an app that can be installed in POS

 

Above are a few examples but there is much more than POS terminals will be able to do in the future. The success of the VAS model will depend upon fast deployment, customized merchant reports, and easy to understand dashboard.

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The role of API-led technology in modernizing the BFSI industry

Technology in finance has been around for more than half a century. With the turn of the century, it became even more critical as a key differentiator, moving up from a mere enabler. However, many financial services firms continue to struggle with their legacy tech and the need to stay relevant, mainly due to the slow creation and adoption of modern financial technology solutions. This is where the FinTech industry is playing a critical role in bringing new-age customer and business-centric innovations into the industry.

 

The question to ask now is- Is modern technology in finance and banking or as we call it Fintech any different from traditional banking technology and why is it positioned as a unique sector? Over the past 50 years, technology has “assisted” traditional financial institutions. However, there has not been any dramatic change in the products being offered or their target market.

 

FinTech- Accelerating API-driven innovation in the Banking and Financial Ecosystem

 

One of the key levers of the growth of Indian Fintech is its robust and scalable technology that caters to all kinds of customer segments. The development is aided by entrepreneurs who bring in innovation, supported by a pool of deep talent.

 

The trend that started with Fintech companies specializing in payment services, digital lending, saving accounts, wealth management and remittances space, is now disrupting the Indian banking and financial landscape in many ways.

 

Primary enablers of fintech growth

 

As we popularly call it, the India stack has been the key enabler for the growth of the fintech ecosystem. While demonetization and the pandemic provided tailwinds to the industry by increasing customer acceptance, the India Stack, regulatory support like CKYC, Video KYC, etc. made things easier to adapt to the compliance requirements. These, in turn, helped accelerate fintech innovation.

 

While the pandemic accelerated the global economy’s digitisation, India’s fintech sector riding on open APIs platform has ushered in a new era of reimagining financial services by prioritising customer experience and accessibility to banking services.

 

Post-pandemic, banks/financial institutions have started to revisit their strategy of digitizing customer experience without compromising on the quality of service delivery, regulatory compliance, and cost. We are now witnessing more collaborations between fintech that are building API-driven digital platforms and Banks. The partnership ranges from basic customer onboarding journeys to offering last-mile delivery of banking services.

 

This partnership has furthered the government’s stated agenda of financial inclusion. It has changed every aspect of the banking industry, including payments, infrastructure, access to financial services and distribution.

 

The popularity of API banking systems is driving more innovation, particularly in the fintech ecosystem. The API technology essentially allows technology infrastructure players to plug into a Bank’s legacy platform without being embedded into it. The infrastructure players, in turn, use the same API technologies to open up their solutions to fintech innovators/distributors. This is helping Banks to accelerate the adoption of API technology to ramp up customer acquisition, improve transparency and increase customer satisfaction.

 

There are several reasons why API banking and payments are becoming the wave of the future. The first and most obvious reason is cost reduction and faster launch of products/services. Secondly, APIs can automate customer support and other processes, improving the quality of service provided to customers while lowering costs. In turn, this allows users to have more interaction with the companies they already know and trust, making them more likely to do more business with them.

 

CARD91 is an API-led issuance Platform-as-a-Service company. It offers unparalleled technology infrastructure to banks, SMEs, corporates & fintech through its Switch and Card Management Solutions for Prepaid Cards, Multi-CurAPIrency Travel Cards and allied systems like Centralised System of Records (C-SOR) for prepaid cards, credit cards and Access Control systems (ACS)

 

The article is authored by Avendra Singh, Director, Partnerships & Sales, CARD91

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Benefits of Sales Incentive Payouts on Cards

Corporates typically incentivize their sales channel comprising distributors, dealers, retailers, and their own salesforce to target product-specific push or drive overall sales. There are various ways to pay out these incentives – bank account transfers, cash disbursement, discounts on additional sales, accumulation of reward or loyalty points reimbursable upon reaching a milestone, etc. However, each of these leaves a lot to be desired. For example,

 

  1. maintaining and updating the account details of lakhs of retailers or salespeople is a cumbersome exercise and fraught with operational risks.
  2. cash disbursement is expensive and poses a risk of theft, last-mile delivery is always a grey area and disbursement above a certain threshold are not permissible according to local laws.
  3. while discounting features can help push your product, it may not always be in the best interests of your sales channel and therefore, not in your best interest. Supply build-up can lower the brand value of your product.
  4. although reward or loyalty points do offer a competitive attribute to your incentive scheme and engage your sales channel initially, it can lose its sheen if the program is not regularly updated with newer schemes or offers. In short, you need a creative team regularly coming up with innovations.

