Monday, November 9, 2015

Add-on insurance edge for RuPay

The National Payments Corporation of India (NPCI), which developed the country's home-grown card payment system RuPay, has attributed the system's rapid growth to the insurance cover it provided to its card-holders.

Rupay, which became operational from 2012, have rolled out 206 million cards (as of September-end), acquiring a sizeable market share within a short time.

Of the 206 million cards, 160 million is for bank accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY).
"The opportunity was given because of RuPay's inherent strength," said A.P. Hota, CEO and managing director of NPCI.
"The government had weighed and evaluated all card payment systems. At that time, the RuPay card had an inbuilt accident insurance of Rs 1 lakh. When the PMJDY scheme was launched, it was thought that along with the opening of accounts let people have an access to accident insurance. Then (Jan Suraksha) insurance schemes were not present. So, the government chose RuPay by its intrinsic strength," Hota said.

RuPay competes with Visa and MasterCard in India.

Hota said NPCI's non-profit characteristic was another factor behind its growth.

"NPCI is not a profit-making company. All operational benefits go to the same banking community who pays the fees," he said.

Hota said the revenue stream from its different verticals - card payment, Aadhar-based services and mobile-based interbank immediate payment service (IMPS) - were adequate to fund the introduction and upgradation of the payments technology.

Mobile payments

NPCI is working on upgrading and simplifying the existing IMPS system, which is likely to take shape by January.
"In IMPS you can send money instantaneously. But suppose one would like to collect money instantaneously. That would be possible in the new system. We have also tried to dissociate authentication and identity verification. Registration formalities have been tightened. Also, the payment processing service provider is not necessarily your bank. An account can be with one bank but the transaction routing can be through another bank," Hota said.

Eleven banks, including Union Bank, United Bank of India, Bank of Baroda, HSBC, HDFC and ICICI have shown interest in participating in the project. NPCI is also in talks with the SBI, which has the largest bank network.

"This requires regulatory clearance. For the last 45 months we have been in touch with the regulator and are clarifying their questions. We hope to secure approval soon. We will start with a few banks and expand gradually," he said.
NPCI is in the process of bringing in district co-operative banks and regional rural banks under the IMPS network.

RuPay forces MasterCard to call for fair competition

Facing stiff competition from India's own payment gateway RuPay, MasterCard has called for a level-playing field to stay put in the Indian market.

"It is great that the government is opening up the market. But the market should be driven by competition rather than mandate-driven competition," said Ravinder S Aurora, MasterCard group head and senior vice-president.

RuPay, which is run by the National Payments Corporation of India, gained traction in the local market ever since banks started opening accounts under the Pradhan Mantri Jan Dhan Yojana. 

About 154 million RuPay cards have been issued to new non-frills account holders under the PMJDY programme, to add to the 40 million existing RuPay debit cards with regular bank customers. Ru-Pay, which was conceptualised by the Reserve Bank of India in 2009, has cornered about one-third of the market with a of 580 million. China has a similar indigenous card called the Union Pay of China. 

To thwart competition, Aurora said that MasterCard is focusing on innovation and advanced technology for better security features. Not too long ago, MasterCard and Visa Card were predominant in the Indian market, which is now almost equally shared by RuPay and the two global payment solution providers in terms of number of cards issued. 

Bankers said that issuing RuPay cards is cost-effective for them as the fees associated with it is typically lower than the charges levied by Visa or MasterCard. Aurora said that about 10% of MasterCard's global business comes from India. It had invested $250 million in India last year.

It has tied up with E-lala, the ecommerce portal being promoted by Confederation of All India Traders. 

PM Modi emphasizes on Financial inclusion

PM Modi emphasizes on Financial inclusion

Prime minister Narendra Modi has said real development in the country means bringing positive change into the lives of the common man and eradication of poverty. 

