CASHLESS ECONOMY (DIGITAL INDIA)

Transcription

1 CASHLESS ECONOMY (DIGITAL INDIA) Done by: Athifa Mymoon. S.R.M University. B.com (Information system and Management).

2 SPOT HEADINGS INTRODUCTION PRACTICAL IMPLEMENTATION FOR MOVING ON PATH OF GOING CASHLESS (IN CONTEXT OF INDIA) GOVERNMENT RURAL PUSH FOR CASHLESS ECONOMY INDIA IS TAKING A STEP ON THE ROAD TO CASHLESS ECONOMY ACHIEVING A CASHLESS ECONOMY ON RURAL AREAS STEPS TAKEN BY RBI AND GOVERNMENT TO DISCOURAGE THE USE OF CASH CHALLENGES IN INDIA MAKING A CASHLESS ECONOMY STEPS SHOULD BE TAKEN TO FOCUS CASHLESS ECONOMY ON RURAL AREAS A STEP ON THE ROAD TO CASHLESS TRANSACTIONS TOWARDS FARMERS MEASURES TO BE TAKEN FOR DEVELOPING CASHLESS INDIA DIGITAL PAYMENT METHODS CAPACITY OF BUILDING AWARENESS FOR CASHLESS ECONOMY DIGITAL FINANCE FOR RURAL INDIA HOW COME LOW-WAGE EARNERS ADAPT TO CASHLESS DIGITAL SYSTEM PROMOTING DIGITAL PAYMENTS WITHIN GOVERNMENT PROMOTING DIGITAL PAYMENTS AMONG PEOPLE CYBER SECURITY FOR DIGITAL PAYMENTS ADVANTAGES OF GOING CASHLESS DRAWBACKS OF GOING CASHLESS CONCLUSION

3 INTRODUCTION: A Cashless Economy is an economy in which all types of transactions are carried out through digital means. It includes e-banking (Mobile banking or banking through computers), debit and credit cards, card-swipe or point of sales (POS) machines and digital wallets. We want to have one mission and target: Take the nation forward Digitally and Economically -NARENDRA MODI (PRIME MINISTER OF INDIA) Prime Minister, Mr. Narendra Modi launched the Programmed Digital India with a vision to transform India into a digitally empowered nation and creating a cashless, paperless economy. As per the current status of India, only 7% to 8% of all the payments are taking place electronically. On Nov 8, 2016, a historical date, he talked about making India a cashless economy and on Nov 27 during an election rally in Uttar Pradesh, he again motivated the people of India to become familiar with cashless transactions. On the same day, during his radio program Mann Ki Baat, he said: Learn how this digital economy works. Learn the different ways you can use your bank accounts and internet banking. Learn how to effectively use the apps of various banks on your phones. Learn how to run your business without cash. Learn about card payments and other electronic modes of payment. Look at the malls and see how they function. A cashless economy is secure, it is clean. We have a leadership role to play in taking India towards an increasingly digital economy. But the decision to demonetize the 500 and 1,000 rupee notes was just one in a series of moves that will push India towards a digital economy.the digital money strategy has been laid out by Prime Minister Modi s government from its early days in power, via a string of major decisions. BANK ACCOUNTS being opened for the poorest in society. The Reserve Bank of India also decommissioned The Jan Dhan scheme, for example, saw more 220m new all currency notes issued before The demonetization was implemented with the aim of eliminating societal corruption and counterfeit Currency. But the move was sudden, happening overnight. The two notes accounted for 86% of the bank notes in circulation in India, and retailers and consumers were forced to look immediately for options. Many turned to digital paying systems. However, just over a month into the demonetization and the country had already started to see the benefits of digital transactions. Government figures show a 268% increase in year-on-year tax collection from 47 Indian cities.

4 PRACTICAL IMPLEMENTATION FOR MOVING ON PATH OF GOING CASHLESS (IN CONTEXT OF INDIA): For making India cashless, these are the various modes available in form of digital transactions which are being considerably implemented and which clearly indicate that cashless transactions are being actively used by people in India. These can be highlighted as under: Payment Banks: Payment bank is a new model of banks introduced by RBI. Payment can issue services like ATM Cards, Mobile banking, Net banking, and Debit cards etc. These payment banks offer amazing competition to traditional banks in terms of services. Two such prominent licenses are Airtel (founded in 1995, in 2016 reaching at revenue of $14.5 billion) and PayTM (founded in 2010 and valued at $1 billion presently) Electronic Fund Transfer Systems: Two popular methods RTGS and NEFT are increasingly used by people at a large scale for making funds transfer from one bank to another leading to less time and economy in operations. Mobile Wallets: Option to open a zero KYC or a full KYC wallet along with your mobile number and the application to be downloaded to your smart phone. Internet Banking: For this type of digital service to take benefit of, the individual must hold a bank account and opt for the online service same. Banking Cards: Banking cards are available by the bank by providing the KYC (know you customer) information to the bank. Applying for a card and getting a pin for the same. Credit and Debit cards are plastic cards that are used as method of payment. Banks Pre-Paid Cards: For this service, a bank account is there with wallet or a pre-paid card and a smart phone to generate the MPIIN. Point of Sale: A handheld device with the biometric reader along with a merchant bank account and internet connectivity. POS machines facilitate acceptance of payment from customers by swiping of their debit/credit/prepaid cards on POS terminals. Number of POS terminals in India has increased from 5 Lakh in year 2010 to Lakh in year 2016 Mobile Banking: A bank account is required along with a mobile phone application of the bank and internet connectivity to take benefit of this digital service. Mobile banking concept is gaining its momentum over the years.

