Digital Payments in India Trends Issues and Opportunities PDF

“Digital Payments in India: Trends, Opportunity,
Issues”
Submitted by
Team 12
in partial fulfilment for the award of the degree

of
MASTER OF BUSINESS ADMINISTRATION
SCHOOL OF BUSINESS MANAGEMENT

SHOOLINI UNIVERSITY
OF LIFE SCIENCES AND BUSINESS MANAGEMENT
SCIENCES
BAJHOL, SOLAN, HP - 173212
APRIL, 2019
ACKNOWLEDGEMENT
Although it is beyond our world power to acknowledge for the project report
guidance to all those
who have co-operated with us but as matter of tradition we are trying to express
it.
With great reference we would like to express our profound gratitude to Dr. Kuldeep
C. Rojhe, Mr.
Narinder Verma for providing us with great opportunity of learning, keen interest,
invaluable
guidance and constant inspiration which was constructive to achieve the goal
throughout my project
report.
We would like to thank all the people who came across at Shoolini University. Their
inspiring
guidance, indispensable support, enthusiastic mentoring and critical appreciation
from our
respectable guides, staff of our organization. Our extended interactions have
always been
provided to me with a stimulating atmosphere and kept my interest levels high in
the course of
this project report. We would like to express our special regards towards our
faculty members as
without their constant supervision we would not be able complete this project.
Lastly, we thank almighty, our parents for their constant encouragement without
which this training
would not be possible and also our friends and classmates for their support and
guidance.
Team: 12
CERTIFICATE
This is to certify that the Project work entitled “Digital Payments in India:
Trends,
Opportunity, Issues” submitted in partial fulfilment of the requirement for the
award of
degree of Master of Business Administration to Shoolini University of Biotechnology
and
Management Sciences, Bajhol, Solan (H.P.) is a bonafide Projectwork carried out by
Team
12. No part of this work has been submitted for any other degree or diploma.
Name Of Group: Team 12 Name Of Guides: Dr Kuldeep

C.Rojhe
Signature: Mr.
NarinderVerma
Signature:
Place: Solan
Date : 10.4.19
Table of Content
Chapter Number Particulars Page Number
Abstract
Chapter 1 Introduction 1-12

1.1 introduction 1-2
1.2 Government ruler push for cashless 2-3

economy
1.3 Background of digital payments 3-5
1.4 Present scenario of digital payments 5-10
1.5 Future scenario 10-11
1.6 Objective of the study 11
Chapter 2 Understanding the concept of digital 12-50

payment: methods, trends,
opportunities, issues.
2.1 Methods of digital payments 12-22
2.2 trends 22-25
2.3 Fintech trends in 2019 25-31
2.4 opportunities 31-32
2.5 Issues/Key barriers for adoption 32-37
2.6 Rise in adoption of digital payments 37-40
2.7 Advantages / benefits of digital 40-41

payments
2.8 Drawback/ disadvantages of digital 41-42
payments
2.9 Innovation: technology will make 42-44
digital payment simpler
2.10 Technology threat background 44-48
2.11 Steps should be taken to focus cashless 48-49
economy on rural areas.
challenges
2.12 49-50
Chapter 3 Literature review 51-52
Chapter 4 Research methodology/design 53
4.1 Research methodology 53
4.2 Need of study 53
4.3 Research design 54
4.4 Data collection methods 54
Chapter 5 Conclusion/Findings 55
5.1 Findings 55
5.2 Conclusion 56
5.3 Recommendations 57
Chapter 6 Bibliography 58
Table of Figures
Figure No. Particulars Page Number
1.1 Growth in country digital adoption index 6

(Meity.gov.in)
Analysis in growth trends is based on 7-8

1.2
data provided by RBI
(Niti.gov.in)
1.3 Value-overall growth performance: Meity 8-9

does not disseminate value data in public
domain.
(Niti.gov.in)
1.4 Digital payment growth after 9

demonetization
(Niti.gov.in)
2.1 Analysis allow the payments ecosystem to 23

respond to change
(InFocus | Payments trends 2019)
2.2 Key barriers for adoption 33

(Google–BCG market study based on Nielsen
consumer survey of 1,516 consumers, 2016).
Reason for stopping usage of digital payments

2.3 (Google–BCG market study based on Nielsen 35
consumer survey of 1,516 consumers, 2016.)
Trigger for digital payments for merchant
consumer survey of 1,516 consumers, 2016.)
Key barriers for merchant trials

consumer survey of 917 merchants, 2016.)
Prepaid instrument transaction almost 2x mobile

