India has experienced a remarkable evolution in its digital payment landscape in recent years. The swift proliferation of smartphones, internet connectivity, and government initiatives such as Digital India, Unified Payments Interface (UPI) NEFT/IMPS, Prepaid Cards/Wallets/Contactless Payments, e-RUPI, CBDC, AEPS, Open Banking/API Integration has significantly contributed to the expansion of digital payment methods throughout the nation. A strong tailwind to digital/contactless payments was provided by demonetisation and Covid-19, leading the way for a cashless economy and better tax compliance. This blog explores the latest digital payment trends reshaping India’s financial landscape.

Unified Payments Interface (UPI) Dominance

The Unified Payments Interface (UPI) has been a game-changer in the Indian payments industry. Launched in 2016 by the National Payments Corporation of India (NPCI), UPI enables users to link multiple bank accounts and execute real-time peer-to-peer transactions. UPI has witnessed exponential growth, with transaction volumes crossing the billion-mark monthly. Its success can be attributed to its simplicity, security, and interoperability across various payment apps.

IMPS/NEFT

IMPS and NEFT have revolutionised the way funds are transferred in India, providing individuals and businesses with fast, secure, and convenient payment options. Whether you need to send money urgently or make routine payments, these electronic funds transfer systems offer unparalleled accessibility and flexibility.

Prepaid Cards, wallets and Contactless Payments

Digital wallets and Prepaid cards have gained significant traction in India, allowing users to store funds digitally and make quick payments. The COVID-19 pandemic further accelerated the need for contactless transactions and contactless payments. NFC-enabled cards, QR code payments, and mobile payment solutions are increasingly prevalent, allowing consumers to make secure transactions without physical contact. Today, merchants are offering contactless payment options to provide their customers with a safer and more efficient checkout experience.

New Government Initiatives:

The Government of India has played a pivotal role in promoting digital payments through its flagship initiatives, such as Digital India, e-RUPI, CBDC and many more. Digital India aims to transform India into a digitally empowered society by promoting digital literacy and providing digital infrastructure.

o e-RUPI is a wholly cashless and no-contact electronic payment instrument that will be delivered to beneficiaries’ mobile devices (even mobile devices that are non-android or iOS) as either a QR code or an SMS-based e-voucher.

o CBDC is a digital currency issued by a central bank, rather than a commercial bank. Backed by blockchain technology, this central bank digital currency (CBDC) is an electronic version of the physical rupee, potentially representing a more secure and government-supported alternative to private digital currencies

AePS

India has witnessed rapid growth in biometric authentication for digital payments. The Aadhaar-enabled Payment System (AEPS) allows individuals to link their bank accounts with their unique Aadhaar identification number and make transactions using biometric verification. This technology has simplified payments for the underbanked population, making financial services more accessible and inclusive.

Integration of Artificial Intelligence (AI) and Machine Learning (ML)

Artificial Intelligence (AI) and Machine Learning (ML) are revolutionising the digital payments landscape in India. With AI-powered chatbots, payment service providers are enhancing customer support to address queries effectively. ML algorithms are leveraged to detect and prevent fraudulent activities, ensuring secure transactions. Moreover, personalised recommendations and targeted offers based on user behaviour are being utilised to drive customer engagement and loyalty.

Open Banking, driven by the Reserve Bank of India (RBI) guidelines, is a game-changer in the banking sector, allowing secure sharing of customer data between banks and fintech companies. Application Programming Interfaces (APIs) facilitate the seamless integration of various financial services, allowing customers to access multiple banking services through a single platform. This collaborative ecosystem encourages innovation and empowers customers with a variety of payment options.

As India moves towards a cashless economy, these trends will continue to shape the future of digital payments, driving financial inclusion and economic growth.

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-Currency Travel Cards and allied systems like Centralised System of Records (C-SOR) for prepaid cards, credit cards and Access Control systems (ACS)

In recent years, the world has witnessed a remarkable surge in the adoption of cashless payment methods. Cashless payment refers to any transaction that does not involve physical cash and utilises electronic methods to transfer funds. This can include various forms such as credit or debit cards, mobile wallets, and digital payment platforms.

The rising trend of cashless payments has brought numerous advantages to both individuals and businesses alike. Some key benefits include:

1. Convenience: Cashless payments offer unparalleled convenience, as users can make transactions anytime, anywhere, without the need to carry physical currency. With just a few taps on a smartphone or a simple swipe of a card, transactions can be completed swiftly and effortlessly.

2. Efficiency and speed: Electronic payment methods have made it possible to transfer funds instantly, allowing individuals and businesses to save valuable time. Moreover, digital wallets and payment apps allow users to store multiple payment methods in one place, simplifying the process even further.

3. Enhanced Financial Management: Cashless transactions provide users with detailed digital records, making tracking expenses and managing personal finances easier.

4. Focus on security. Cashless transactions eliminate the concern of carrying physical currency. Encryption technology and secure authentication methods used in digital payments have significantly reduced the chances of fraudulent activities.

However, like any technological advancement, there is a flip side to cashless payments too. There are cybercrimes where even intelligent people are duped by criminals. There are various techniques, such as phishing, malware attacks, and identity theft, to gain unauthorised access to personal and financial information. To mitigate these risks, individuals must be vigilant and proactive in safeguarding their digital transactions.

The rise of cashless payments indicates a transformative future for the financial industry. As technology continues to advance, CARD91 is at the forefront, leveraging the expertise, API integrations and offering additional payment options to provide innovative solutions for businesses, consumers, and partners alike. Not only this but as cybercrimes become more prevalent, CARD91 prioritises implementing robust security measures to safeguard sensitive data and protect against unauthorised access. It encompasses several key elements like encryption, fraud detection and compliance with security standards. As the financial industry continues to evolve, CARD91 remains dedicated to staying ahead of emerging security threats and delivering secure and reliable transaction solutions for the digital age.

