CASHLESS ECONOMY (DIGITAL INDIA) - srmuniv.ac.in · ¾ CONCLUSION . INTRODUCTION: A Cashless Economy is an economy in which all types of transactions are carr ied out through digital

CASHLESS ECONOMY

(DIGITAL INDIA)

Done by:

Athifa Mymoon.

S.R.M University.

B.com (Information system and Management).

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

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 2005.

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.

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 14.62 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.

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

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 2020.

Number of connected rural consumers is expected to increase from 120 million in 2015

to almost 315 in 2020.

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

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)

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.

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.

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:

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.

3. 0.50% to 2.25% paid by merchant

4. Cash-out charged to customer in case of credit cards @ 1% to 3.5% of

transaction value.

Services Offered:

These cards can be used at PoS (Point of Sale) machines, ATMs, microATMs, Shops,

wallets, online transactions, and for e-commerce websites.

1. International cards can be used across globe for multiple currencies

2. Funds Transfer limit:

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 30.11.2016 (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:


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)

Service Activation:

1. None

2. 1-2 minutes


1. Remember MMID

2. Remember MPIN

3. Dial *99#

4. Registered mobile number with any phone (feature or smart)

5. Self Service mode

Transaction Cost:

1. NIL by system

2. Rs. 0.50 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:


2. Aadhaar Number should be linked with bank a/c

Service Activation:

1. None

2. 1-2 minutes post Aadhaar seeding


1. MicroATM

2. Remember Aadhaar

3. Give Bank name

4. Present self (Aadhaar holder) with Bio-metrics (Finger and/or IRIS)

5. Assisted mode

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


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

5. 5-7 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

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


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:

1. Load money (subject to regulatory limits) using internet banking or

merchant locations

2. Bank A/c

3. All Cards

4. Cash-In


1. Smartphone or internet

2. Use MPIN


Transaction Cost:

1. Customer pays for remittances to bank a/c @ 0.5%-2.5% of fixed fee.

2. May pay for data charges in self-service mode.


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


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

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

4. 1-2 days for card

5. 5-7 minutes for wallet


1. Smartphone or internet

2. Use MPIN


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


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


For Users

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


1. Any Card

2. Resident for bio-metric authentication (AEPS)

3. Assisted Mode


5. No limit for regulator

6. Merchant’s Bank and payee Bank may set limit based on its own

discretion


on banks.)

Service Available from no. of operators:

1. Source RBI – Aug’16

2. 14.62 lakh

3. Interoperable

4. Mobile PoS

Necessary conditions for service initiation:

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

Service Activation:

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


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





discretion

9. Virtual PoS


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


1. Any Card

2. Wallet Account

3. Scanner for reading QR Code and Bar Code




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

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 16.30 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.

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 inter-

operable 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.

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 non-

commercial 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

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 ₹ 65.625 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.

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.

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

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, 2016

2. 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 2016

3. 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 2017. Dated

16th December 2016

4. 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 2017. Dated 16th December 2016

5. 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 2016

6. 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

31.03.2017. Dated 21st December 2016

7. 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 2017

8. 14444 Toll-Free Helpline for Digital Payments Launched Dated 5th Jan

2017

9. Union Budget (2017-18): Promoting Digital Payments (Digital Economy)

towards less-cash society Dated 1st Feb 2017

10. 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

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 2017. 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. 5000 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-धन Vyapar Yojana[ Merchants]:

Prizes for Merchants for all digital transactions conducted at Merchant

establishments

Weekly prizes worth Rs. 50,000, Rs 5,000 and Rs. 2,500

11. 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.

Users on Android with internet can install BHIM via Play Store

(https://play.google.com/store/apps/details?id=in.org.npci.upiapp). BHIM

requires permission to your Phone Calls & SMS to verify your phone

number.

Users without access to internet/data services, can experience BHIM by

dialing *99# on their phones.

How does it work?

After downloading the app, give necessary permission and verify mobile

number linked with bank account. Register your bank account with BHIM,

and set a UPI PIN for the bank account using last 6 digits of your debit

card and expiry date. Your mobile number is your payment address (PA),

and you can simply start transacting. Yes! It is that simple.

Send / Receive Money: Send money to or receive money from friends,

family and customers through a mobile number or payment address.

Money can also be sent to non UPI supported banks using IFSC and

MMID. You can also collect money by sending a request and reverse

payments if required.

Check Balance: You can check your bank balance and transactions

details on the go.

Custom Payment Address: You can create a custom payment address in

addition to your phone number.

QR Code: You can scan a QR code for faster entry of payment addresses.

Merchants can easily print their QR Code for display.

Transaction Limits: Maximum of Rs. 10,000 per transaction and Rs.

