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What is e-RUPI & and how it is a big leap in the Digital Payments Ecosystem in India

Launched in August 2021 by Prime Minister Narendra Modi, e-RUPI is a new digital payment solution for seamless transfer of funds, without the need for any card, digital payments app, internet access or even a bank account. 

 

e-RUPI is a cashless and contactless payment method done through an e-voucher sent to beneficiaries via QR Codes or SMS strings, which can be redeemed/used for specific purpose only, at the service providers. It connects the sponsors of the services with the users and service providers digitally, with no physical interface required.

 

These vouchers will be both person and purpose/end-use specific, for ex: If they are issued by government for availing any medical service at a particular hospital, then they can be redeemed only for that. In other words, it will work as a closed system PPI.

 

How e-RUPI works?

 

e-RUPI is developed by NPCI on its UPI platform, with onboarded banks as the issuers. The government or any private corporate will approach the partner banks with the details of specific beneficiaries to whom the payments have to be made and the purpose of such payments.

 

Each beneficiary will be uniquely identified basis their mobile number and voucher will then be issued and delivered (in the form of QR Code/SMS) in the name of that beneficiary only. 

 

Objective of e-RUPI

 

e-RUPI is expected to serve the following objectives:

 

  • The long-term vision of e-RUPI is to reach the unbanked population, include them into a formal financial system and reduce the digital gap in the country
  • To provide an equal access to various healthcare, education, and other benefits to each citizen of the country
  • Transparency in transactions, as the end-use of the funds can be easily tracked
  • Will guarantee that the money is used for the purpose for which it was intended, unlike traditional bank account transfer where it is possible that the funds are used for other purposes

 

Further, with the government in the process of establishing a digital currency for the Central Bank, e-RUPI can be used to emphasize the flaws in the current digital payment infrastructure which is crucial for the development of digital currencies in future. 

 

Application of e-RUPI

 

Currently, this is a platform launched as a government initiative for leak-proof distribution of welfare benefits to eligible beneficiaries. It aims to provide services under various schemes of the government including Ayushman Bharat Pradhan Mantri Jan Arogya Yojana and other subsidy programs, etc. 

 

However, in future even private entities can use this voucher-based payment method for providing services to their employees for travel, healthcare, and other such purpose-specific expenses.

 

It can also be used to provide credit to first-time borrowers, where the end-use of funds is specific and thereby evolving the digital lending landscape in the country.

 

A move towards digitalization and introduction of Digital Currency

 

While e-RUPI is in itself not a digital currency, as it is still backed by Indian Rupee as the underlying asset and is purpose specific, it is definitely a move towards introducing digital currency/cryptocurrency in India.

 

Both e-RUPI and cryptocurrency work on similar principle of enabling end to end digital transactions and removing physical intermediaries thereby ensuring transparency, data security and overall reduction in operating costs. 

 

What lies ahead?

 

With the introduction of e-RUPI, it is clear that the government is in support of new digital initiatives, as they expect that India has tremendous potential to change the way they transact and pay for different services. This is supported by increasing adoption of digital payments for small-value transactions, especially by the non-digital customer segment in the country.

 

This backed by India’s high currency to GDP ratio, validates that such digital initiatives and crypto assets/digital currencies can co-exist and position India as the front runner towards forming a complete digital economy. Further, e-RUPI will encourage the use of PPIs in India for better channelization & monitoring of funds, providing an opportunity for Fintechs driving digital payment solutions to design new products build around e-RUPI/digital currencies and such kind of digital solutions.

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Cryptocurrency Banking – Will Crypto co-exist or replace cash in the near future?

 

With the global cryptocurrency market now worth more than $3 trillion, this is something which cannot be overlooked, thereby capturing the interest of investors, traders, financial service firms alike. But currently, with the RBI and government highlighting macroeconomic and financial stability concerns and want some form of regulation for cryptocurrencies, it still poses a challenge for its wide acceptance. Further such currencies are difficult to spend like one would do with regular money. 

 

However, in recent times new platforms and services are being introduced for better managing of such digital coins in day-to-day finances of people. Let us now understand about cryptocurrency banking, its benefits and at the same time what barriers it can have.

 

What is Cryptocurrency Banking?

 

This term can be sometime misleading, as these currencies are not yet regulated by any central authority. Moreover, the firms and exchange companies that provide such services aren’t banks, but they only provide ways to people to manage their cryptocurrency balances, by allowing them to hold it in digital wallets and spend it like traditional money.

 

What are the benefits of Cryptocurrency Banking?