5 GOVERNMENTS RURAL PUSH FOR CASHLESS ECONOMY In an attempt to encourage poor and illiterate people in rural areas to make digital payments, the government is promoting Aadhaar Pay which ensures financial transactions by just using fingerprint. Aadhaar Pay the merchant version of the Aadhaar-enabled payment system (AEPS) which is already in use will become an alternative for all online and card transactions which require password and PIN. Through this app, merchants can take cashless payments from a customer who is only required to give his Aadhaar number, name of bank from where the money is to be deducted, and finger print for authentication. A Times of India report cited Unique Identification Authority of India (UIDAI) CEO AB Pandey saying that the app works on any android-based phone, even a lost cost one, with an attached finger biometric device. He further added that this ensures digital transactions which are cardless, PINless. There is no need of smartphone for the customers. INDIA IS TAKING A STEP ON THE ROAD TO CASHLESS ECONOMY: A Cashless Economy is an economy in which all types of transactions are carried out through digital; since the removal of the notes, the government has been working hard to promote digital payment systems to consumers, proactively offering different incentives and REWARDS. So far, it seems to be working: the government has reported a 400-1,000% increase in digital transactions since the demonetization. The changes have created perfect market conditions for alternative digital payment systems, in addition to existing e-wallets and debit/credit cards. These are not just the basic banking apps or websites either. The National Payments Corporation of India, together with the RBI, has launched UPI ( united payment interface ), which powers multiple accounts from participating banks, and offers several banking services all in a single mobile application. A step in the right direction certainly, India, the second most populous country in the world, is projected to pass the United States in number of Smartphone users in 2017.Around 223 million people in the U.S will use a smartphone by 2017, compared to 340 million in India. The smartphone penetration rate in India is forecast to reach more than 28% by 2018 Nevertheless, The Banks have made sure that smartphone ownership is not a barrier to accessing mobile payments, providing a USSD option on older, non-smart phones

6 which users call up for. In addition, the Digital India Initiative has been set up to provide internet access and comprehensive mobile phone coverage across India, helping over a billion people to get online and utilize digital payment techniques. Furthermore, the RBI has been promoting a biometric authentication system for banking. The Aadhar Enabled Payment System (AEPS) can be used to open a BANK ACCOUNT, withdraw or deposit cash, and transfer funds using just an identification number and fingerprint. AEPS was created to serve remote towns and villages where cash machines cannot be provided. It has the potential to be the cornerstone of the government s vision of a cashless digital society if it can penetrate deeply enough into rural India. ACHIEVING A CASHLESS ECONOMY ON RURAL AREAS Worldwide there is a tremendous interest among policymakers to explore the possibility of moving towards a cashless economy. Digitilization of transactions is the best way to move towards cashless economy. Rural areas are home to two thirds of the country s population of some 870 million people where much of the challenge lies in achieving cashless transactions for the rest of the decade. It is estimated that rural users will constitute almost half of all Internet users in Number of connected rural consumers is expected to increase from 120 million in 2015 to almost 315 in Over 93% of people in rural India have not done any digital transactions. So the real problem lies there. The government has taken steps including announcing zero balance accounts for people, but growth of Bank branches has been low. STEPS TAKEN BY RBI AND GOVERNMENT TO DISCOURAGE THE USE OF CASH Government is also promoting mobile wallets. Mobile wallet allows users to instantly send money, pay bill, and recharge mobiles, book movie tickets, and send physical and e-gifts both online and offline. Recently, the RBI had issued certain guidelines that allow the users to increase their limit to Rs 1, 00,000 based on certain Know your customer verification. Various incentives offered by government to promote digitalization in India to make India Digital India by focusing on cashless modes are On digital transactions up to rupees 2000, Service Tax of 15% waived off

7 Digital purchase of fuel through credit cards, mobile wallets or e-wallets, discount of 0.75% Free accident insurance worth rupees 10 lakh on account of online ticket buyers On purchase of new LIC policies online via its site, 8% discount is offered. Government has also launched UPI (Unified Payment Interface), payment system that can be used for immediate mobile transfers between account holders of two different banks. Government has introduced various technologies like BHIM (Bharat Interface for Money) app to transact between each other as well as with other merchants. BHIM App currently has 17 million downloads in less than 3 months since its launch. And government is considerably promoting their digital cashless technologies other than BHIM such as UPI & Aadhar Enabled Payment Systems. As per National Payments Corporation of India, payment transactions through Aadhar enabled Payment Systems have raised 12 times over 6 months from April 2016 to October 2016 which is highlighting that traditional bank themselves are moving towards e-wallet services on mobiles at a faster pace. In addition to government or RBI, Companies are also participating in combating of cybercrimes because of increasing trend of cashless or digital transactions. Microsoft opened full scale cyber security Center called Cyber security Engagement center (CSEC) in India. This centre, located in Delhi, functions as a satellite to company s Redmond Digital Crime Unit (DCU).This centre monitors how viruses are spreading, from where cyber attacks are originating and helping customers to tap pool of security specialists. CHALLENGES IN INDIA MAKING A CASHLESS ECONOMY There are a number of obstacles in making India a cashless economy. Some of them are as under:- Currency denominated economy: High level of cash circulation in India. Cash in circulation amounts to around 13% of India's GDP. Transactions are mainly in cash: Nearly 95% of transactions take place in cash. Large size of informal / unorganized sector entities and workers prefer cash based transactions. ATM use is mainly for cash withdrawals and not for settling online transactions: Nearly 92% of ATM cards are used for cash withdrawals. Multiple holding of cards in urban and semi urban areas show low rural penetration. Limited availability of point of sale terminals. (pos machines)