While addressing the Delhi Economics Conclave in New Delhi on the economic and institutional reforms introduced by government, Prime Minister asked economists to deliberate and find 'out-of-the-box' sustainable solutions. 

'Reform to transform' that was the mantra Prime minister Narendra Modi shared at the Delhi economics enclave. 

He stressed on the fact that while talking of reform, it is important ask two critical questions: 

REFORM FOR WHAT? and REFORM FOR WHOM? In answer to the the second question Narendra Modi reiterated his government's motto of Sabka Sath Sabka Vikas. 

The theme of the Conclave this year is 'Realising India's JAM -Jan-Dhan Aadhar Mobile. It seeks to explore ways to improve the subsidy procedures. The PM has given an all-new meaning to JAM saying it stands for JUST ACHIEVE MAXIMUM. 

While speaking on the reforms, PM said that 19 crore people have been connected with the banking system under the Jan Dhan Yojana in just a few months. 

26000 crore rupees has been deposited in these accounts and the Rupay Card facility is now being used by 36 percent of the population. 

Under Pradhan Mantri Mudra Yojna, 60 lakh people have been issued loans worth Rs 38000 crores. 

1.25 lakh bank branches have also been given the target of issuing loans to at least have one dalit and one woman to achieve true financial inclusion. Around 12 crore people are benefiting from these programs. 

The PM said that the economy of the country is strong and taking it to greater heights is not a short-term task but a long term objective. 

Highlighting the achievements of his Government, he said-Soil health card is slowly transforming the destiny of farmers, transparent auction processes is helping in curbing corruption. 

In a push to infrastructure development, 26 KM roads are being constructed per day now as compared to 5 KM per day earlier. 

Referring to cooperative federalism in action, the Prime Minister said economic and even foreign policies are now developed in consultation with Chief Ministers. 

He also referred to the Swachta Abhiyaan which the country has adopted, leading to both economic reforms and improving the country's image in the world. 

Tuesday, October 20, 2015

How Aadhaar card has made your life easier

How Aadhaar card can make your life easier

Supreme Court allows more instruments to use the biometric card.

Image: Many transactions in the financial sector are finally getting linked to the biometric card. Photograph: Reuters
Soon, linking the employee provident fund account with the Aadhaar card can make life much easier for employees.

K K Jalan, central provident fund commissioner, Employee Provident Fund Organisation, explains: "With the Supreme Court (SC) deciding to allow linking of PF with Aadhaar, it will help us go totally online. We wanted to use Aadhaar to give unique benefits to subscribers, like settlement of accounts through the online method. This can only be done if the account is linked with the biometric card. At present, for claims settlement, we are totally offline."

With the SC adding four more schemes (Jan-Dhan Yojana, Mahatma Gandhi Rural Employment Guarantee, EPF and pensions) where Aadhaar may be used, many transactions in the financial sector are finally getting linked to the biometric card.

Earlier, the use was limited to getting foodgrain and kerosene under the Public Distribution System and for cooking gas.

Image: Aadhaar has been allowed for pension schemes. Photograph: Reuters
Says Guru Malladi, partner & leader, advisory services (government & public sector), EY: "For multi-channel service providers this is a welcome step. While there can be no denial of service if one does not have the card, it will help make things simpler for ones who decide to share their Aadhaar details."
For example, as Aadhaar has been allowed for pension schemes, the money can be deposited directly to a pensioner's account.
Even if the pensioner dies, things can move rapidly if his/her nominee's card details are with the department.

At present, it takes three to six months for transfer of such details.
Sushila Pai (name changed) lives with her 92-year- old mother in Mumbai's outskirts.

When her brother who'd retired from a state government organisation passed away, the pension amount was supposed to have passed to the nominee, their mother.

However, as the mother was 92 years and could not travel to the bank or even sign, bank officials had to come every month to get her thumbprint on cheques for withdrawal of pension. Frustrated with the process, the family withdraws the pension once in a quarter or six months.