 

The primary benefit that is envisaged is the use of it in issuing cryptocurrency debit cards. This will allow consumers to use their digital coin balance like any other money for daily expenses, purchases or withdraw it as cash rather than just keeping it for the purpose of investment. 

 

Prior to this, cryptocurrency could only be spent where it was directly accepted by retailers or sell it in exchange for dollars. Now, fintech firms are partnering with financial institutions and/or debit card issuers to issue such cards, using their partner’s regulatory structure to convert digital coins into an acceptable legal tender (say INR) and allowing retailers/vendors to accept it in exchange for their goods/services. This will allow digital currencies to be accepted wherever regular debit cards are accepted.

 

This in future can be further extended in the form of prepaid cards, that can be loaded with cryptocurrency for making online/offline purchases from merchants.

 

Barriers/risks in accepting Cryptocurrency Banking

 

The biggest barrier to spend and lend in cryptocurrency is how volatile it is. The same is valid in case of investing in it. The financial institutions rely on traditional currency for lending, spending for daily purchases, etc. because of the stability in its value, but the same is not possible with digital coins, currently in a manner that is safe and secure.

 

Moreover, while spending digital currency, one should be aware of the risk that its value can change after its spent, since the transactions are based on the real time value of the digital coin. 

 

Another barrier is that the regulators are still evaluating its credibility and validity, as there are no laws/regulations currently in place for them. They are decentralized and are not backed by any asset. Their value gets determined through demand and supply.

 

How will the future of money evolve?

 

With the regulatory bodies/government cognizant of the fact that this is an emerging technology, it will require them to keep a close watch and take proactive steps in the future. As this issue is span across geographical boundaries, it will further require global partnerships and collective strategies. 

 

The combination of cryptocurrency, CBDCs, stable coins and other digital payments could eventually lead to the “demise of [physical] cash”. However, one technology alone will not overtake it. 

 

Though the future of money is cashless, a dependence on these digital payments will not lead to an efficient system. And eventually all this will affect not only money, but also the economy and society.

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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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New to Credit – A millennial’s wishlist from Credit Cards

After reading Amit’s blogpost that projects a whopping doubling of the credit card customer base within the next 4 years, I could not help but wonder which is the major segment of India’s population that could qualify as “The Aspirational Indians”. It didn’t take me a lot of effort. With the cues that the economic growth of India is throwing at us – premiumisation trend, luxury / revenge travel, rising number of entrepreneurs, etc. – I could easily conclude that it’s the Gen-Z that’s driving credit card growth.

 

Okay, now how do you lure this class of potential credit card customers? I remember students of top B-schools getting free credit cards from established issuers. But what about the rest of the young aspirationals? We all know there’s enough competition with some legacy Issuers who’ve got the proverbial “first-mover advantage”, but that also implies they’ve got the legacy systems! How can the next generation of Issuers work using first principles and craft a lean and superior product? We, at CARD91, will surely answer this question in the next few days to come ☺

 

However, for now, let’s just focus on the specific preferences, lifestyle, and spending habits of this demographic. Here are some features that I felt could be appealing:

 

Instant Card Issuance:

Millennials hate to wait! If an Issuer imbibes this core principle, a major advantage over legacy Issuers is already gained. Quick and easy application processes with instant card issuance for immediate use are absolutely non-negotiable for Gen Z.

 

Credit Card on UPI:

Although one may be new to credit card, UPI is omnipresent now! Gen Z is pretty familiar and comfortable using UPI and therefore, this is one of the must-have features to capture the market especially when the legacy issuers are still struggling to make it functional.

 

Reward Programs for Online Shopping, Food Delivery, Dining, and Entertainment:

Tailored rewards or cashback for online shopping on popular e-commerce platforms, special discounts on food delivery services or dining at partnered restaurants, and exclusive access to movie theatres, streaming services, music subscriptions, and live events are a must have!

 

Low Forex Markup for International Travel:

Unlike the previous generations, Gen Z is more keen to discover the world from an early age. Since it may still not be earning much, a LOW / ZERO FX mark-up feature on credit cards is surely a hotseller!

 

Travel Rewards for International or Domestic Trips:

Millennials are explorers in the true sense – domestic or international travel is always on their mind, and on the cards 🙂. Travel-related benefits such as discounts on domestic flights, hotel bookings, or holiday packages within India, exclusive lounge access, and waiver on fuel surcharge are needed in every credit card targeted at this generation.

 

Local Lifestyle Perks:

Millennials consider work-life balance very important in their overall well-being and are spoilt for choices when it comes to including “life” in their lifestyle! An Issuer must get into partnerships with local brands, gyms, spas, or wellness services to provide discounts or exclusive offers.