-Ayushi Jain
(Manager- Partnerships & Sales)

Today, banks issue various prepaid instruments like prepaid cards, digital wallets, gift cards, fastags, etc. that are mandated to comply with certain regulations, as prescribed by the regulator in its master directions. At the same time, regulated entities carry out remittances, issue forex, international debit and international credit cards governed by tax laws. Any issuer providing multiple types of instruments, or partnering with multiple technology service providers is expected to follow these regulations and laws. The prepaid instrument regulations are meant to monitor/manage the level of prepaid instrument loading and usage at an individual customer level. The tax laws focus on collecting tax at source (TCS). These compliances demand a centralised repository that takes care of the following:

Uniquely identifying the customer and rolling up based on personally identifiable information (PII) sought from the customer at the time of onboarding.

Classifying customers based on their risk-profile categorisation.

Maintaining personalised limits at the customer level.

Controlling loading and usage at the issuer level.

Intimating the Bank / Regulated Entity on TCS applicability and rates.

This is precisely what the Centralised System of Records or C-SOR offers. A centralised System of Records (C-SOR) is a centrally managed repository that maintains customer-level records for a range of instruments issued by technology service providers (TSP) on behalf of the issuer. All customer actions undertaken by the TSP are sent to C-SOR for verification and validation. This means that only C-SOR-validated customer actions are treated as valid. Given below are a few scenarios that illustrate how the Centralised System of Records could be used by issuers in the context of various businesses they undertake.

Prepaid Cards: Bank and Non-bank PPI issuers issue prepaid cards through multiple TSPs. To maintain the balances and daily/monthly/yearly transactions allowed across transaction types and KYC types, be it full KYC or small PPI, the issuing entity should be employing a centralised system of records. For instance, a customer who was onboarded via both TSP1 and TSP2 will be identified as a single customer in the C-SOR system and the usage data should be managed accordingly.

Payments Bank: Payments Bank Savings Account balances plus balances contained in PPI or other internal wallets should not cross 2 Lakh INR at EOD. The differential should be swept into its partner Scheduled Commercial Bank’s deposit account. CSOR makes sure that the aggregate balance across applicable instruments doesn’t cross the prescribed limit.

LRS Limit Maintenance: Limits under the Liberalised Remittance Scheme (250,000 USD in a fiscal year) can be maintained by the C-SOR based on usage across instruments like Credit Cards, Debit Cards, Remittance Accounts and Forex Cards. The issuer can also be notified about usage that affects the TCS charged at a customer level.

CARD91 has built a robust centralised system of records as an API-led solution which lets issuers monitor its registered customers on a real-time basis. For more information, please reach out to sales@card91.io.

Written by Praveen Varghese, Product Manager, CARD91.

Tips for using Forex cards effectively for your overseas trip

Forex card is a type of prepaid card that can be loaded with foreign currency for use while travelling abroad. It is also known as travel cards as they are invaluable companions that help in simplifying and lightening your travel experiences. It is widely accepted and is one of the most cost-efficient and safe ways to pay for your expenses abroad.

Benefits of Forex cards:

A Forex card is one of the cost-effective ways of carrying and paying in foreign currency. It has replaced cash and travellers’ cheques to a major extent. The reasons are not far to gauge:

1. It’s cheaper and negates exchange rate risk. Most card issuers offer lesser spreads and at the same time, you can lock in the exchange rate when loading the card protecting you from foreign currency fluctuations during the travel.
2. It’s safer than other cards because it is a prepaid instrument and does not expose your savings bank account through a debit card or your credit limits through a Credit card.
3. Forex cards offer convenience, owing to wider acceptability, though not as much as debit and credit cards.
4. Most of the Forex cards also provide zero or lower transaction fees. Moreover, forex cards can be used to withdraw cash from ATMs in the local currency, at a fee.

Tips for using Forex card abroad:

1. Check exchange rates: Keep a check on the exchange rates before loading the card to get a favourable rate. Most players are open to negotiating these rates.

2. Keep looking for deals: Some issuer or other has deals on Forex cards, especially during travel and back-to-school seasons.

3. Issue more than one card: It’s a good idea to issue more than one card, preferably two, for the same load. The second card can kick in if the first card is lost or compromised.

4. ATM usage: Use ATMs affiliated with your card to avoid extra fees.

5. Avoid public Wi-Fi: To protect your data, one should avoid using public Wi-Fi for making online transactions or checking balances.

6. Online transactions payment: To avoid cross–currency charges use Forex Cards to pay for online transactions in stores abroad.

7. Dynamic currency conversion (DCC): DCC helps to make in-store credit card purchases in a foreign country using the currency of your own country. While DCC makes it easier for an international transaction, it also comes with an additional expense as it will include a markup fee and foreign transaction fees. So the customer should decline the option of DCC while making any retail store transaction.

8. Pay across the world with a single currency: Some Forex cards let you transact seamlessly wherever you travel without cross-currency charges. Load it once (in USD) and use it to pay for your expenses anywhere in the world.

CARD91 provides a multi-currency travel card designed for banks, distributors and agents helping with inventory management, including tracking, organising and overseeing all the multi-currency-related processes, providing a seamless digital onboarding. We make cross-border remittances faster, smoother, and more reliable through our SDKs.

Written by Srishti Sachdeva, Manager of Sales, CARD91.