2.6 banking transactions 38
(RBI Payment System Indicators, BCG Analysis)
Threats
2.7 44
Abstract
This project report focuses on the impact and importance of digital payment in
India. According to
the Government of India the digital payment will increase the employment, reduces
risk related to
cash like corruption, robbery, and carrying or storage of large amount of cash and
made all
transactions to be done cashless or digitalised which helps the people to transfer
the money with
security and safety at high speed. The impact of this policy is a footstep towards
the modernisation
and globalisation by making the economy cashless. In digital payment, banking
sector plays a major
role by providing digital tools like debit cards, mobile banking, mobile wallets.In
recent days many
changes took place in the payment system like digital wallets, UPI and BHIM apps
for smooth shift to
digital payments. The objective of this project report is to study the optimistic
impact that Digital
payment system in India.
A major obstacle for the adoption of this digital payment system in India is slow
internet connectivity
and the additional charges over the digital transactions. No matter India started
shadowing digital
payment policy over a year ago but still some of the sectors in India are still at
the majority of cash
transactions which is acting as a big hurdle for the economy to grow itself.
Key Words: Digital payments, E-Payments, online payments,cashless, security,

technology,
transactions, India.
Chapter I
Introduction
1.1 INTRODUCTION:
The term digitalization means to deal money digitally with less use of hard form of
money or in a
layman‘s language using computerized or digitalized modes of transactions is
digitalization.
Digital Payments – Definition
The Payment and Settlement Act, 2007 has defined Digital Payments. As per this any
―Electronic
funds transfer‖ means any transfer of funds which is initiated by a person by way
of instruction,
authorization or order to a bank to debit or credit an account maintained with that
bank through
electronic means and includes point of sale transfers; automated teller machine
transactions, direct
deposits or withdrawal of funds, transfers initiated by telephone, internet and,
card payment.
India is a growing economy where 67% of the population is still from rural areas
(World Bank, 2016).
No doubt we have achieved the literacy rate of 74% but sti ll a huge mass of
population lacks
technological knowledge and so the problem of digitalization is big in India as
compared to other
countries in the world. Automated Teller Machines (ATMs) are the first form of
digitalization that
was introduced in India in the 1987. It took more than twelve years by the people
to accept it as a
mode of transaction. But as the time has passed people understood how to use it and
its importance
increased gradually. As the population increased in India the need of ATMs also
increased in various
parts of the country so in order to reduce the rush of ATMs, RBI focused on
introducing E-banking in
the country. The main focus of Reserve Bank of India (RBI) was to ensure safer and
authorized
payment system to the people. With this objective Electronic Clearing Service (ECS)
was introduced
1990s. In the year 2008 National Electronic Clearing cell was launched to handle
multiple
transactions of individuals and corporate. It came as boon for the economy as many
people find it as
easy, quick and fastest mode of transaction to transfer their funds to any part of
the world. During this
transformation a national level e-Governance plan was initiated in 2006. So keeping
the focus on rural
areas to expand the e-banking and better internet facilities ―Digital India‖
campaign was launched on
1st July 2015. The objective of the campaign is to develop secure and digital
infrastructure, delivering
government services digitally and universal digital literacy. According to Internet
and Mobile
Association of India (IAMAI) and Kantar IMRB report out of 918 million rural
population of India
only 186 million are using internet and leaving out 732 million potential users.
The ratio of male to
female Internet users is 64:36. No matter these digital changes have taken place
about ten years ago
but it is unable to reduce dependency of the people on paper currency in the
economy. To reduce the
burden of printing more currency and dependency of people on paper currency
domentisation of
Rs.500 and Rs.1000 was done on 8th November 2016. Apart from this in order to
inculcate the habit
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of using digital currency government unveiled two schemes namely Lucky GrahakYojana
for
customers and Digi DhanVyapaarYojana for traders. The Indian government and Reserve
Bank of
India is trying very hard to promote mobile banking and e-payments. Along with
these efforts
recently various small finance banks and payments banks have also been brought to
fulfill the motto
of financial inclusion and innovative banking solutions. While Digital India is
trying its way in rural
India but the digital literacy one of the biggest hurdle in making it a great
success. The IAMAI report
finds that an estimated 281 Million daily Internet users, out of which 182.9
million or 62% access
internet daily in urban area, as compared to only 98 million users or 53%, in rural
India. Almost
double the proportion of Rural Users access internet less than once a month in
rural India as
compared to Urban India. Therefore, to make economy digitalized a joint effort of
banks,
government, educated youth and telecom industry will be required to spread the
knowledge. They
have to gain the trust of the people that their money is safe if they are doing
transaction digitally.
There is a requirement of making strict rules regarding cybercrime, online frauds
and strengthen the
internet security.
1.2 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 card less, PINless. There is no need of smartphone for the customers‖.
The Digital India program is a flagship agenda 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. To incentivize the move towards a cashless
economy, the
Government has come up with a rash of discounts and freebies on digital
transactions. But will these
be substantial enough and, along with other benefits, counter the higher risk of
identity theft once the
currency notes are back in circulation? What are the gains and drawbacks of
financial digitization?
Here‘s a look at what may be in store for you. The digital India mission envisioned
by the
Page | 2
Government of India is aimed at transforming the country into a digital economy.
One major part of this larger program is a special focus on digital payments. The
program on digital
payments is envisioned with elements such as, extending banking facilities to under
banked, banking
from anywhere, expanding the base of financial inclusion, creation of digital
opportunities with
national identity program and establish enhanced transparency into the systems.
Digital payments are
becoming a key part of our daily lives and impacting society, business and the
economy at large.
India‘s digital payment industry, which is currently worth around USD 200 Billion,
is expected to
grow and to reach USD 1 Trillion by 2023, as per a report by Swiss financial
services holding
company, Credit Suisse. In India, as per a recent report by RBI, total digital
payment transactions
stood at 1.06 billion transactions for the month of December 2017. The Government
of India is
targeting to reach 25 billion digital transactions by the end of the year (Fy2018).
This significant
growth, both globally and in India, warrants stakeholder‘s concerted e orts to
envision robust cyber
security and data protection policies. Such reports would go a long way in
enhancing the end-
consumer trust in digital payment space and could potentially result in increase in
the digital payment
market in India.
1.3 BACKGROUND OF DIGITAL PAYMENTS