Even the transfer of pension took over six months because bank officials had to come several times to take the thumbprints.

If Pai's mother had an Aadhaar card and had shared the details with the bank as the nominee of her son's pension, the transfer would have been much simpler.

Image: Usage of Aadhaar will soon be extended to other instruments like purchase of mutual funds. Photograph: Reuters
More products?
When Attorney General Mukul Rohatgi requested the SC to add the opening of bank accounts with a unique identification number, the court would not make more modifications.

However, experts hope this usage of Aadhaar will soon be extended to other instruments like purchase of mutual funds (MFs), insurance policies and so on. Chief executives of MFs believe this development will allow them to exponentially extend their reach.

At present, if distributors have client applications from another city, it is a big problem, as the process of physical verification is long.

Many online distribution companies do video conferencing as physical verification.

Image: The issue is about the authenticity and veracity of the database. Photograph: Reuters
Quiet spread
Backed by the Reserve Bank of India's permission to use Aadhaar, many banks have already started using it aggressively.

Some even insist on the card when one applies for a bank account or loans.
Also, the income tax department is making life easier for taxpayers who are willing to link their Aadhaar while filing returns.

Despite filing a return online, taxpayers had to take printouts of the acknowledgement and send it by post to the department. Now, those who have linked the card need not do it.

The problem
The apex court has not allowed mandatory use of Aadhaar. Without this, most financial institutions will be wary.

However, experts also believe such a development would be premature, for many reasons. At present, the Unique Identification Number covers only 900 million accounts, roughly 75 per cent of the population.

"Once we have reached 90 per cent or more, the courts will look at the government's plea to make it mandatory more favourably," says a tax expert.

 However, it is not only about coverage. Take the case of Anwar Sheikh, an assistant with a law firm, as an example.

He applied for the card, with his family. While the others got their cards in a couple of months, his brother and he did not.

After chasing the department and calling the helpline several times, he was told his documentation had not been received. He reapplied and got his card after a year.

What is more surprising is that when he made contact with the department, he was asked to send the details in a format.

When he did so, there was no response. "How can someone's documentation, eye scan, fingerprints simply disappear from the system? It is what worries me about the idea of a single identity like Aadhaar," says the lawyer.

Image: There is a lot of personal data already floating around. Photograph: Reuters

Voluntary vs mandatory

There is a strong debate on whether it should be made mandatory or not.
Pawan Duggal, cyber security lawyer, feels the government should not do so as of today because Aadhaar is based on biometric information, collected using a computer system. This means it is based on information in electronic form.

It is, therefore, governed by the Information Technology Act, which states that such information needs to have adequate security.

"It's not normal data - it's sensitive personal data. If it's not properly retained and securely maintained, it can be leaked out and the entire identity will be compromised," says Duggal.

Image: It won't be a bad idea to get an Aadhaar card and use it for transactions you are comfortable with. Photograph: Reuters
The bigger problem, as Duggal highlights, is that one doesn't know how the government is complying with the IT Act, as there's no information on data safety procedures adopted. People are clueless on the compliances done under the Act.

Some others feel the privacy issues will be resolved over time. "It is an opportunity for us to review our 70-year-old privacy laws. The security establishment around the card has to be created," adds Malladi.

According to him, there is a lot of personal data already floating around.
For example, with travel to the US and UK, one has to give biometric data even before entering the countries. Many others, like Dubai, seek data for people who are there even in transit. All this data can theoretically be misused.

The issue is about the authenticity and veracity of the database. This is the reason why some financial institutions, like MF companies, are not allowed to accept it as a proof, which can have bigger financial ramifications.

While this debate will be on for some time, or perhaps a very long time, it won't be a bad idea to get an Aadhaar card and use it for transactions you are comfortable with.

