LET’S TALK ABOUT DIGITAL PAYMENTS
LET’S TALK ABOUT
D I G I TA L PAY M E N T S
Digital Payment Companies In India
1.1.1 Concept – Meaning & Definition
1.1.2 Overview of Payment Systems
1.1.3 Digital Payment Forecasting
1.1.4 Payment Gateways
Digital Payment Companies
1.1 Introduction & Overview of Payment Systems
1.2 Prepaid Payment Instruments [PPI]
1.3 Who can Issue PPI?
1.4 Mode of Payment
1.5 Anti Money Laundering [AML]
1.6 Key Discussions
Session - I Road Map…
1.1.1 Concept
“Digital payments are not one instrument but rather an umbrella term applied to a range of different instruments used in different ways.”
Meaning & Definition:
“I love you not for what you are but for what I am when I am with you”
-- Umashanker Sahu
1.1.2 Overview of Payment System
Country’s Cashless Journey 2006-2011- Shift of Non Cash
Payments 2013 – Master Card launched 2014 – Online payments rapid
Growth 2014 – Adaption of Mobile payment 2015 – 200% increase in Mobile
Payment from 2011 E- Commerce
Consumer to Business (C2B) Business to Consumer(B2C) Manufacturer Wholesaler
1.1.3 Forecasting
'Indian digital payments market to reach $500 bn by 2020'
1.1.4 Payment gateway market
HOW PAYMENT GATEWAYS WORK
Software and servers that transmit Transaction information to Acquiring Banks and responses from Issuing Banks (such as whether a transaction is approved or declined).
1.1.4 Payment gateway market
Payment Gateway Players Financial Institutions/Banks
• ICICI• CITI• HDFC• AXIS etc.
Third Party Vendors
• CC Avenue• Bill Desk• PayU• PayPal etc.
1.2 Prepaid Payment Instruments [PPI]
Definition: “Payment instruments that facilitate purchase of goods
and services, including funds transfer, against the value stored on such instruments. ”
---- RBI under Payment & Settlement Systems Act 2007
Meaning & Definition:
“Mode of cashless fund transfer or transaction using cards or mobile phones”
-Umashanker Sahu
1.2 PPI Exists??
1.2 Classification of PPIClosed System Payme
nt Instruments
• Issued by an entity for facilitating the purchase of goods and services
• Do not permit cash withdrawal
• Usage - Web portals for online purchases /shopping - Make my Trip, Flipkart, Jabong etc. Semi-
Closed Payment
Instruments
• Facilitates the purchase of goods and services at identified merchant locations
• Do not permit cash withdrawal
• Limit – Rs. 20,000 with minimum details
• E.g. E Wallets/Digital Wallets Open
System
Payment
Instruments
• Facilitates the purchase of goods and services at POS terminal.
• Permit Cash withdrawal upto Rs.1000 at any point of time.
• Eg. Web portals for online purchases /shopping -
Closed System Payment Instruments
Semi-Closed System Payment Instruments
Open System Payment Instruments
1.2 Classification of PPI
Closed System Payment Instruments
Semi-Closed System Payment Instruments
Open System Payment Instruments
Virtual Cards/Digital Wallets/E-Wallets
General Purpose Debit Cards
Gift Cards
1.3 Who can issue PPI in India?
Companies minimum paid up capital of Rs. 5 crore and +ve Net worth of Rs. 1 crore
Mobile based pre-paid payment instruments (mobile wallets & mobile accounts)
NBFC - closed and semi-closed system payment instruments, including mobile phone based pre-paid payment instruments
Certificates of Authorization issued by Reserve Bank of India under the Payment and Settlement Systems Act, 2007 for Setting up and Operating Payment System in India
1.4 Mode of Payment
1.4.1 Bank Cards 1.4.2 USSD Mobile Banking 1.4.3 Aadhar enabled payment system [AEPS]1.4.4 United Payments Interface [UPI] 1.4.5 Point of Sale (POS) & Cards1.4.6 Mobile POS1.4.7 V- POS1.4.8 Best Practices
1.4.1 Bank Cards
How to issue Approach nearest bank branch Multiple cards from one account PIN issued by bank separately
Activate your Card At your Bank’s ATM by even balance
checking At your bank branch by any
transaction
1.4.1 Bank Cards – Types & Usage
PREPAID CARDS
Pre-loaded from your bank account
Safe to use, limited
amount of transaction
Can be recharged like mobile recharge like Gift Card
DEBIT CARDS
Linked to your bank account
Used to pay at shops, ATMs, wallets, Micro ATMs, online shopping Etc.