The journey has taken many decades and involved breakthroughs and innovations that
gradually saw
the use of physical cash make less and less sense. We‘ve taken a look back at some
of the major
milestones in the rise of digital payments.
The internet and World Wide Web: Digital payments are inextricably linked to the
beginning of the
internet, which can be traced back to ARPANET, developed by the US during the Cold
War and
launched at the end of the 1960s. But it was in 1989, when Tim Berners-Lee came up
with the
concept of web pages and sites that could be linked together by hyperlinks (the
World Wide Web),
that digital payments became a more realistic proposition.
❖ The first online payments take place: Online payments began in the 1990s. The
Stanford
Federal Credit Union was the first institution to offer online banking
services to customers in
1994. However, early online payment systems were not very user friendly,
requiring
specialised knowledge of data transfer protocol. Early players in digital
payment were
Millicent and E-cash, which offered services that used micropayment systems
and electronic
alternatives to cash, such as e-money, tokens or digital cash. The founding
of e-commerce
pioneer Amazon in 1994 provided further impetus to these early digital
payment efforts.
❖ The emergence of PayPal: One of the earliest companies to specialise in online
payment was
PayPal, which started as an online money transfer service in 1999. Its
popularity took off
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when it became popular with eBay users. PayPal consistently innovated, with
features like
payments that could be made using email addresses, the addition of new
currencies, mobile
payment apps, HTML payment buttons, and using a reverse Turing test (to
determine if an
interaction was human or machine) to reduce fraud. PayPal was soon targeted by
established
financial institutions and banks, as well as eBay, who attempted to have the
company legally
classified as an unsecured service or bank. EBay acquired PayPal in 2002, owning
it until
2015, when it was spun off as a separate company.
❖ Digital payments companies become major players: With e-commerce and online
banking
becoming more established, digital payments grew quickly, with numerous digital
payments
companies emerging as major players. PayPal was awarded an EU banking licence in
2007, by
which time it had 35 million customers across Europe. After eBay spun-off PayPal
into an
independent company in 2015, PayPal turned its focus to reducing friction around
payments.
PayPal continued to grow and, showing its current scale, recently spent $2.2
billion to acquire
Swedish payment start-up iZettle, which offers a low-cost card payment device
and point of
sale app for small businesses.
❖ Digital wallets come to the fore with Apple Pay: Digital wallets have been around
for some
time but have gained more traction with the Millennial generation. Stored online
or on
smartphones, they are linked to bank accounts or payment cards and used to make
purchases
online or in physical shops using contactless
technology.
The launch of Apple Pay in September 2014 was a significant moment as it
improved wallet
functionality by enabling payment cards to be added via a photo of the card and
authenticating
payments via the iPhone fingerprint scanner. Credit card providers now pay the
company a fee
for each transaction on the platform. Online giants Amazon and Google also offer
digital
wallet functionality. Google Pay enables users to send money and split
restaurant bills, while
Amazon Pay provides a secure single-click checkout process.
❖ Virtual banking comes of age: The development of digital payments opened the way
for
virtual banks that focus on helping customers conduct their financial
transactions digitally. In
2011, for example, e-Payments launched, giving small businesses and individuals
a more
efficient and cost-effective way to receive and make domestic and international
payments. The
virtual bank accounts offered by e-Payments make it simple and secure to make
payments and
manage accounts via computer or mobile device, supporting a cashless approach to
finances.
❖ Crypto currency gets serious: The concept of a decentralised currency – using a
type of
cryptography to enable automated and untraceable digital payments – has been
around for
several decades, but really took off with the launch of the Bitcoin crypto
currency in 2009.
Page | 4
Many crypto currencies use block chain technology, which was invented in
2008 to serve as
the public ledger of Bitcoin. A block chain is a list of records, or
blocks, that are linked
together using cryptography. Each block contains a scrambled version of the
previous one, as
well as a timestamp and transaction data. A block chain is secure by
design, as it stops data
being modified. This made Bitcoin the first digital currency to solve the
problem of double
spending – caused by replication of digital data – without requiring a
trusted authority or
central server. Crypto currency is regarded as the next major milestone in
digital payments
and, with block chain, promises to take the industry in new and unexpected
directions in the
future.
Innovative use of technology has enabled digital payment infrastructure and the
creation of innovative
products such as mobile wallets, i.e. prepaid payment instruments. The major
technology capabilities
which are responsible for this revolution are, but not limited to, Smart devices,
Apps, Near Field
Communication Protocol, QR Code and Mobile Wallets. It enables the end consumer to
conduct
commerce with ease and from anywhere.
1.4 PRESENT SCENARIO OF DIGITAL PAYMENTS IN INDIA