8 Mobile Internet penetration remains weak in rural India: In India there is poor connectivity in rural areas. Lower literacy level in poor and rural parts of the country makes it problematic to push the use of plastic money on a wider scale. Though bank accounts have been opened through Jan Dhan Yojana, most of them are lying unoperational. Unless, people start operating bank accounts, cashless economy is not possible. The digital mode is a big hurdle for the tech-unfriendly people. Since, India has a low penetration of 34.8% as per Internet live stats and only 26.3% of all mobile phone users have a smart phone, therefore, it is difficult to go digital. The low literacy rates in rural India & lack of infrastructure like internet access and power make things extremely difficult for people to adopt cashless economy. In India, there are approx. 350 million internet users. The internet penetration rate is just 27% which is very low in comparison to countries like Nigeria, Kenya & Indonesia etc. It has to be at least 67% which is global median The internet loading speed is very low. The average page load time is 5.5 seconds in India in comparison to 2.6 seconds in China. Since, India is dominated by small retailers; therefore they don t have enough resources to invest in electronic payment infrastructure. Most card and cash users have the perception that they will be charged more if they use cards. Moreover, non- users of credit cards are not aware of the benefits of credit cards. STEPS SHOULD BE TAKEN TO FOCUS CASHLESS ECONOMY ON RURAL AREAS: The Jan Dhan Aadhaar Mobile (JAM) can encourage digital transaction culture. It is spreading to reach each remote corner of the country. A large number of government transfers (DBT) are made through JAM mode. This will help people to get digital transaction awareness. The role of the government in these cases will be to make cashless transactions mandatory for certain payments and make it mandatory for certain services exceeding a certain amount which has already been initiated. A tax rebate (of say 1% to 2%) on payments made by households as salary to unorganized sector (domestic servants, sweepers etc.) can boost cashless payments. This will do two things, one the households will have an incentive to go cashless and two; large portion of the unorganized sector will be financially included. The 5 A's of promoting financial inclusion through cashless payment instruments which are availability, accessibility, acceptability, affordability and awareness. Government should assure basic necessities in rural areas and focus on developing infrastructure. Special drives through schools, colleges, panchayats etc. can help create awareness about cashless/ banking transactions.

9 Financial literacy is a must for bringing more and more people to the digital platform. Digital payment or payment through banks, instead of paying cash should be encouraged. Linkage of all welfare activities with bank accounts is a very strategic step. A strong banking base is the basic prerequisite for the cashless economy. Targeted financial education programs can improve financial skills and Credit Management, and increase account ownership in rural India A STEP ON THE ROAD TO CASHLESS TRANSACTIONS TOWARDS FARMERS: The government has taken a slew of measures to ensure that cash requirements of farmers are not adversely impacted due to the demonetization exercise, even as it has urged farmers to join the movement for cashless transactions in the ongoing sowing season. About 50 farmers did their first cashless transaction at the event and bought seeds and fertilizers in the presence of Union ministers. Agriculture Minister Radha Mohan Singh and Railway Minister Suresh Prabhu were present at the event held in Dadri on November 26/2016. On November 27/2016, the Agriculture Minister attended a seminar in Dehradun, while the Railway Minister was present at Palwal. Several bodies in the agriculture sector have come forward to lend a helping hand. The Indian Farmers Fertiliser Cooperative Limited (IFFCO), the world's largest fertilizer cooperative, has initiated a pan India outreach programme to educate farmers about the benefits of shifting towards cashless transactions through live demonstrations and interactive sessions. "IFFCO has decided to spearhead the campaign in all our marketing zones located across the country to sensitize our farmers about the use of online and digital payment gateways and also educate them about the benefits of going cashless," said managing director US Awasthi, who'll be travelling to 125 locations across the country to address farmers and member cooperatives. Separate stalls will be set up in each of these locations to conduct live demonstrations of doing cashless transactions through various available means and also answer the queries posed by farmers regarding the same. To expand digital payment infrastructure in rural areas, the Central Government through NABARD will extend financial support to eligible banks for develepment of 2 POS devices each in 1 lakh villages with population of less than 10,000.These POS machines are intented to be deployed at primary cooperative socities /milk societies/agricultural input dealers to facilitate agri-related transactions through digital means.this will benefit farmers of one lakh village covering a total population of nearly 75crore who will have facility to transact cashlessly in their villages for their agriculture needs.