 

Financial Management Tools:

Millennials are eager to learn about building a large corpus. Budgeting features, spending insights, and real-time notifications to help cardholders manage their finances effectively can be a good attraction. An educational initiative on how to get maximum benefit from a credit card by being a transactor can help. Also, a tie-up with any personal finance assistant offering discounted or complimentary services is a plus point.

 

Customized Offers:

Millennials love personalized experiences! AI-led tailored promotions and discounts based on spending patterns and preferences can be a good draw.

 

Gamified Rewards:

Accelerated rewards with increasing spends and other milestones can hold this generation’s interest and drive higher card usage.

 

Language and Regional Support:

Although we are a large, English speaking nation, there’s an even larger chunk of population (Gen Z included) that still prefers Hindi or a local language. To create that “wow” factor, the Issuer can offer customer service and mobile app interfaces that support multiple languages and cater to regional preferences. 

 

Student-focused Features:

Career development is an important focus area for this generation. The Issuer that can give access to online courses, career-building resources, student discounts, or networking events to support professional growth will surely have an edge over others.

 

Flexible Credit Limits:

Millennials are either yet to start their professional journey or are in a very early stage. Cards that allow for flexible credit limits based on income and spending habits, giving users more control, are certainly more acceptable.

 

Green Initiatives:

With the increasing exposure to sustainability initiatives in academic institutions over the last few years, even my daughter teaches a lesson or two to me! Issuers offering cards manufactured in an eco-friendly manner or those with features that contribute to environmental causes will be able to emotionally connect with Gen Z millennials!

 

Collaborations with Local Influencers:

This generation has a far more extensive online social presence than physical presence. Partnering with popular local influencers or celebrities who are active online for exclusive offers and promotions can drive higher card usage.

 

Understanding the local culture, preferences, and the unique challenges faced by millennials in India is crucial to design the right credit card product that resonates with this demography. Additionally, keeping up with the rapidly evolving digital landscape and incorporating technology-driven solutions will likely appeal to the tech-savvy nature of millennials.

 

If you’re an Issuer, no time better than the present to launch a credit card product for this generation. 

 

Authored by Shailabh Kothari, Director – Sales and Alliances at CARD91

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CARD91 introduces Optimus – Credit Card Issuance: REDEFINED

In today’s ever-evolving financial landscape, optimizing credit card management processes is imperative for sustained growth and regulatory compliance. That’s why I’m excited to introduce Optimus – an advanced credit card tech stack meticulously developed by CARD91. Optimus, derived from Latin meaning “The Best,” signifies a significant advancement in credit card life-cycle management, empowering financial institutions and raising customer service standards. 

 

With its customer-centric approach, Optimus enables financial institutions to meet the diverse needs of digitally savvy users. Through secure onboarding and a seamless digital journey, Optimus facilitates faster customer onboarding and improved service quality. By providing personalized rewards and streamlining processes, Optimus enhances customer satisfaction, elevating the overall customer experience and delivering added value to help institutions stand out in the rapidly growing credit card market.

 

Here are key features that position Optimus as a game-changer in credit card management

 

Regulatory Compliance and Modernity:

Optimus is meticulously designed with a modern and modular framework to ensure strict adherence to industry regulations. This architecture provides financial institutions with a robust platform to navigate complex regulatory landscapes confidently. By upholding regulatory standards, Optimus mitigates the risk of penalties and legal issues, fostering a secure operational environment.

 

Configurable Credit Programs:

Optimus offers unparalleled configurability, allowing institutions to tailor credit programs to diverse customer needs and market dynamics. From setting credit limits to defining spending criteria and incentivizing usage, Optimus provides the flexibility to orchestrate credit programs seamlessly. This adaptability empowers institutions to stay agile and responsive to evolving market demands, driving innovation and maintaining competitiveness.

 

Customised Rewards:

Optimus enables financial institutions to offer personalized rewards tailored to individual cardholders’ preferences and spending habits. Whether it is cashback on specific categories, discounts at preferred merchants, or exclusive access to events, Optimus empowers institutions to create bespoke rewards programs that resonate with their customers, fostering stronger loyalty and engagement.

 

Digital-First Approach: 

Optimus offers a digital-first approach, prioritizing a user-centric experience aligned with modern expectations. By leveraging optimized digital channels and streamlined processes, Optimus enhances convenience and accessibility for cardholders, ensuring seamless interactions and efficient credit card management.

 

In conclusion, Optimus represents a transformative milestone in credit card management technology. With its robust regulatory compliance, configurable features, rewards program, and digital-first approach Optimus empowers financial institutions to navigate intricate regulatory environments while delivering unparalleled customer experiences.