Mobile wallet providers belong to different sectors such as banking, telecom, pure
play payment
organizations and manufacturers of smart phones. The users are able to leverage the
mobile wallets
for services such as travel, ticketing, e-commerce, etc. Globally, mobile wallets
have been existing for
many years. M-PESA, a mobile phone based financial service was launched by Vodafone
in Africa in 2007.
Google launched its wallet in USA in 2011 and recently, in 2017 came out with TEZ
application for mobile
payments in India. PayPal launched its wallet in 1999. It has more than 227 million
active users in 200 markets
and supports over 100 currencies.
The private sector in India has taken a giant leap to drive digital payments
adoption. At the same time,
National Payment Corporation of India (NPCI) developed and introduced United
Payment Interface
(UPI) which provides 24x7x365 mobile payment platform for users to send and receive
payments
with a simple virtual payment address. This technology innovation was further
augmented with the
introduction of Bharat Interface for Money (BHIM) which has enabled high volume
cashless
payments through mobile phones.
The Indian Government‘s thrust on digital payments is making this space affordable
and
interoperable, to end-consumers, businesses and digital payment sector at large.
The total number of
payment system operators in India stands at 91 till date, as per RBI report (Jan
2018). Mobile wallet
transactions have risen 590.30% year-on-year as of Jan 2018. In 2016-17, as per the
RBI Bulletin (Jan
Page | 5
2018), the prepaid payment instruments (PPI) transactions stood at 1.963 billion
(volume) and INR
838 billion (in value). In India, the introduction of United Payment Interface
(UPI) is also making a
significant impact; as per NPCI, from Fy-2017-18 (Apr‘17 to Mar‘18), transactions
on this platform
were to the tune of INR 509.62 billon (value) and 413.95 million (volume).
Similarly, as of Dec 2017,
as per NPCI data, Aadhaar based transactions stood at 1900 million (volume) from
Apr‘17 to Mar‘18.
Retail digital payments leveraging NPCI platforms are also on the rise.
Figure 1.1:
As India rapidly transitions to a digital payment ecosystem, threats are also