 

What if there was an alternative that addresses all these concerns while allowing you an avenue to brand yourself, monetize the entire scheme, and much more? Enter Prepaid Cards. 

 

  1. Easy to maintain: A General-Purpose-Reloadable (GPR) prepaid card can be issued once to an individual and can be reloaded as many times as desired till the expiry of the card or till the applicable limit is exhausted. You no longer need to maintain the bank account details of each channel partner or salesperson as any card-load transaction is just an API call away whereas funding is done into a single pool account.
  2. Cash equivalent, but not so much: Yes, your channel partners are elated that they don’t have to play barter trade with you anymore (remember discount schemes or reward points that can be only availed on future sales?) and at the same time, they do not have to deal with physical cash.
  3. Branding: One more potent opportunity to showcase your brand! The more cards that are issued, the better the visibility of your brand, and the higher the multiplier effect. 
  4. Wider acceptability: By giving incentives on cards and not via discounts on future sales or reward points, you ensure wider acceptance of your incentive program with the desired audience, which ultimately helps drive more sales.
  5. Instant gratification: In this digital era, enchant your channel partners by instantly issuing and activating physical or digital cards, and crediting incentives to their cards rather than relying on the traditional way of transfers. 
  6. Compliant: A prepaid card is a regulated product issued by RBI-licensed entities – this ensures the heavy lifting of compliance is already taken care of. Besides, the data is hosted in a PCI-DSS-compliant environment, ensuring full data privacy for the cardholders.
  7. Customize your program: Create a positive or negative list of merchants and categories where the card can be used. Place restrictions on the amount or count of transactions to avoid misuse – something that you, as a Corporate, cannot influence if the incentive is disbursed in cash or to a bank account. Allow cashback or discounts on your choice of merchants through a brand loyalty program.
  8. Control with the user: A cardholder can view balances or statements, reset the PIN, switch on/off any transaction type, and set corresponding limits, and analyze spending.
  9. Leverage the existing card network and its reward programs: By giving incentives on prepaid cards, you’re allowing the channel partner to choose how she would like to spend it across millions of merchants accepting cards and benefit from the network-run reward programs.
  10. Financially inclusive: A simple yet effective way to contribute to the nation by easily bringing those in far-flung areas under the banking system.
  11. Support: Ensure you tie up with a Bank or Technology Service Provider who can offer on-demand support to you or your cardholder in the language she desires.

 

At CARD91, we pride ourselves on being able to roll out sales incentive programs for corporates in less than 2 weeks! Yes, our API-first approach, deep understanding of supply chain programs, in-house technology & payment experts, and existing partnerships with banks and card networks allow us to offer any prepaid card solution in a simple, plug-and-play manner. Just sign us up, sit back, and witness the magic!

 

Given that you’ve reached here, it seems that you’re interested in launching a hassle-free and widely accepted loyalty scheme for your sales channel. Irrespective of your inclination or choice, do have a 30-minute free session with one of our supply chain and payment experts by writing to us at sales@card91.io. We will be pleased to share how we’ve helped several corporates successfully make the decision!

 

Written by Shailabh Kothari, Director – Partnerships & Sales

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“The Rise of Gift Cards: How They’re Changing the Gifting Industry “

Over time, there has been a significant shift in how people give gifts to their near and dear ones, with more individuals choosing gift cards over cash. This trend has now extended to corporate gifting also, with organizations preferring to incentivise and reward employees with gift cards. This trend can be attributed to various factors such as convenience, personalization, security, flexibility, budgeting, and specific purchases. Additionally, the growth of e-commerce has played a crucial role in driving the gift card industry; the recipient can order their gift from the comfort of their home. Based on the research conducted by researchandmarkets.com, the estimated value of the Indian Gift Card Market is USD 36.16 Bn in 2023 and is projected to grow at a CAGR of 12.64% to reach USD 65.57 Bn by 2028.

 

Gift cards are considered by modern fintech startups and established large companies as the most efficient method to incentivize their sales channels, vendors, business partners, and employees. Additionally, gift cards are used to reward customers for their loyalty. 