10 MEASURES TO BE TAKEN FOR DEVELEPING CASHLESS INDIA Basic cyber hygiene must be taken care of such as non-sharing of passwords with others, non-saving of passwords on public networks and Better access to control techniques with strong authentication measures should be implemented by mobile e-wallet companies. Open Bank accounts and ensure they are operationalized. Abolishment of government fees on credit card transactions; reduction of interchange fee on card transactions; increase in taxes on ATM withdrawals. Tax rebates for consumers and for merchants who adopt electronic payments. Need is to scale up the capabilities of POS machines for faster rollouts in country. Making Electronic payment infrastructure completely safe and secure so that incidents of Cybercrimes could be minimized and people develop faith in electronic payment system. The Reserve Bank of India too will have to come to terms with a few issues, from figuring out what digital payments across borders means for its capital controls to how the new modes of payment affect key monetary variables such as the velocity of money. RBI will also have to shed some of its conservatism, part of which is because it has often seen itself as the protector of banking interests rather than overall financial development. DIGITAL PAYMENT METHODS: The Digital India programme is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy. Faceless, Paperless, Cashless is one of professed role of Digital India. As part of promoting cashless transactions and converting India into less-cash society, various modes of digital payments are available. These modes are:

11 BANKING CARDS Banking cards offer consumers more security, convenience, and control than any other payment method. The wide variety of cards available including credit, debit and prepaid offers enormous flexibility, as well. These cards provide 2 factor authentications for secure payments e.g. secure PIN and OTP. RuPay, Visa, MasterCard are some of the example of card payment systems. Payment cards give people the power to purchase items in stores, on the Internet, through mail-order catalogues and over the telephone. They save both customers and merchants time and money, and thus enable them for ease of transaction How to get it: 1. Provide KYC (Know Your Customer) information to open a new account 2. Apply for Card with option of Debit / Credit Card 3. Get a PIN Service Activation: 1. Visit an ATM to activate PIN 2. May take about 3-7 days What is required for Transaction? 1. PoS terminal or online payment gateway 2. Present Card physically or card details for online transaction 3. Provide PIN 4. Provide OTP (One Time Password) received on registered mobile to complete online transaction for merchant website. 5. Self-service and/or Assisted mode Transaction Cost: 1. NIL to customer for merchant transactions. 2. Annual fee and limits on ATM transaction by banks discretion % to 2.25% paid by merchant 4. Cash-out charged to customer in case of credit 1% to 3.5% of transaction value. Services Offered: These cards can be used at PoS (Point of Sale) machines, ATMs, wallets, online transactions, and for e-commerce websites. microatms, Shops, 1. International cards can be used across globe for multiple currencies 2. Funds Transfer limit:

12 3. User can set up transaction limit based on card. USD(Unstructured Supplementary Service Data) The innovative payment service *99# works on Unstructured Supplementary Service Data (USSD) channel. This service allows mobile banking transactions using basic feature mobile phone, there is no need to have mobile internet data facility for using USSD based mobile banking. It is envisioned to provide financial deepening and inclusion of under banked society in the mainstream banking services. *99# service has been launched to take the banking services to every common man across the country. Banking customers can avail this service by dialing *99#, a Common number across all Telecom Service Providers (TSPs) on their mobile phone and transact through an interactive menu displayed on the mobile screen. Key services offered under *99# service include, interbank account to account fund transfer, balance enquiry, mini statement besides host of other services. *99# service is currently offered by 51 leading banks & all GSM service providers and can be accessed in 12 different languages including Hindi & English as on (Source: NPCI). *99# service is a unique interoperable direct to consumer service that brings together the diverse ecosystem partners such as Banks & TSPs (Telecom Service Providers). How to get it: Service Activation: 1. Provide KYC (Know Your Customer) information to open a new account 2. Mobile no. should be linked with bank a/c 3. Register for USSD/Mobile Banking 4. Get MMID (Mobile Money Identifier) 5. Get MPIN (Mobile PIN) 1. None minutes What is required for Transaction? 1. Remember MMID 2. Remember MPIN 3. Dial *99# 4. Registered mobile number with any phone (feature or smart)

13 Transaction Cost: 5. Self Service mode 1. NIL by system 2. Rs charged to customer (The transaction costs are based on available information and may vary based on banks.) Services Offered: 1. Balance enquiry 2. Mini Statement 3. Funds transfer 4. MMID 5. A/c no. 6. Aadhaar 7. Know MMID 8. Change M-PIN 9. Generate OTP Funds Transfer limit: 1. Rs 5,000/day 2. Rs 50,000/annum AEPS Aadhaar Enabled Payment System (AEPS) AEPS is a bank led model which allows online interoperable financial transaction at PoS (Point of Sale / Micro ATM) through the Business Correspondent (BC)/Bank Mitra of any bank using the Aadhaar authentication. How to get it: 1. Provide KYC (Know Your Customer) information to open a new account 2. Aadhaar Number should be linked with bank a/c Service Activation: 1. None minutes post Aadhaar seeding What is required for Transaction? 1. MicroATM 2. Remember Aadhaar 3. Give Bank name 4. Present self (Aadhaar holder) with Bio-metrics (Finger and/or IRIS) 5. Assisted mode