moving from cash to
Page | 6
cyber and the nascent ecosystem is already facing sophisticated cyber attacks. As
such, stakeholders
may need more capabilities, processes, standards and best practices to detect,
prevent or respond to
advanced threats in the digital payment ecosystem. Recently a banking organization
in India was hit
by a cyber attack, it was discovered that INR 25 crore was pilfered from multiple
accounts due to a
bug in a digital payment application and also a mobile wallet organization has a
loss of INR 19 crore
due to vulnerabilities in its own online payment system.
GROWTH TRENDS( DURING 2011-12 TO 2017-18)
There are two official sources on Digital Payments, They are RBI and MeitY, both of
which are
relevant and important. The narrative on the growth trends which covers the period
from 2011-12 to
2017-18 is presented separately for both the data sources. The analysis covers the
trends over the
years 2011-12 to 2015-16 ie. Years preceding demonetization and compares the growth
trends over
the last two years ie. 2016-17 and 2017-18 which is the post demonetization period.
The following analysis on growth trends is based on data provided by MeitY
Volume – Overall Growth Performance (MeitY Data)
The volume of overall payments steadily increased over the period 2011-12 to 2015-
16, recording a
compound average annual growth rate (CAGR) of over 58.9 per cent. The rate of
growth in volume of
overall payments further accelerated to 104.4% per cent in 2017-18. Graph 1
indicates the trends in
Digital Payments over the period of 2011-12 to 2017-18. The growth in 2017-18 is
spectacular and
could be attributed to development of innovative digital payments platform such as
BHIM-UPI,
BHIM Aadhaar and Bharat QR Code. It is noteworthy that the growth in 2017-18 is
much higher than
the trend growth rate over the last five years (2011-2016).
Table1.2: The following analysis on growth trends is based on data provided by RBI
Page | 7
Annual growth
25000
120%
CAGR-58.9%
100%
20000
80%
15000
60%
10000
40%
5000
20%
0
0%
2011-12 2012-13 2013-14 2014-15 2015-16 2016-
17 2017-18
volume(in mn) 950 1450 2200 3350 6070
10130 20880
Annual Growth 0% 52.60% 51.70% 52.30% 81.20%
66.90% 104.40%
Volume – Overall Growth Performance
The volume of overall payments steadily increased over the period 2011-12 to 2015-
16, recording a
compound average annual growth rate (CAGR) of over 28.4 per cent (Graph 2). Graph 2
indicates the
trends in Digital Payments over the period of 2011-12 to 2017-18. There is a clear
surge in 2016-17
(Growth rate of 56%) and subsequent moderation in the growth (Growth rate of 44.6%)
in 2017-18.
Notwithstanding this it is noteworthy that the growth in 2017-18 is much higher
than the trend growth
rate over the last five years (2011-2016).
Graph 2- As per MeitY data in 2017-18 the growth is 104.4% whereas as per RBI data
the growth is
44.6%. This is explained by the fact that the data components of MeitY and RBI
vary.
Figure1.3: Value – Overall Growth Performance: Meity does not disseminate value
data in public domain
Page | 8
Annual growth
18000
60.00%
16000
50.00%
14000
12000 CAGR-28.4%
40.00%
10000
30.00%
8000
6000
20.00%
4000
10.00%
2000
0
0.00%
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
2017-18
volume(in mn) 2589 3011 3711 4717 7047 10991
15889
Annual Growth 0.00% 16.30% 23.20% 27.10% 49.40% 56.00%
44.60%
Value – Overall Growth Performance
• The nominal value of overall payments also increased every year over 2011-12 to
2015-16, though
not steadily, recording a CAGR of nearly 12.7 per cent during the same; But the
annual growth has
shot-up to 31.1% in 2016-17 due to demonetization. However, in 2017-18 growth rate
has sharply
declined to 11.9%. Graph 3 indicates the trends in Digital Payments over the period
of 2011-12 to
2017-18. There is a clear surge in 2016-17 (Growth rate of 31.1%) and subsequent
slowdown in the
growth (Growth rate of 11.9%) in 2017-18.
This trend in the digital payments growth has also been accompanied by the rising
currency in
circulation after demonetization. The outstanding stock of currency in circulation
which hovered
around 12 per cent of GDP during 2011-12 to 2015-16, declined to 8.8 per cent
during 2016-17,
reflecting the impact of the demonetization. But as per data of RBI available in
April 2018 this trend
has reversed as the outstanding stock of currency in circulation has climbed back
to 11.3 per cent of
GDP.
Figure1.4- Digital payment growth after demonetization
Page | 9
Annual growth
3000000
35.00%
2500000
30.00%
CAGR-12.7%
25.00%
2000000
20.00%
1500000
15.00%
1000000
10.00%
500000
5.00%
0
0.00%
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
2017-18
vol(in mn) 1066529 1312555 1042000 1580617 1723425 2258781
2527539
Annual growth 0.00% 23.10% 4.20% 5.40% 9.00% 31.10%
11.90%
Hence this warrants pertinent stakeholders to gear up, prepare and collaborate to
provide secure and
reliable prepaid payment instruments to the end consumers. This study is an e ort
to build a set of
recommendations towards securing the emerging prepaid payment instruments ecosystem
in India.
1.5 FUTURE SCENARIO OF DIGITAL PAYMENTS IN INDIA