 

To keep up with the growing demand for gift cards, businesses are exploring ways to modernize their traditional gift card offerings by incorporating new technology and platforms. This may involve expanding their range of gift card options and adopting innovative technologies to streamline the gift card purchase and redemption process.

 

Types of Gift Cards

The types of gift cards can be categorized as follows:

  1. Open Loop Gift Cards: These gift cards are issued by financial institutions such as banks or card companies and can be used at any location within the card’s network.
  2. Closed Loop Gift Cards: These gift cards are issued by retailers or brands and can only be used at their specific stores or websites. Examples of such gift cards include those from Starbucks, Lifestyle, and others.
  3. Card Catalogues: There are a few aggregators that compile a catalogue of brands and issue gift cards that can be used at more than one brand, but within the defined catalogue only.

How do Gift Cards work? 

Customers can purchase a gift card online or offline from retail stores/ businesses. Once the card is purchased, it can be activated either by the purchaser or the recipient, depending on the issuer’s policy.

 

To use a gift card, the recipient presents the card at the time of payment either in-store or online. The available balance on the card is then applied toward the total purchase amount. If the purchase amount exceeds the card’s balance, the recipient may be required to pay the remaining balance using another payment method.

 

For example, if a person has an INR 500 gift card to a clothing store and they buy a shirt that costs INR 300, the remaining balance of INR 200 will still be available for future purchases. However, if the person buys an item that costs INR 600, they can use the gift card to pay for INR 500 of the total amount and then pay the remaining INR 100 with a UPI or credit card, or cash.

 

It’s important to note that some gift cards have expiration dates or fees associated with them, which vary depending on the issuer’s policies. 

 

How businesses can benefit from Gift cards?

Gift cards can be a valuable tool for businesses in several ways:

  1. Boosting sales: Gift cards encourage recipients to visit the retailer and make purchases, which can increase sales and revenue.
  2. Building brand awareness: Gift cards can feature a retailer’s logo and branding, which can help promote the business and increase visibility.
  3. Customer retention: Gift cards can be used to incentivize customers to return to the retailer, as they may have unused funds on their cards.
  4. Cost-effective marketing: Gift cards can be a cost-effective way to promote a business, as they can be used as prizes in contests or given as incentives to customers who complete a survey or refer friends to the business.
  5. Increased cash flow: When a customer purchases a gift card, the retailer receives payment upfront, which can help with cash flow management.

Overall, gift cards can be a powerful marketing and sales tool for businesses, as they can encourage customer loyalty, attract new customers, and increase revenue.

 

CARD91 offers an API-driven technology that enables businesses to effortlessly modify their current gifting solutions or create a new gifting tool for their employees, clients, vendors, or customers to enhance their sales. If you are interested in discovering more about CARD91’s products and services, do reach out to us at sales@card91.io and we will be happy to help you.

 

Written by Astha Bishnoi, Manager – Partnerships & Sales

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Assisted Commerce – Accelerating the growth of Digital Payments in India

India’s e-commerce sector has grown significantly over the past few years and is expected to grow multifold in the coming years. The growth has been driven by increasing internet penetration, rising smartphone adoption, and the growing popularity of online shopping among consumers. The D2C and B2B segments have seen significant growth due to the increasing popularity of online marketplaces, making it easier for businesses to reach customers directly and for buyers to find a wider range of products at competitive prices. The projected growth of the D2C market to US$ 60 billion by FY27 and the overall e-commerce market to US$ 350 billion by 2030 highlights the tremendous potential of the sector in India (according to a recent report published by e-commerce enablement platform Shiprocket in collaboration with CII)

 

Further, India has seen a boom in smartphone penetration as well as tremendous growth in digital transactions. The number of internet connections in 2021 saw a tremendous growth to 830 million, driven by the ‘Digital India’ programme and the digital transactions in January 23 were close to (in terms of value) INR 12.98 Lk Cr (according to the latest TRAI data).

 

Given an understanding of the low adoption of mobile penetration in rural areas, assisted commerce was born and is now a full-fledged huge business opportunity for the commerce industry.

 

The assisted commerce industry is growing rapidly, driven by several factors, including the increasing popularity of mobile messaging apps, the rise of voice assistants, and the growing demand for personalized and seamless shopping experiences.

 

One of the key benefits of assisted commerce is that it allows businesses to provide 24/7 customer service, without the need for human customer support staff. This can help improve customer satisfaction and reduce costs for businesses.