What is the Aadhaar case about?
  • After a few government departments made Aadhaar compulsory, several petitions were filed
  • Supreme Court impleads all states and Union Territories in the case
  • The principal opposition to Aadhaar in the SC turns out to be the question of privacy
  • The government's defence: Only basic identity data required
  • SC restrains UIDAI from transferring information to any agency without the written consent of the Aadhaar card holder
  • The attorney-general argues that a Right to Privacy is not guaranteed under the Constitution
  • SC refers the privacy question to a larger constitutional bench
  • A five-judge bench, accordingly, set up to hear the petition
  • Going forward, SC to look at whether there is any Right to Privacy guaranteed under the Constitution

Monday, October 12, 2015

Paytm to launch virtual 16 digit Rupay card

In a bid to increase the currency of its digital money, leading payments and company Paytm is planning to launch a virtual card in partnership with and a bunch of national banks. The virtual card, which will have a 16-digit number, just like a physical debit or credit card, will expand Paytm's reach significantly from 35,000 merchants currently using its to 1.5 million merchants, who accept all kinds of through plastic cards.

Once rolled out, the virtual card is expected to increase the utility of money stored on Paytm digital wallets, since it will make it usable across a much wider network, said Vijay Shekhar Sharma, “We are building this so that our wallet gets ubiquitously accepted across places.”

  • Paytm plans to launch a virtual card with RuPay
  • The card which will have a 16-digit number, just like a debit or credit card
  • It is expected to expand Paytm's reach from 35,000 merchants to 1.5 million
  • Paytm has applied for a payment bank licence. is expected to announce successful applicants by August

For instance, Taxi firm uses Paytm, but some of its peers don't. Similarly, leading e-commerce that may be competing with Paytm in the e-commerce space also do not use Paytm. However, after this virtual card is rolled out, consumers can shop from rival e-commerce sites or book a cab from aggregators other than Uber using their Paytm money. The virtual card will also give Paytm a leg up over its competitors which are offering similar services.

Sharma said the company is currently negotiating the commercials with banks and Rupay, and should be able to launch the product in the next three months. When asked why consumers will opt for a virtual pre-paid card when they can just shop using their debit or credit card, Sharma listed a couple of reasons. Using the debit card might put the entire bank account at the risk of cyber crime and very few people in the country have credit cards. There are only 20 million credit card users, compared to 81 million Paytm users, added Sharma. “Also, our goal is to provide online experience to even consumers who do not have a bank account.”

However, the company might face some challenges as Rupay is not currently offered by each and every bank in India and users might find the procedure too complicated. Once rolled out, a Paytm consumer will be able to see the 16-digit number in the application settings. The company is also exploring the option of issuing a physical card, which can be used at offline retail merchants.

Since Paytm has also applied for a Payment Bank license with the Reserve Bank of India (RBI), it will be interesting to note how these new payment models pan out for the company. In a recent interview to Business Standard, Sharma had said, “Payment will be our primary play. We came into business to solve the payment issues of this country and I am confident we can solve those by using the mobile platform. RBI is expected to come out with the first list on August 1. If we get a licence, we can offer a bouquet of financial services.”

At present, Paytm has a user base of 80 million and 30 million for its mobile wallet service. The number includes users accessing its services through computers. Sharma expects to see 50 million Paytm app downloads and a wallet user base of 200 million by the end of 2015-16.

The company is backed by Chinese e-commerce giant Alibaba's financial arm Ant Financial. It is set to get close to one million merchants from China on its marketplace and add about 100 million stock-keeping units (SKUs) to its platform by July-August as part of the deal. It will also increase the number of Indian merchants from 40,000 at present to 100,000 by the end of this financial year.

Monday, September 14, 2015

NPCI plans to roll out three new versions of RuPay

National Payments Corporation of India will launch a Mudra card, a credit card and an international card within the next one year

In a bid to promote the use of RuPay, the Indian version of payment settlement card, the National Payments Corporation of India (NPCI) is planning to roll out three new versions of the card within the next one year.