20,000 within 24 hours. The limit for USSD has currently been set at

₹5,000 per day. Language supported: Hindi and English. More languages are yet to come

Purpose:

“The main purpose of BHIM App is to provide uniform experience of UPI

and also to support those banks who have not developed any UPI app for

their customers as yet”, says NPCI MD & CEO.

Benefits:

1. 1 digital payment app for all bank accounts.

2. Money remains in your bank account, so you earn interest.

3. No charges from using BHIM app infra, minimal UPI charges from

banks for making transactions.

4. Simple, secure and light.

5. BHIM framework *99# works without internet.

6. Transaction from ₹ 1/- to ₹ 10,000/- 7. Daily transaction limit of ₹ 20,000/-

CYBER SECURITY FOR DIGITAL PAYMENTS

Digital payments are likely to cost more if the National Democratic Alliance (NDA)

government decides to impose a token 'security fee' or cess on each online

payment.

According to several media reports, the government is contemplating imposing a

cyber-security cess on e-payments companies. The Department of Financial

Services (DFS), along with the Ministry of Electronics and Information

Technology (MeitY) and the home ministry are learnt to be preparing such a

proposal.

This 'security fee' or cess like the Swachh Bharat cess, could be used to create

better infrastructure for secure digital transactions.

Analysts are of the view that levying a cess on digital firms is not a right way to

improve cyber security of digital payments and creating such a corpus is not a

way of handling the country’s digital payments security.

“The problem is not that there is no money to solve these security issues. Who

implements these security transaction issues? It will be the transaction providers,

the PPIs, banks, MasterCard, Paytm. They’re not saying that they don’t have

money to do that. Some of the issues are all digital transactions are heading

towards mobile and we’re going down this pyramid of lower literacy users who

are not aware of security issues and services. The biggest problem so far has

been someone calling you up and saying I need to verify who you are and I’m

going to send you a code and you give it to me,” Prasanto K Roy, VP and head

of Nasscom Internet Council, told Business Standard.

At present, users pay various charges for digital transactions. This includes

convenience fee, transaction charges, and cost for plastic card, like annual or

joining fee as well as merchant fees.

The country requires locally developed tools and niche workforce to protect its

cyberspace according to experts.

"Creation of indigenous tools along with building human capacity with relevant

capabilities is imperative to secure India's cyberspace," a joint report by

Assocham and PwC on Securing the Nation's Cyberspace said.

While the government should create a robust policy environment and ensure

adequate technology support, businesses should not limit its efforts towards

cyber resilience merely for compliance, but practice self-regulation, the report

noted.

"It is critical that all economic participants in a country pay attention to cyber

security and develop adequate measures to identify, protect, detect, respond and

recover processes and capabilities in the face of threats.

"Businesses today need to urgently and proactively invest in it," Sivarama

Krishnan, partner, and leader – Cyber Security, PwC India, said.

Promoting a cyber-safe culture within citizens for responsible cyber behavior will

be key to ensuring the security of India in cyberspace, it further said.

The report stressed on the need for an inclusive approach to creating a secure

business ecosystem, where the government, industry sectors, standard bodies

and business all have to play their role in creating a secure environment.

"Apart from the government and enterprises, India's academic institutions also

have a key role to play in this fight for cyber security.

"Academia and industry need to collaborate to generate interest and find

innovative solutions to cyber security issues. This collaboration is also needed to

ensure India has the trained manpower needed to implement its cyber strategies,

according to Krishnan

Citizen participation in mitigating cyber risks is also becoming increasingly

important, the report noted.

"So far, there haven't been any cases of Locky ransomware reported in India but

we are getting enquiries from customers and Trend Micro's support team is

helping out in resolving them," Sharda Tickoo, Technical Head, Trend Micro

India, said in a statement.

The government said that ransomware 'Locky' is spreading through a "massive

spam campaign".

According to CERT-In, "spam mails" are being used to spread the ransomware.

"It has been reported that a new wave of spam mails are circulating... to spread

variants of Locky ransomware. Reports indicate that over 23 million messages

have been sent in this campaign," CERT-In said.

"The message contains common subjects like please print, documents, photo,

images, scans, and pictures," it added.

The ransomware is known to scramble the contents of a computer or server and

demands payment to unlock it "usually by anonymous decentralised virtual

currency Bitcoins".

Locky ransomware's re-emergence is touted as one of the largest malware

campaigns in the second half of 2017.

The ransomware once considered almost defunct, sent over 23 million emails

with the malware to the US workforce in just 24 hours on August 28.

Victims are presented with a ransom note, demanding 0.5 bitcoin ($2,300) in

order to pay for "special software" in the form of a "Locky decryptor" in order to

get their files back.