The near total digitization of payment transactions is a certainty. Even in India,
by 2025, cashless
transactions are estimated to be around 80% with hard currency changing hands only
once in every
five transactions people make. By 2025, the volume of digital transactions could be
as high as $1
trillion. Digitization and bringing the heaving mass of unorganized Indian
businesses into the formal
fold has been the cornerstone of the - current government's policymaking around
upgrading the
country's payments ecosystem.
Its initiatives such as Jandhan Yojana, Aadhaar, introduction of BHIM app and the
emergence of UPI
have driven financial inclusion across the country, and promise to change the
payment scenario in
India. Over the next decade the global payments landscape will evolve even faster
due to mass
adoption of e-payments and innovations introduced by new and disruptive market
players. India will
be at the forefront of this payments transformation.
The current payments ecosystem will also be redefined by regulatory changes that
will cover not only
the new disruptive services of start-ups but also the evolving service bouquet of
traditional players. In
the near future, payment platforms will not just be commoditized solutions but also
be cutting-edge
Page | 10
platforms that will deliver to changing lifestyles of consumers.
Major card networks have released technical standards for payment tokenization
solutions, which are
poised to become hygiene factors in any payments service, and its adoption will
soon become
imperative. ACI Worldwide, a leading global provider of payment and fraud
prevention solutions,
advocates an all-in-one approach to payment transactions that includes a fraud
screen for payments of
any value to protect both consumers and businesses from the costs of nefarious
transactions.
1.6 OBJECTIVES OF THE STUDY

1. To find out whether India going cashless has helped our citizens.
2. To find out whether India will turn out to be a successful cashless society.
Page | 11
Chapter II
Understanding Concept Of
Digital payments:
Methods, Trends,
Opportunity and issues
2.1 METHODS OF DIGITAL PAYMENT SYSTEMS
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.The payment system could be
bifurcated into two
main segments. The first segment consists of instruments which are covered under
Systemically
Important Financial Market Infrastructure (SIFMIs) and the second segment consist
of Retail
Payments.
As part of promoting cashless transactions and converting India into less-cash

society, various modes
of digital payments are available.
1 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.
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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.
2 USSD (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)
1. None
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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.)
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
3 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
1. None
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2. 1-2 minutes‘ post Aadhaar seeding
1. Micro ATM
2. Remember Aadhaar
3. Give Bank name
4. Present self (Aadhaar holder) with Bio-metrics (Finger and/or IRIS)
5. Assisted mode
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.
1. Balance Enquiry
2. Cash Withdrawal
3. Cash Deposit
4. Aadhaar to Aadhaar funds transfer
5. Payment Transactions Funds Transfer limit: Banks define limit. No limit for RBI.
4 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
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➢ What is required for Transaction:
1. Smartphone with internet facility
2. Registered device only
3. Use registered MPIN
4. Self Service Mode
1. NIL to customer by most Banks
2. Customer pays for data charges
banks.)
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
5 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.
Page | 16
➢ 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
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
3. Self-service and/or Assisted mode
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. (The transaction costs are based
on available
information and may vary based on banks.)
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
For Users
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1. No KYC - Rs 20,000/ month (revised from Rs 10,000 to current till 30th Dec.
2016)
2. Full KYC – Rs 1,00,000/- month
For Merchants
1. Self-Declared - Rs 50,000/ month
2. With KYC – Rs 1,00,000/- month
6 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
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
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
banks.)
1. Balance Enquiry
2. Passbook/ Transaction history
3. Add money
4. Bank A/c
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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
7 POS A point of sale (PoS)

it 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
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)
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3. Assisted Mode
5. No limit for regulator
6. Merchant‘s Bank and payee Bank may set limit based on its own discretion
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
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
8. Merchant‘s Bank and payee Bank may set limit based on its own discretion
9. Virtual PoS
banks.)
➢ Necessary conditions for service Initiation:
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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
6. Merchant‘s Bank and payee Bank may set limit based on its own discretion.
8 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:

➢ 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
Page | 21
six settlements from 8 am to 1 pm on Saturdays.
➢ 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.
➢ 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.
➢ 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.
2.2TRENDS:
The payments industry, already one of the most dynamic sectors in financial
services, continues to
evolve, propelled by technological and operational innovations from established
players and FinTech
firms.
A number of individual, near-term trends are disrupting and reshaping the payments
landscape. They
include differentiated services or experiences; technology- and data-driven options
for how to pay and
receive payment; infrastructure modernization; incumbent-FinTech collaborations;
targeted
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megersand acquisitions (M&A); and workforce evolution. What‘s often more difficult—
and more
important—is to discern what implications these trends, collectively, may have for
payments
companies over the next year or two.
One outcome we expect to see is trends-driven product commoditization and

convergence, which
should encourage payments companies and FinTechs to consider where they are in the
industry today
and how they can get where they want to be. Specifically, organizations need to
determine how to
effectively organize around, operate within, and benefit from six industry trends,
and which business
model(s) to adopt, to help reach their desired future state.
Figure2.1. Analytics allow the payments ecosystem to respond to change
Source: InFocus | Payments trends 2019
1. Shifting from a product to service focus.

The greater prevalence of exponential technologies—distributed ledger technology
(DLT) and
cryptocurrencies, Internet of Things (IoT) as point of sale (POS), wallets,
tokenization, and more—
will expand consumers‘ and merchants‘ options for how to pay and receive payment.
Further, as the
value of traditional competitive differentiators decreases (e.g., transaction
processing speed,
convenience, and access), streams of traditional product revenue will likely become
commoditized,
resulting in decreased payment processing fees. Future revenue, therefore, will
need to come from
other means; likely differentiated services or experiences. Delivering on this
change demands a
digitally savvy workforce aligned to a common goal: to be able to deliver a
frictionless user
experience and interface that is both convenient and accessible.
2. Unlocking the full value of data.

Payments providers will need to bring together disparate data across multiple
functions and systems
to create new services, as well as use big data and analytics to help improve the
customer experience.
Insights in payments industry data represent how consumers and businesses spend
their capital and
contain significant indications of various micro- and macroeconomic factors. Key
industry players
Page | 23
that process large chunks of payments hold the key to most of the data and insights
and are building
analytics capabilities to harness them. Payments analytics architectures are
increasingly evolving
toward integration between mission-critical payments systems and analytical
applications. Advanced
analytics techniques are key to better understanding the customers and to help
drive growth and
assess financial risk.
3. Modernizing the payments infrastructure.

Modernization efforts in the form of new rails to process faster/real-time payments
(RTP) continue to
gather steam. These are large investments, which not every player will be able to
afford. Some will
invest across the board and become scale players, boosting capabilities in account
management,
processing, acquisition, and customer experience. Others will choose to make
targeted investments
and outsource some functions to the scale players. These operating and service
delivery model
transformations may have significant impact on payments firms, perhaps requiring
reorganization or
upskilling to enable teams to work in new ways.
4. Increasing collaboration between incumbents and FinTechs.

We expect to see increased levels of collaboration as a way for industry players to
manage
investments, increase speed to market, and/or use a partner to perform some
functions on their
behalf. Key issues to resolve will likely centre on data sharing; who owns the
customer; ease of
integration; and data security. New governance models and decision rights will be
required to
effectively manage these modern collaborations and drive alignment around a shared
vision and
delivery on that vision. While these partnerships can produce excellent business
results, the potential
remains for culture clash between flatter, more agile FinTechs and more
traditional, hierarchically
structured incumbents. Creating a new leadership structure with common
accountability for product
development and user experience will be critical to the success of these
partnerships.
5. Conducting targeted M&A to add capabilities and/or scale.