Currently, RuPay card is being issued as debit and Kisan cards, along with the opening of the saving bank accounts.

The company will launch a Mudra card, a credit card and an international card. NPCI, which had launched the RuPay payment scheme, is in talks with the US, Japanese and Chinese bank card associations to enable Indians avail of international services wherever these firms are operating.
RuPay is a card payment settlement system that competes with Visa and MasterCard. Since its launch in March, 2012 until August 2014, 35 million such cards had been issued.

Mudra Bank co-branded card will be a new card which will be introduced in association with Mudra Bank, to cater to entrepreneurs while the new credit card will pave way for the further acceptance of the RuPay brand among the customers.

Speaking to reporters here on Monday, M Balachandran, chairman, NPCI said for the international card, the corporation has tied-up with Discover Network Merchants, which is the third largest in the US and Europe and the issuer of Diners card and is in the final stages of talks with JCB (Japan Credit Bureau) and China UnionPay.

As per the terms with the credit bureaus, while their cards will be allowed to used in India, through NPCI network, and similarly through their network RuPay cards will be allowed to access in any part of the world. “With these tie-ups we will be able to cover almost major parts of the world,” said Balachandran.

He was in Chennai to kickstart a nation- wide e-Payment literacy workshop on the eve of World Financial Literacy Day.

To increase the user base, the government has asked all the public sector banks to issue their customers the RuPay cards. Balachandran said that currently NPCI has a capacity to handle 20 million transactions per day, and it will be expanded to 40 million in the next two months and further to 100 million in one year’s time in order to facilitate all the government subsidy transactions. DBT transactions alone estimated to be around R1,159 crore through 44 schemes in 94 districts across the country.

“Once the state governments also start using our system, we need to have more capacity for which we are getting ready,” said Balachandran.

NPCI would invest around R100-150 crore every year as capital expenditure to enhance capacities. Transactions under NPCI include withdrawals from ATMs, point of sale operations and quench clearing.

RuPay cards in currency among bank users: official

Around one lakh of the nearly two lakh customers of Puduvai Bharathiar Grama Bank, the only Regional Rural Bank in the Union Territory of Puducherry, have been given RuPay cards, said D. Devaraj, Chairman of the bank at an e-Payments Literacy Workshop on Tuesday.

The workshop held in Puducherry is among 115 such workshops being held across the country as a programme of the National Payments Corporation of India (NPCI), an initiative of the Reserve Bank of India and an umbrella institution for all retail payment systems in the country. Here, the workshop was conducted by the Puduvai Bharathiar Grama Bank in association with NABARD.
A booklet on e-payments literacy manual was also launched at the event by Shanthamurthy, Joint Director, Planning and Research Department.

The workshops are aimed at promoting e-payments and safe banking practices. Around 200 customers and staff of the Puduvai Bharathiar Grama Bank participated in the interactive workshop.

New app planned

A.R. Ramesh, chief project officer, NPCI, Mumbai, took the audience through various aspects of e-payments like safe usage of ATM cards, fund transfer through IMPS (Immediate Payment Service), benefits of linking Aadhaar card and mobile phone number to bank account, and answered their doubts. Mr. Ramesh said that the NPCI has plans to launch a mobile application bringing on board a large number of billers for the convenience of customers. He also spoke about the benefits of the RuPay card, an initiative of NPCI, with the card being linked to insurance schemes, such as Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana.

“The RuPay card is as good as cash. It is accepted on leading websites, including 30,000 merchant websites, besides booking on IRCTC website and airlines websites also,” he said.

Puducherry has high usage of e-payments, said Ravichandran from Puduvai Bharathiar Grama Bank, adding that more than 50 per cent customers at the bank use some kind of e-payment methods. The event was also attended by O.S. Gnana Sekaran, Assistant General Manager, Indian Bank Zonal Office, Puducherry, and P. Veerashankar, Deputy General Manager, NABARD, Chennai. A workshop was also held at Karaikal.