14 Transaction Cost: 1. NIL to customer 2. Merchant or BC may get charged or paid based on bank s discretion 3. Disclaimer: The transaction costs are based on available information and may vary based on banks. Services Offered: 1. Balance Enquiry 2. Cash Withdrawal 3. Cash Deposit 4. Aadhaar to Aadhaar funds transfer 5. Payment Transactions Funds Transfer limit: Banks define limit. No limit for RBI. UPI Unified Payments Interface (UPI) Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the Peer to Peer collect request which can be scheduled and paid as per requirement and convenience. Each Bank provides its own UPI App for Android, Windows and ios mobile platform(s). How to get it: 1. Bank a/c 2. Mobile number should be linked with bank a/c 3. Smart Phone with internet facility 4. Debit Card for re-setting MPIN. Service Activation: 1. Download the App for UPI 2. Do registration online on the App with a/c details 3. Create a virtual ID 4. Set MPIN minutes What is required for Transaction: 1. Smartphone with internet facility 2. Registered device only 3. Use registered MPIN 4. Self Service Mode Transaction Cost: 1. NIL to customer by most Banks

15 2. Customer pays for data charges (The transaction costs are based on available information and may vary based on banks.) Services Offered: 1. Balance Enquiry 2. Transaction History 3. Send / Pay Money 4. Virtual Address 5. A/c no. & IFSC code 6. Mobile no. and MMID 7. Aadhaar (to be made functional) 8. Collect Money 9. Virtual Address 10. Add bank account 11. Change / Set MPIN 12. Notifications 13. A/c Management Funds Transfer limit: 1 lakh / transaction MOBILE WALLETS A mobile wallet is a way to carry cash in digital format. You can link your credit card or debit card information in mobile device to mobile wallet application or you can transfer money online to mobile wallet. Instead of using your physical plastic card to make purchases, you can pay with your smartphone, tablet, or smart watch. An individual's account is required to be linked to the digital wallet to load money in it. Most banks have their e-wallets and some private companies. e.g. Paytm, Free charge, Mobikwik, Oxigen, Rupee, Airtel Money, Jio Money, SBI Buddy, its Cash, Citrus Pay, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, Speed Pay etc. How to get it: 1. Option to open Zero KYC or Full KYC wallet 2. Option of Consumer vs. Merchant wallet 3. Mobile Number 4. An App to be downloaded in smart phone Service Activation:

16 1. Load money (subject to regulatory limits) using internet banking or merchant locations 2. Bank A/c 3. All Cards 4. Cash-In What is required for Transaction? 1. Smartphone or internet 2. Use MPIN 3. Self-service and/or Assisted mode Transaction Cost: 1. Customer pays for remittances to bank 0.5%-2.5% of fixed fee. 2. May pay for data charges in self-service mode. (The transaction costs are based on available information and may vary based on banks.) Services Offered: 1. Balance Enquiry 2. Passbook/ Transaction history 3. Add money 4. Bank A/c 5. All Cards 6. Cash-In 7. Accept Money 8. Pay money 9. Another wallet (mobile no.) with same provider 10. Pay merchant 11. Bar Code reader 12. Manage Profile 13. Notifications Funds Transfer limit: 1. For Users 2. No KYC - Rs 20,000/ month (revised from Rs 10,000 to current till 30th Dec. 2016) 3. Full KYC Rs 1,00,000/- month For Merchants 1. Self-Declared - Rs 50,000/ month 2. With KYC Rs 1,00,000/- month BANK-PRE-CARDS

17 How to get it: 1. Provide full KYC (Know Your Customer) information to open new account 2. Apply for Wallet/ Pre-paid Card 3. Get a MPIN / PIN Service Activation: 1. Load money (subject to regulatory limits) using branch, or internet banking 2. Bank A/c 3. All Cards days for card minutes for wallet What is required for Transaction? 1. Smartphone or internet 2. Use MPIN 3. Self-service and/or Assisted mode Transaction Cost: 1. On loading the pre-paid card, Customer may pay service charges for transaction or fixed fee, upfront + each transaction. 2. Loading wallets is mostly free. 3. Merchant is charged fee 0.50% to 2.50 % 4. Cash out is charged to customer as fixed fee or 1% to 2.5% of value of transaction. Only from Cards (The transaction costs are based on available information and may vary based on banks.) Services Offered: 1. Balance Enquiry 2. Passbook/ Transaction history 3. Add money 4. Bank A/c 5. All Cards 6. Accept Money 7. Pay money 8. Another wallet (mobile no.) with same provider 9. Pay merchant 10. Bar Code reader 11. Cash-Out (Cash withdrawal) 12. Touch and Pay 13. Manage Profile 14. Notifications Funds Transfer limit: For Users

18 Rs 1,00,000/- for Users For Merchants Self-Declared - Rs 50,000/ month With KYC Rs 1,00,000/- month POS A point of sale (PoS) is the place where sales are made. On a macro level, a PoS may be a mall, a market or a city. On a micro level, retailers consider a PoS to be the area where a customer completes a transaction, such as a checkout counter. It is also known as a point of purchase. Physical PoS Necessary conditions for service initiation: Handheld Device with card and /or bio-metric reader Merchant Bank a/c Internet connectivity GPRS/ Landline Service Activation: Paper work with Bank for merchant bank a/c Deposit certain amount Collect device Configuration and training to operator What is required for Transaction? 1. Any Card 2. Resident for bio-metric authentication (AEPS) 3. Assisted Mode 4. Funds Transfer limit: 5. No limit for regulator 6. Merchant s Bank and payee Bank may set limit based on its own discretion (The transaction costs are based on available information and may vary based on banks.) Service Available from no. of operators: 1. Source RBI Aug lakh 3. Interoperable 4. Mobile PoS Necessary conditions for service initiation:

19 Service Activation: 1. Smartphone 2. App from bank 3. Integrated or external card and /or bio-metric reader 4. Reader connects using jack or Bluetooth 5. Internet connectivity 2G/3G/4G, or Wi-Fi 6. QR code and Bar code reader 1. Merchant Bank a/c 2. Download App 3. Register device and/or mobile with merchant bank a/c and bank 4. May require training or readable instructions What is required for Transaction? 1. Any Card 2. Resident for bio-metric auth (AEPS) for registered devices 3. Wallet account 4. Scanner for reading QR Code and Bar Code 5. Self-service and/or Assisted mode 6. Funds Transfer limit: 7. No limit for regulator 8. Merchant s Bank and payee Bank may set limit based on its own discretion 9. Virtual PoS (The transaction costs are based on available information and may vary based on banks.) Necessary conditions for service Initiation: 1. Smartphone and /or Web browser 2. Internet connectivity 2G/3G/4G, or Wi-Fi or landline 3. E-payment gateway 4. Virtual A/c for transactions 5. May need QR code 6. Service Activation: 7. Merchant Bank a/c with some merchant credentials 8. In case of QR code for pull transactions 9. May require ability to identify or authenticate user for service delivery

20 What is required for Transaction? 1. Any Card 2. Wallet Account 3. Scanner for reading QR Code and Bar Code 4. Funds Transfer limit: 5. No limit for regulator 6. Merchant s Bank and payee Bank may set limit based on its own discretion INTERNET BANKING: Internet banking, also known as online banking, e-banking or virtual banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website. Different types of online financial transactions are here 1. National Electronic Fund Transfer (NEFT) National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme. Individuals, firms or corporates maintaining accounts with a bank branch can transfer funds using NEFT. Even such individuals who do not have a bank account (walk-in customers) can also deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT. However, such cash remittances will be restricted to a maximum of Rs.50,000/- per transaction. NEFT, thus, facilitates originators or remitters to initiate funds transfer transactions even without having a bank account. Presently, NEFT operates in hourly batches - there are twelve settlements

21 from 8 am to 7 pm on week days (Monday through Friday) and six settlements from 8 am to 1 pm on Saturdays. 2. Real Time Gross Settlement (RTGS) RTGS is defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). 'Real Time' means the processing of instructions at the time they are received rather than at some later time; 'Gross Settlement' means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable. The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is 2 lakh. There is no upper ceiling for RTGS transactions. The RTGS service for customer's transactions is available to banks from 9.00 hours to hours on week days and from 9.00 hours to 14:00 hours on Saturdays for settlement at the RBI end. However, the timings that the banks follow may vary depending on the customer timings of the bank branches. 3. Electronic Clearing System (ECS) ECS is an alternative method for effecting payment transactions in respect of the utility-bill-payments such as telephone bills, electricity bills, insurance premier, card payments and loan repayments, etc., which would obviate the need for issuing and handling paper instruments and thereby facilitate improved customer service by banks / companies / corporations / government departments, etc., collecting / receiving the payments.

22 4. Immediate Payment Service (IMPS) IMPS offers an instant, 24X7, interbank electronic fund transfer service through mobile phones. IMPS is an emphatic tool to transfer money instantly within banks across India through mobile, internet and ATM which is not only safe but also economical both in financial and non-financial perspectives. Objectives of IMPS: To enable bank customers to use mobile instruments as a channel for accessing their banks accounts and remit funds Making payment simpler just with the mobile number of the beneficiary To sub-serve the goal of Reserve Bank of India (RBI) in electronification of retail payments To facilitate mobile payment systems already introduced in India with the Reserve Bank of India Mobile Payment Guidelines 2008 to be interoperable across banks and mobile operators in a safe and secured manner To build the foundation for a full range of mobile based Banking services. MOBILE BANKING Mobile banking is a service provided by a bank or other financial institution that allows its customers to conduct different types of financial transactions remotely using a mobile device such as a mobile phone or tablet. It uses software, usually called an app, provided by the banks or financial institution for the purpose. Each Bank provides its own mobile banking App for Android, Windows and ios mobile platform(s). MICRO ATMS Micro ATM meant to be a device that is used by a million Business Correspondents (BC) to deliver basic banking services. The platform will enable Business Correspondents (who could be a local kirana shop owner and will act as micro ATM ) to conduct instant transactions.

23 The micro platform will enable function through low cost devices (micro ATMs) that will be connected to banks across the country. This would enable a person to instantly deposit or withdraw funds regardless of the bank associated with a particular BC. This device will be based on a mobile phone connection and would be made available at every BC. Customers would just have to get their identity authenticated and withdraw or put money into their bank accounts. This money will come from the cash drawer of the BC. Essentially, BCs will act as bank for the customers and all they need to do is verify the authenticity of customer using customers UID. The basic transaction types, to be supported by micro ATM, are Deposit, Withdrawal, Fund transfer and Balance enquiry. CAPACITY BUILDING AND AWARENESS FOR CASHLESS ECONOMY: Door Darshan (DD) Free Dish reaches to around 2 to 2.5 core families, mostly in rural areas and people from poor background. The DigiShala is an education and noncommercial TV channel on DD Free Dish with aim to: 1. Impart education related to the digital payment ecosystem, its tools, benefits and processes 2. Inform and educate citizens about Digital India - cashless, faceless and paperless 3. Encourage citizens especially in rural and semi urban areas to use digital payments as well as other products and services offered by Digital India DigiShala Programme Portolio 1. Range of educational programmes on Digital India in multiple regional languages Sessions with focus on: 2. Step by step demos of making digital payments using UPI, USSD, Aadhaar, e-wallets, cards etc. 3. Talk shows and panel discussions with experts 4. Case studies on business transformation using digital payments 5. Information about products and services under the Digital India programme