"We are trying to build a ransomware strategy with two best practices - first is to

start with fortifying email defence mechanisms and second is to delete the VB or

Java Script if it is not used in machines. There are certain secure configurations

which are unnecessary and not running, should be blocked," Tickoo informed.

A true example that proves cyber security is implemented for the good

sake of people:

The Madhya Pradesh Police cyber cell said that debit and credit card details of

several (number unknown), including particulars of bank account details, CVV

number, phone numbers and email IDs, are up for sale on the dark web for Rs

500.

The development was reported by the Times of India after cops in Indore

discovered the illegal sale, which was being conducted by an international gang

led by a Pakistani national who was operating from Lahore.

The activities were busted by the MP police after a detective posed as a

customer and bought debit card details of an Indore-based woman in exchange

for bitcoins.

Following the development closely, the police managed to nab two members of

the international racket from Mumbai.

While large databases of data are available on the dark web, this is the first time

that sensitive details such as CVV, phone numbers and email IDs have been

collated in a database.

This makes the job much easier for a person buying the details as he/she would

be able to generate a new pin and drain a bank account.

The MP cyber-cell started investigating the case after Jaykishan Gupta, a

professional banker, filed a complaint that Rs 72,401 was debited from his credit

card on August 28.

"Our investigation revealed that the card was used to buy air tickets for one Raj

Kumar Pillai of Mumbai. Pillai and his accomplice Ramprasad Nadar were

rounded up," said MP Cyber cell SP Jitendra Singh told TOI.

"Pillai was a former employee of US-based IT service provider Cognizant and

Nadar was employed with HDFC bank," he added.

The gang, however, has used the card details only on international websites

where the one-time password (OTP) is not required

ADVANTAGES OF GOING CASHLESS:

Convenience

The ease of conducting financial transactions is probably the biggest motivator to

go digital. You will no longer need to carry wads of cash, plastic cards, or even

queue up for ATM withdrawals. It’s also a safer and easier spending option when

you are travelling. “The benefits are enormous if you leave out the low-income

group, which will face a huge challenge,” says Kartik Jhaveri, Director, and

Transcend Consulting. “For the rest of the country, it is constructive and simple.

It will be especially useful in case of emergencies, say, in hospitals,” he says.

Adds Jayant Pai, Head, Marketing, PPFAS Mutual Fund: “You have the freedom

to transact whenever and wherever you want. You don’t have to be physically

present to conduct a transaction or be forced to do so only during office hours.” Discounts

The recent waiver of service tax on card transactions up to Rs 2,000 is one of the

incentives provided by the government to promote digital transactions. This has

been followed by a series of cuts and freebies. It’s a good time to increase your

savings if you take advantage of these. For instance, 0.75% discount on digital

purchase of fuel means that the petrol price in Delhi at Rs 63.47 per litre can be

brought down to Rs 62.99/l with digital payment.

Similarly, saving on rail tickets, highway toll, or purchase of insurance can help

cut your costs. Add to these the cashback offers and discounts offered by mobile

wallets like Paytm, as well as the reward points and loyalty benefits on existing

credit and store cards, and it could help improve your cash flow marginally.

Tracking spends

“If all transactions are on record, it will be very easy for people to keep track of

their spending. It will also help while filing income tax returns and, in case of a

scrutiny, people will find it easy to explain their spends,” says Manoj Nagpal,

CEO, Outlook Asia Capital. “Besides the tax, it will have a good impact on

budgeting,”

Budget discipline

The written record will help you keep tabs on your spending and this will result in

better budgeting. “Various apps and tools will help people analyse their spending

patterns and throw up good insights over a couple of years,” says Jhaveri.

Controlled spending could also result in higher investing. If the same amount of

cash does not flow back into circulation and people continue to use mobile

wallets and cards, it is also likely to bring down the latte Factor. This means that

the Rs 10 you spent on candy or chips, or that regular cup of coffee office is likely

to take a hit since you will be short of loose change and smaller currency notes.

There’s a lesser chance of budgetary leaks and unaccounted for spends

sneaking into your budget at the end of the month.

Lower risk

If stolen, it is easy to block a credit card or mobile wallet remotely, but it’s impossible to

get your cash back. “In that sense, the digital option offers limited security,” says Pai.

This is especially true while travelling, especially abroad, where loss of cash can cause

great inconvenience. Besides, if the futuristic cards evolve to use biometric ID (finger

prints, eye scan, etc), it can be extremely difficult to copy, making it a very safe option.

Small gains

It may not seem like much of an advantage, but being cashless makes it easy to ward

off borrowers. Another plus is that you can pay the exact amount without worrying about

not having change or getting it back from shopkeepers.