 

Assisted commerce is also helping businesses to improve their customer engagement and loyalty by providing personalized recommendations and targeted marketing messages.

 

Imagine a situation where an individual may require support to make online purchases or conduct transactions- What started as kiosks in tier–3, 4, 5, and 6 towns and villages to help people navigate online government services and promote financial inclusion created a whole new business model.

 

The goal of assisted commerce is to enable individuals to participate in the digital economy and make purchases independently, by offering some level of assistance.

 

Assisted commerce can take many forms, depending on the individual’s needs and abilities. For example, helping individuals in rural areas to navigate online shopping platforms, bill payments, and train and bus ticket purchases. Alternatively, it may involve support staff or caregivers assisting individuals with shopping in physical stores or conducting financial transactions.

 

Assisted commerce is important because it can help promote independence and autonomy for individuals who may otherwise face barriers to participating in the new economy. By providing the necessary support and assistance, individuals with disabilities or the elderly can have greater control over their finances and make purchases that align with their needs and goals.

 

On this, Prepaid cards can be a very useful tool, as they offer a way for caregivers or support staff to manage and monitor the individual’s spending while still allowing them to make purchases independently. Many prepaid card programs offer features specifically designed for assisted commerce, such as cardholder and caregiver controls.

 

Some examples of the types of transactions that can happen via Assisted Commerce:

  1. Online shopping: Individuals who require assistance to navigate online shopping platforms may receive help from caregivers or support staff to browse products, compare prices, and make purchases.
  2. Bill payments: Individuals may require assistance with paying bills (utility/mobile/etc), such as by helping to navigate online payment platforms
  3. Banking transactions: Individuals may require assistance with banking transactions by making deposits or withdrawals at a bank branch or through online or mobile banking platforms.
  4. Direct money transfers can also be facilitated with the help of assisted commerce. This can involve using a variety of payment methods, such as bank transfers, wire transfers, or mobile payment apps.

 

We at CARD91 can play an important role in facilitating assisted commerce by providing innovative solutions that will be easier for businesses that may have limited access to banking services. If you’ve any use case, particularly on Assisted Commerce, you may write us at sales@card91.io

 

Written by Khushboo Bakhru, Senior Manager – Partnerships & Sales

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How to drive seamless customer onboarding using a Partner for DigiLocker KYC

DigiLocker is a Ministry of Electronics and Information Technology (MeitY) flagship initiative launched as part of the Digital India Programme. DigiLocker is a secure document repository created for the use of Indian citizens and businesses to store and retrieve important identifying documents easily. 

 

It also assists in maintaining a secure digital record of the original documents in the cloud and makes them available for various authentication reasons as requested by the user. The app is hosted per ISO 27001 standards to protect personal and financial information. The program also employs 256-bit SSL (Secure Socket Layer) certifications, which ensures that the data you supply to issue papers is secured. To get papers from the government or registered issuers, users must verify themselves using their Aadhaar data.

 

Compliance in the financial services industry largely comes in the form of KYC and AML procedures. For any financial services offerings, organisations need to process ‘Know Your Customer (KYC)’ as mandated by regulatory authorities. 

 

DigiLocker is used by regulated financial institutions (FIs) to conduct KYC verification before customer onboarding. DigiLocker KYC, as this process is known, involves integrating with DigiLocker to retrieve and verify KYC documents after obtaining the customer’s consent. A mobile native KYC journey is critical to reduce friction points as part of customer onboarding and prevent drop-offs.

How do financial institutions complete KYC using DigiLocker?

 

They partner with a ‘requestor’. A requestor is an authorised entity registered with the Digital Locker directory. It pulls out KYC documents such as Aadhaar & PAN from a user’s DigiLocker account, authenticates them, and uses them as Proofs of Identity & Address.

