Banking has truly gone digital, thanks to the extent of smartphone penetration in India, which stands at 17%, and growing at 45% annually. “The payments ecosystem in India has witnessed frenzied activity over the past year, with 2-3 digital banking apps or mobile wallets being launched every other month,” says a Motilal Oswal study on digital banking.
According to the study, by 2019, the share of cash in consumer payments will shrink to 40%, from 70% now. A Boston Consulting (BCG) report says that smartphone users will equal bank accounts by 2020. This explains why banks and fintech companies are falling over one another to attract customers by sprucing up their digital banking facilities.
While mobile wallets, which allow you to store money in a Web account—offered mainly by ecommerce portals—have ushered in the digital revolution in the country, several other innovations are changing the way you pay , and many more are on the anvil.
This offering from the National Payments Corporation of India makes transferring funds as simple as sending an SMS. All you need is an user ID linked to your bank accounts. It eliminates the hassle of conventional money transfers such as filling in details— beneficiary’s name, account number, IFSC code, etc.
The NFC technology converts your mobile phone into a payment device, eliminating the need to swipe your debit or credit cards . You just have to tap your phone at the NFC-powered readers. “Payments are executed instantly and in a secured manner, eliminating the need to share your card details with the merchant,” says Rajiv Anand, Group Executive and Head, Retail Banking, Axis Bank. Currently, SBI, ICICI Bank and Axis Bank offer this facility to their customers.
Quick Response (QR) code
Consider this: You have shopped online and selected cash-on-delivery as your payment option. However, the day your package is delivered to you, you do not have enough cash with you to make the payment. It is in situations such as these that QR code-based payment app come into play. If your bank has created QR code-reader app, you can scan the code printed on your package and the payment will be credited to the seller from your account. “You need not enter any details. The app on the smartphone will read the QR code on the package and prompt you to enter the PIN. Once you do so, the transaction is completed,” says Hota. QR code tech is also useful while making over-the-counter payments.
Several banks including SBI, ICICI Bank, Axis Bank and Bank of Baroda allow you to transfer funds to beneficiaries without a bank account. To transfer funds, you need to add the name of the recipient to the list of your cash withdrawal beneficiaries and share her mobile number, name and address with the bank.
You can initiate the transfer by selecting the recipient, after which you will get a numerical code on your cell phone, which should be shared with the recipient. An SMS containing another code (one-time password) will be sent to the beneficiary’s mobile number. To withdraw the amount, the recipient has to visit specified ATMs, enter both the codes and mobile number.
The payments industry is seeing rapid technological innovation and you could soon have access to much easier to use and secure technologies, powering everyday transactions. A look at what is in the pipeline.
So far, the utility of wearables like watches and bands has been limited to routine tasks—displaying smart phone notifications, tracking fitness levels, etc. They will soon assist in making payments. “A growing number of wearables are adding contact-less payments to their offering. This will save time and you won’t have to use your cards for the purpose,” says Anand. The market will see watches, fitness bands and even jackets that that come with payment-enabled capabilities. “Wearables are the final frontiers of payment technology. We are closely tracking the developments and should be able to offer this exciting new payment method quite soon,” says Anand.
Pilots are being run on finger prin tand voice-based authentication systems. Financial services firms are gung-ho about Aadhaar getting legislative backing. Some have hailed it as a catalyst for transforming the financial landscape.
UPI, too, could make use of biometric technology. A combination of Aadhaar, which uses biometric information, and smartphones could completely alter the way payments are made, paving the way for customers to complete transactions using fingerprints. “These will be cross-checked with the biometric database with the Unique Identification Authority of India (UIDAI) database. Once verified, the transaction will be executed,” says Anand.
Have you suffered long queues at shopping malls’ cash counters? The lines can be seemingly unending, particularly if you happen to be shopping on a weekend. The use of beacon technology could provide you respite from the queues soon, says Sengupta of DBS. It allows shoppers to gather the desired items and walk out, as the beacon identifies the individual and the merchandise, charging the customer upon leaving the store. “This technology is being piloted by Amazon in the Silicon Valley. Sounds too good to be true, but then who would have thought in early 2000 that one could make a payment through a watch?” says Sengupta.
This is the technology that powers the controversial crypto-currency Bitcoin. And now banks and payment processing companies are betting on this technology. Visa’s development centre in Bengaluru is exploring it, along with others. DBS, Singapore has already partnered with financial institutions to understand its potential. “Bitcoin is still a contentious payment currency due to non-traceability of the payor and the payee. But usage of the underlying philosophy (technology) of a public ledger that provides full tracking of any payment done and eases settlement between financial institutions brings focus on the block chain technology,” says Sengupta.