GO DIGITAL, GET DISCOUNTS

Service tax : Waiver of service tax of 15% on digital transactions up to

`2,000.

Fuel : 0.75% discount on digital purchase of fuel through credit/debit

cards, e-wallets or mobile wallets.

Rail tickets : 0.5% discount on monthly and seasonal suburban railway

tickets from 1 January 2017. Online rail ticket buyers get up to `10 lakh

free accident insurance too.

Rail catering : 5% discount on digital payments for railway catering,

accommodation, retiring rooms, etc.

Highway toll: 10% discount on NH toll payment via RFID or fast-tags in

2016-17.

Insurance: 10% discount by government general insurers on premium

paid online via their portals. 8% discount on new LIC policies bought

online via its site. POS: Rs 100 a month is the maximum rent that PSU

banks can charge for PoS.

Rupay : Kisan credit card holders to get RuPay Kisan cards.

DRAWBACKS OF DIGITAL TRANSACTIONS

Higher risk of identity theft

“The biggest fear is the risk of identity theft. Since we are culturally not attuned to digital

transactions, even well-educated people run the risk of falling into phishing traps,” says

Nagpal. With the rising incidence of online fraud, the risk of hacking will only grow as

more people hop on to the digital platform.

Besides, the latest move by the government to remove the two-factor authentication

process for online transactions up to `2,000, will not help. Irrespective of the size of

transaction, the absence of this additional layer of security will expose thousands to the

risk of identity theft. Another weak link is the inadequate redressal mechanism. “With

the poor redressal system in India, imagine what a poor rickshaw puller will do if he has

his Aadhaar ID stolen?” asks Mumbai based financial trainer P.V. Subramanyam.

“Given the tedious process and poor grievance redressal, people will have no easy

recourse if they lose money online,” adds Nagpal. There is no stringent legal process to

deal with this kind or scale of fraud. Add to it the mass identity theft from banks’ or

companies’ databases and it can turn into a financial nightmare akin to the data breach

in the Indian banking system on October 2017.

Losing phone

Since you will be dependent on your phone for all your transactions on the move, losing

it can prove to be a double whammy. It can not only make you susceptible to identity

theft, but you could also be rendered helpless in the absence of physical cash or any

other payment option. This can be especially problematic if you are travelling abroad or

in smaller towns or villages with lack of banking infrastructure or other payment options.

Another drawback is that you need to keep your phone constantly charged. If the phone

dies on you, you will be stranded, particularly if you are in the middle of an important

purchase or dealing with an emergency.

Difficult for tech-unsavvy

India has a low Internet penetration of 34.8%(2016), according to the Internet Live

Stats, and only 26.3% of all mobile phone users have a smartphone (2015), as per

Statista figures. Besides the practical difficulty of going digital, “a bigger block is the

psychological shift. You are suddenly jumping three generations to the digital medium,” says Pai. Adds Subramanyam: “It’s a problem for the older people, who may suddenly

find themselves locked out of their accounts if they can’t download an app or don’t have

cash.” The digital medium may prove a challenge for the tech-unfriendly people, who

will need more time to adapt or the availability of other options to conduct transactions.

Overspending

While there is no denying the convenience of card or mobile wallet transactions, it could

open a spending trap for an unsuspecting population. According to behavioural finance

theorists, the pain of parting with money is felt more acutely if you use physical cash

instead of a card. Hence, using cash instead of cards or mobile wallet acts as a natural

bulwark for people who find it difficult to control their spending.

Besides, a high penetration of the digital payment system is contingent on the fact that

the same amount of cash does not come back into circulation. If it does, people are

more likely to switch back to the former ease of using cash as it is a habit that they may

find difficult to break.

CONCLUSION:

The first step taken to digital India was the demonetization of Rs 500 and Rs 1000 notes

in India. I do understand that it will be very difficult to adapt to such changes

immediately but if such immediate actions were not to be taken then India’s economic

conditions will only turn from bad to worse. Thus, as citizens and youths of India it is in

our hands to promote this magnificent India encouraged by our PM Mr. Narendra Modi

who has a bright vision towards the upcoming of future India. Let us teach our brothers

and sisters of this country the benefits of E- `1banking, Digital India Vision etc . . . . This

step of cashless economy is going to create ripples

Big success and it will help to attain vision of “DIGITAL INDIA”

“Coming together is a beginning; keeping together is progress; Working together

is success”

Documents

CASHLESS ECONOMY (DIGITAL INDIA) - srmuniv.ac.in · ¾ CONCLUSION . INTRODUCTION: A Cashless Economy is an economy in which all types of transactions are carr ied out through digital