24 Digital Finance for Rural India: Creating Awareness and Access through Common Service Centers (CSCs) Ministry of Electronics and IT (MeitY) has launched a new scheme entitled Digital Finance for Rural India: Creating Awareness and Access through Common Service Centers (CSCs) under Digital Saksharta Abhiyan (DISHA) with objectives to enable the CSCs to become Digital Financial Hubs, by hosting awareness sessions on government policies and digital finance options available for rural citizens as well as enabling various mechanism of digital financial services such as IMPS, UPI, Bank PoS machines etc. with an outlay of core. 2 lakhs Common Service Centers (CSCs) to provide capacity building, awareness access for digital payments methods to around1 core rural citizens and 25 lakhs merchants across India. Each CSC would reach out to 40 households in the catchment area, covering one person from each household. Apart from rural citizens, each CSC would also target 10 Merchants per Panchayat to facilitate them in getting POS machines or digital payment mechanism. Vittiya Saksharta Abhiyan (Visaka) Ministry of Human Resource Development (MHRD) views the institutions of higher education in the country, faculty members and students to take the lead and act as engines of this transformational shift. The purpose of the `Vittiya Saksharta Abhiyan is to actively engage the youth/ students of Higher Education Institutions to encourage and motivate all payers and payees to use a digitally enabled cashless economic system for transfer of funds. The best way of leadership is to lead by example. All heads of higher educational institutions should plan for a cashless campus, within a limited timeframe, for all transactions within the campus. Various options of digital transactions are presented here. To begin with, the faculty, staff and students, whom we refer to as engines of change, need to dispel the commonly held belief that digital transactions are complex and necessarily require a smart phone and internet connectivity. They need to further educate their family members and people in their immediate surroundings and motivate them for digital transactions. NCC/NSS volunteers of an institute may take up a major market and interact with shop owners, including vendors, and their associations with an objective of developing a cashless market focusing on each point of sale. Indian Railways to install 10,000 Point of Sale (pos) machine to promote cashless transactions using debit/credit cards. State Bank of India has been mandated to install 10,000 POS machines at various locations.

25 HOW COME LOW-WAGE EARNERS ADAPT TO CASHLESS DIGITAL SYSTEM: After demonetization, low wage earners and domestic staff like cooks, drivers, watchmen and cleaners are facing problems as most of them are migrants from towns and villages and don t have bank accounts. Open a Jan-Dhan account The Pradhan Mantri Jan-Dhan Yojana (PMJDY) was launched two years ago and allows anyone to open a bank account with zero-balance facility, accident insurance cover of Rs 1 lakh, debit card and access to credit, insurance and pension. The account holder can have a safe repository for their savings. Understanding financial products and learning how to use them will build confidence in transacting digitally, says Parag Mathur, General Counsel and Head of Compliance at BankBazaar.com. You can help your domestic helpers open an account at one of the designated banks with the help of an Aadhaar card, if they have one. If not, a valid ID proof like PAN, driving license, MGNREGS card, voter ID or a passport will be required Get valid ID proof An ID proof will be integral to a cashless economy as one can t even open a bank account without one. If the low-wage earner does not have an Aadhaar card, you can help them get enrolled for it by taking an online appointment on the UIDAI website and helping them choose the nearest Aadhaar enrolment centre Use e-wallets to transact E-wallets like Paytm, Freecharge and Mobikwik have been cashing in on demonetization, with small businesses like sweet shops, ironing and cigarette kiosks in cities starting to accept payments through Paytm. You can help your domestic staff to use these e-wallets for small transactions like mobile recharges and utility bill payments. You can also inform them about changes in demonetization rules as and when they take place. Save for emergencies Saving is critical for the low-income group, especially in case of emergencies like medical needs or the one created by demonetization. Most low wage earners live from payday to pay-day, which is why the money saved every month could prove extremely useful. You can help them by depositing a portion of their salaries in the bank or with you, which they can access in case of an eventuality.