As per DigiLocker, it shall be used by the requester to –

(a) register on the Digital Locker directory;

(b) access documents uploaded by the subscriber on the Digital Locker portal; 

(c) use authorised gateway providers to access these documents stored across repositories; 

(d) access subscriber’s State or Central department or agency or body corporate issued documents based on the URI; and

(e) take consent from the subscriber to access documents available in the subscriber’s Digital Locker account 

 

 

 

 

4 Critical points to consider when looking for a ‘requestor’ for DigiLocker KYC

 

1. Compliance with DigiLocker norms

A DigiLocker-based KYC journey must follow certain rules as per the DigiLocker norms. As per UIDAI, MeiTY & other regulators, the following aspects must happen for a compliant DigiLocker flow:

  • Customer must be mandatorily redirected to the DigiLocker page
  • Customers must enter their Aadhaar details, OTP, and captcha themselves
  • Take consent from the subscriber to access documents available in the subscriber’s Digital Locker account
  • The verification must be performed by a requesting partner registered with DigiLocker

2.  Ability to create DigiLocker accounts on the fly

A customer may or may not have a pre-existing DigiLocker account. For such cases, your KYC partner must be able to create one for the customer on the go with their consent to be able to pull the relevant documents

 

3. Smooth customer experience 

It’s no news that Financial Institutions face heavy competition when acquiring customers. Hence, when choosing a KYC partner, thinking about your customer’s journey is basic hygiene. A smooth customer onboarding experience sure gives you an edge over your competitors.

 

4. Ease of integration

The requestor should have an API bus which Financial institutions can simply plug into to facilitate a DigiLocker KYC journey for their customers.

 

How can CARD91 help issue various card-based payment instruments using DigiLocker-based KYC?

CARD91 is a full-stack card issuance Technical Service Provider. We work closely with financial institutions such as Banks & NBFCs, and Fintechs to help them launch new-age card programs across card-based payment instruments such as prepaid cards, credit cards, forex cards etc. For issuing these various types of cards to the end customer, KYC is mandated by all financial institutions. We have been working closely with our banking partners to incorporate & promote mobile native DigiLocker-based KYC for a complete end-to-end digital experience for the customers to get their hands on these different types of card-based payment instruments. Some advantages of adopting a DigiLocker-based KYC methodology are as follows – 

  1. An end-to-end mobile native digital journey for the end customers that helps reduce drop-offs and increase the number of cards issued.
  2. A faster turnaround time for the card issuing entity (Banks) to validate and verify the customer and take approval decisions on issuing cards to these customers.
  3. Get a full KYC limit of up to INR 2 lac per card per month in case of pre-paid instruments.
  4. Help promote financial inclusion & digital payments for New to Credit and New to Bank customers who can apply for a pre-paid instrument with no or thin file financial history with financial institutions.

Bhushan Sawant, Director – Partnerships & Sales at CARD91

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The Dynamics of Interchange Fees and their Impact on Businesses

Interchange fees are a critical aspect of card processing and have a significant impact on the business’s bottom line. However, it is an important component of the revenue of the payments industry, affecting both merchants and consumers.

What are Interchange fees?

Interchange fees are the fees that a merchant’s bank pays to the card issuer’s bank for each transaction. These fees are a percentage of the transaction amount and are charged to the merchant’s bank every time a card is used for payment. The fees are set by the card networks, such as Visa and Mastercard, or by regulators in various countries, and are typically based on the type of card used (debit, credit, prepaid, multi-currency, rewards, etc.), the transaction amount, the location (domestic or overseas), and the merchant category code (MCC).

How do Interchange fees work?

When a customer uses a credit or debit card to make a purchase, the merchant’s acquiring bank pays an interchange fee to the card-issuing bank as compensation for processing the transaction. The acquiring bank then passes this fee onto the merchant as a “Merchant Discount Rate (MDR), typically as a percentage of the transaction amount. The acquiring bank has other revenue streams such as float income.

How does it work in India?

In India, interchange fees are primarily regulated by the Reserve Bank of India (RBI). The RBI periodically reviews and revises the interchange fee structure to promote transparency, competition, and efficiency in the payment system. The aim is to strike a balance between the interests of payment system participants, such as card issuers, acquirers, and merchants. The fees are typically a percentage of the transaction value or a fixed amount per transaction.
How do Interchange fees affect your business?

Interchange fees can have a significant impact on a merchant’s profitability as they decide the MDR charged by the acquiring bank to them. The MDR fees can range from 1% to 3% of the transaction amount, and for some high-risk industries, the fees can be even higher.

Understanding interchange fees, the float income of banks, and the resultant MDR is an important part of managing a successful business. By taking steps to optimize payment processing and manage fees, merchants can improve their profitability and provide better experiences to their customers.

At CARD91, we understand the dynamic relationship between Interchange fees and MDRs and help our issuance partners to monetise their transactions.

-Ayushi Jain, Manager- Sales & Partnerships, CARD91

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