1.4.2 USSD – Mobile bankingEnables Customer to send money, check account balance, mini statement and more without internet connectivity.
Non-internet Banking - USSD - *99#
Registrations
Get Mobile Money Identifier (MMID)& Mobile Pin [MPIN]
Link mobile number with Bank Account
Account in a bank or Any mobile phone on GSM network
1.4.2 Transaction FlowTransfer Funds to another Bank Account
Dial 99# from your phone
1.4.3 Aadhar enabled payment system [AEPS]
AEPS allows bank-to-bank transaction at PoS (MicroATM) with the help of BC.
Only Aadhar needed
Aadhar enabled Services
Balance EnquiryCash WithdrawalAadhaar to Aadhaar Funds Transfer
1.4.3 Transaction Flow
GO TO A MICROATM
OR BANKING CORRESPOND
ENT
PROVIDE YOUR BANK NAME AND AADHAAR
CHOOSE WHICH
TRANSACTION TO DO
PROVIDE FINGER PRINT ON SCANNER
ON SUCCESSFUL TRANSACTIO
N TAKE THE PRINT SLIP
PROCESS COMPLETED
1.4.4 Unified Payment Interface [UPI]
A system that powers multiple bank accounts into a single mobile application like an email ID for your money.
Registration Requirements
Smartphone with internet facility
Bank Account details (only for registration)
CUPI, UCO UPI, Union Bank UPI,AVAILABLE APPS (28 BANK APPS)
like SBI app, PNB UPI, UPI Collect (ICICI) etc.
1.4.4 Registration Process
DOWNLOAD ANY BANK’S APP
CHOOSE YOUR UNIQUE ID AS
VIRTUAL PAYMENT ADDRESS (VPA)
SELECT YOURBANK
GIVE ACCOUNT DETAILS FOR FIRST
TIME
SET M-PIN FOR VALIDATING
TRANSACTIONS
REGISTRATIO N COMPLETED
1.4.4 Registering on UPI
1.4.4 Sending Money on UPI
1.4.5 Point of Sale (POS) & Types
An electronic device used to process card payments at retail locations.
PHYSICAL POS MOBILE POS VIRTUAL POS
1.4.5 Physical POSThe physical location at which goods are sold to customers.
1. Swipe a Debit/Credit Card on
the POS Machine.
2. Enter Amount to be Paid and PIN 3. Generate Receipt
1.4.6 Mobile POS
A Smartphone, tablet or dedicated wireless device or electronic point of sale terminal.
1.4.7 Virtual- POS
A web or windows application that can be used by card-accepting merchants to manually authorize card transactions.
No POS machine required QR code used for payment to bank account of merchant Complete privacy of merchant bank account
1.4.8 Best Practices
Register your mobile number at bank for regular information by SMS for every transaction
Never share your PIN to anyone Transact at only trusted merchants While at ATM, ensure no one is looking over your
shoulders
1.5 Anti Money Laundering [AML]
1.5.1 Meaning, Definition & Concepts
1.5.2 ML Activities
1.5.3 Stags of ML
1.5.4 AML Flow
1.5.5 Illustration Video
1.5.1 Meaning, Definition & Concepts
Section 3 of PMLA 2005, describes the offence of ML. Section 3 reads as under: “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.”
Money Laundering (ML) is the processing of criminal proceeds in order to disguise their illegal
origin.
1.5.2 Money Laundering Activities
Account activities not consistent with the customer’s business or normal transaction profile of the customer.
Transactions which attempts to avoid reporting/record-keeping requirements.
Unusual activities. Transaction or account activities pertaining to
customer who provides insufficient or suspicious information or is reluctant to provide requisite information.
Suspicious fund transfer activities.
1.5.3 Stages of ML
•Physical Movement of cash through banking channel.
PLACEMENT STAGE•Conducting Multiple complex
financial Transactions to eliminates the audit trail.
LAYERING STAGE
•Integrate the illicit funds into the Economy
•E.g. Purchase of real estate, Jewellery etc.
INTEGRATION STAGE
1.5.4 Money Laundering Flow
Happy Digitalization
Thank You