26 Invest in small instruments Investments like stocks and mutual funds might be too complicated for low-wage earners, but they can invest in simpler avenues like post office recurring deposits or bank fixed deposits. You can help them understand the basics of these investments and set up accounts with the respective entities. Even money in bank will earn an interest for them, says Vivek Rege, Founder & CEO of V R Wealth Advisors. They can also contribute to the Pradhan Mantri Atal Pension Yojana, which has been designed to provide income security for those working in the unorganized sector. Promoting Digital Payments within Government Guidelines for the Electronic Payment & Receipts for Cashless Services Ministry of Electronics and Information Technology (MeitY), Government of India envisages Paperless, Cashless and Faceless services across the country, especially in rural and remote parts of India. MeitY further envisages common e- Governance infrastructure that will offer end-to-end transactional experience for a citizen, businesses as well as internal government functions, which includes accessing various services and making payments and receipts through electronic modes. The Apex Committee on Digital India has recommended a targeted and time bound approach to implement digital payments for citizens across all the e- Services of Government Ministries and Departments. Against this backdrop, MeitY has notified Guideline for Electronic Payments and Receipts (EPR), intended for Central Public Sector Undertakings, State Governments, Govt. of India Autonomous Bodies, and Municipalities for expeditiously implementing appropriate mechanism to enable electronic payments and receipts. The objective of this guideline is to provide guidelines for Departments to: 1. Assess various services involving payments and receipts by types of services and level of electronic payment enablement 2. Provide actionable instructions for universal adoption of electronic payment modes for each type of service through various payment channels 3. Provide guidelines on engagement with various payment service providers The Guidelines for Electronic Payments and Receipts (EPR) will be implemented through assessment of the department s overall status of services offered and maintain a repository of services offered by departments. This repository will be used for measuring and tracking of adoption level electronic payments across departments in India. Furthermore, information of departments requiring payments integration will be shared with Government and private sector Payment

27 Systems providers (PSPs) for enablement of Electronic modes and channels of payments. For detailed guidelines, please refer the EPR guidelines. Promoting Digital Payments among People 1. NIL Excise Duty on POS Devices and All goods for manufacture of POS Devices. Dated 28th November, To promote digital payments through use of credit/debit cards and mobile phone applications/e-wallets etc., the Central Government announced a package of incentives and measures. Dated 8th December Banks and Prepaid Payment Instrument (PPI) not to levy any charges on customers for transactions up to 1000 made through Immediate Payment Service (IMPS), USSD-based *99# and Unified Payment Interface (UPI) systems from 1st January 2017 to 31st March Dated 16th December For card payments, transactions up to 1000/-, MDR capped at 0.25% and transactions above 1000/- and up to 2000/-, MDR capped at 0.5% from 1st January 2017 to 31st March Dated 16th December Benefit of lower rate of Income Tax on digital turnover (from 8% to 6%) for small businesses under Section 44AD of Income Tax Act, 1961 Dated 20th December Public Sector Banks (PSBs) not to charge fees for transactions settled on Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) in excess of rates charged for National Electronic Funds Transfer (NEFT) for transactions above Rs. 1000/-, with service tax being charged at actual; For Unstructured Supplementary Service Data (USSD) transactions above Rs. 1000/-, a further discount of Fifty (50) Paise upto Dated 21st December Oil Marketing Companies, via IndianOil, BPCL & HPCL are now offering an upfront discount of 5/- on every LPG refill to all LPG customers who will book and pay for their LPG cylinders online. Dated 3rd January Toll-Free Helpline for Digital Payments Launched Dated 5th Jan Union Budget ( ): Promoting Digital Payments (Digital Economy) towards less-cash society Dated 1st Feb Lucky Grahak Yojana and Digi-धन Vyapar Yojana NITI Aayog announces the launch of the schemes Lucky Grahak Yojana and the Digi-धन Vyapar Yojana to give cash awards to consumers and merchants who utilize digital payment instruments for personal consumption expenditures. The primary aim of these schemes is to

28 incentivize digital transactions so that electronic payments are adopted by all sections of the society, especially the poor and the middle class. The scheme will become operational with the first draw on 25th December, 2016 (as a Christmas gift to the nation) leading up to a Mega Draw on Babasaheb Ambedkar Jayanti on 14th April It will comprise of two major components, one for the Consumers and the other for the Merchants: Lucky Grahak Yojana [Consumers]: Daily reward of Rs 1000 to be given to 15,000 lucky Consumers for a period of 100 days; Weekly prizes worth Rs 1 lakh, Rs 10,000 and Rs for Consumers who use the alternate modes of digital Payments This will include all forms of transactions viz. UPI, USSD, AEPS and RuPay Cards but will for the time being exclude transactions through Private Credit Cards and Digital Wallets. Digi-धनVyapar Yojana[ Merchants]: Prizes for Merchants for all digital transactions conducted at Merchant establishments Weekly prizes worth Rs. 50,000, Rs 5,000 and Rs. 2, Bharat Interface for Money (BHIM) Bharat Interface for Money (BHIM) provides fast, secure, reliable medium to make digital payments through your mobile phone using UPI (Unified Payment Interface) platform via Mobile App and USSD (Unstructured Supplementary Service Data) platform via *99# service. BHIM was launched by Hon ble Prime Minister on 30th Dec 2016 and within 10 days, the BHIM app had 1 core downloads from Android Play Store and over 2 million transactions across the UPI (Unified Payment Interface) and USSD (Unstructured Supplementary Service Data) platforms. BHIM is interoperable with other Unified Payment Interface (UPI) applications, and bank accounts. BHIM is developed by the National Payment Corporation of India (NPCI), a not-for-profit company for providing retail payment systems in the country under guidance from Reserve Bank of India. BHIM has been designed for quick and secure user on-boarding, sports a best-in-class and an intuitive user interface and makes digital transactions seamless. BHIM has been a huge boon for merchants who can now accept payments directly into their bank accounts. All users, including merchants, get a ready to use VPA (virtual payment address) and an exclusive, ready-to-print QR code upon sign-up.