 

I also extend my heartfelt congratulations to the exceptional CARD91 team for their dedication and innovation in launching Optimus

 

Ready to experience the future of credit card management? 

Reach out, and let us demonstrate the power of Optimus. Book DEMO now.

 

(Blog Authored By: Ajay Pandey, CEO & Co-Founder CARD91)

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Necessity of Revolution in Cross Border Payment process

E-Commerce has broken the political borders and offers products & services across different country borders. This has resulted in a high volume of cross-border goods and payment flows. 

Cross border payments have become an integral part of the day-to-day activities of global businesses. Small Businesses’ zeal to expand their business beyond their country boundaries has been well supported by ongoing digitalisation and high-end technological capabilities across multiple sectors and industries. However, it continues to face significant challenges owing to complicated cross-border mechanisms. The Small businesses face challenges in making or receiving payments internationally because of dealing in different currencies and country specific rules and regulations for international payments. This has created a need for a more agile and frictionless cross border payment framework making cross-border payments as simple as domestic transactions.

 

What are Cross-border payments?  

 

Cross-border payments are defined when both the parties i.e. buyer and sellers involved in the transaction are registered in different countries. Most popular cross border payments methods are wire transfer, credit cards and alternative payment methods- mobile wallet, low value payment method. All interaction for payments happens between buyers and sellers through their respective Banks. The Banks communicate with each other through the SWIFT mechanism when it comes to international transactions. 

In Traditional cross-border payments of correspondent banks, the number of intermediary banks depends on the relationship of the buyer’s and seller bank’s with the correspondent bank. As the number of intermediary banks increases, costs associated with fees and commissions also increase. A Bank can track the transactions till its immediate bank. It becomes difficult for the originating bank to track the transaction once the payment goes to the next bank in the sequence. There is no standard procedure for cross-border payments due to different rules and regulations of each country.  Evolving customer requirements, instantaneous fund transfer, cost reduction, complete transparency and technological innovation has initiated the process to improve cross-border payments as a whole.

 

Cash Flow in Cross-border Payments

 

When a customer makes a purchase, there’s a complete back-end process wherein money gets transferred from the buyer’s bank account to the seller’s bank account. This process becomes very complex when it comes to cross-border payments. In international transactions, currency exchange rates and foreign transaction fees are also involved along with the fees or commission charged by the different bank in the value-chain. In cross border payments domestic and international financial institutions are working together to make the transfer of funds.

 

When a purchase is made, if the buyer’s and seller’s bank have a direct relationship payment is done very easily and seamlessly but in the absence of direct relationship intermediary bank’s role becomes important. These intermediary banks are called correspondent banks.

 

Major Banks across the globe have their own branch or correspondent bank’s branch in another city. In such cases, the funds will first move from the Buyer’s bank branch to the Bank’s own branch or its Correspondent bank’s branch in the seller’s country. This fund is further transferred to the seller’s bank who will then credit the seller’s account. There are many entities, different currencies, exchange rates and transaction fees involved in the single international transaction which make the process slow and opaque in nature. The more the number of correspondent banks in the chain, cost and complexity of transaction keeps on increasing

 

In the Era of Globalised Digital Economy, international payments still felt backward and analogue.

 

A Revolution in Cross Border Payments  

The future of cross-border payments is clear wherein the world requires ability to move funds instantaneously, seamlessly with full transparency and 24*7 access. As the payment industry started moving forward on this journey, an array of new industry initiatives and emerging technologies are transforming the payments process. Fintechs using emerging technologies like blockchain, artificial intelligence, machine learning have started offering faster, agile and seamless solutions to the financial institutions to cater the emerging needs of customers.

 

Currently multiple paths are being used by the payment service providers such as Real-time payments, SWIFT gpi, SWIFT’s transaction manager, artificial intelligence, blockchain and digital currencies- cryptocurrency, central bank digital currency and stable coins. These new ways in cross-border payments would provide opportunities to make cross-border transactions faster, more frictionless, efficient, transparent and cost-effective like domestic transactions. Fintechs act as catalysts for innovation and bring global payments together through various approaches. Banks have started collaborating with fintech to mend their strengths and optimize their offerings by enhancing the payments infrastructure with latest technologies.

 

This revolution will transform the landscape of cross-border payments and empower the end user with full control on sending and receiving international payments at any point in time with complete transparency related to fees/ commissions charged and traceability of transactions in the system.

 

As per Deloitte report – B2B and P2P payments with blockchain would result in a 40% to 80% reduction in transaction costs and take an average of four to six seconds to finalize (compared to two to three days using the standard transfer process).

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