Responding to pressures from non-traditional players, we expect payments industry
incumbents to
ramp up M&A transactions targeting the peskiest friction areas—such as cross-border
payments,
multipayment integration, and business-to-business (B2B) payments. In general, M&A
activity would
be targeted and used as a method to create scale, provide competitive advantage, or
acquire
capabilities. In some cases, M&A targets offer the acquirer an opportunity to
transform its business
model by acquiring the talent and skills necessary to deliver on payments
organizations‘ digital
ambitions and/or fill existing talent gaps.
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6. Building the next-generation organization to support the desired business
outcomes.
While all financial services organizations manage geopolitical, legal, and social
forces bearing down
on them, it is crucial for payments organizations to reconsider how and whether
their workforce can
keep pace in an ever-accelerating digital environment. Adding complexity,
organizations face
mounting pressure from an evolving workforce. Data indicates that 47 percent of
current jobs will be
gone by 2028 due to advancements like robotics and cognitive capabilities, and 40
percent of the US
workforce will consist of contingent workers by 2020. Further, engaging
multigenerational employees
who may have disparate values and backgrounds creates additional complexity. The
56-million-strong
millennial workforce, with native digital capabilities, must work alongside the 41
million Baby
Boomers that represented a quarter of all US employees in 2017.Payments
organizations face the
compound challenge of rightsizing engagement and employee value propositions in an
effort to
accommodate diverse demographic needs, while asking more of their employees to help
keep pace
with digital change. Ignoring these workforce transition needs is not an option.
And as a result, some
companies may need to restructure their organizations to become more agile by
breaking down silos
and organizing around customer solutions rather than individual offerings.
2.3 FINTECH TRENDS IN 2019

The financial services industry has traditionally been a decidedly unsexy one,
lacking the trendy
trappings of the tech world. Massively hyped concert-like product announcements,
hip conferences
replete with famous musical headliners, open offices, beer on draft, and so-called
unicorn companies
have all been the domain of the tech industry. While some of those things will
remain exclusive to
that world, there is no doubt that the financial services industry has become flush
with a vitality that
has accompanied significant technological change. That change has become apparent
during the past
few years, particularly with the injection of blockchain into the mainstream
consciousness
While Bitcoin and the rest of its cryptocurrency cohorts have dominated the
headlines and inspired
millions of words in digital and physical ink, there are a host of fintech
applications and industry
subsections that have remained outside the spotlight. Those applications will see
increased adoption
over the next few years and solidify the notion that fintech is here to stay.
Fintech is transforming the
financial services industry, and will continue to do so as the industry makes the
shift to fostering
innovation. Fintech products improve the ease with which people can make cross
border remittances,
increase the number of data points used to make loan decisions, automate regulatory
functions, and
more. The breadth of fintech project types has expanded greatly over the past few
years, with
Page | 25
innovation in multiple fintech subcategories driving adoption in sectors such as
insurance and
regulation. Insurance technology, a branch of fintech, has seen machine learning
applications
automate internal processes and claim processing.
1. Artificial Intelligence and Robotic Process Automation

An increase in connected devices and the means to process that data is driving the
creation of
personalized insurance products based on an individual‘s data sets. Regulatory
technology has seen
know your customer (KYC) and anti-money laundering software infused with artificial
intelligence
pop up in the past couple of years.
These solutions, along with those dealing with compliance, risk management,
transaction monitoring,
and regulatory reporting, will continue to develop as more and more is sunk into
their creation and
adoption. Fintech investment, innovation, and adoption will continue to grow
rapidly in the next few
years as companies start to see significant return on investment (ROI) from fintech
investments.
● Prediction: Robotics Process Automation (RPA) software will be widely used in 75%
of
financial services institutions by the end of 2019.
RPA refers to robotics process automation software programs that automate
repetitive human
processes by utilizing the exact same application interface a human would,
eliminating built-in human
inefficiencies. For example, a robot might carry out a data entry task utilizing
Microsoft Excel and the
company CRM software.The robot would use the exact same applications to get the
task done, but
would finish much more quickly, its speed being limited only by the speed of the
various applications
it would use. The financial services industry in particular contains a large amount
of roles built
around data entry and repetitive tasks. Robots, provided they are trained properly,
can take care of
these tasks for any department.Robots cost around $15K annually per unit, with an
initial
implementation cost of $40K–$50K per robot. That‘s a lot of money in start-up
costs, but companies
typically see 40–100% ROI within 3–8 months. The annual cost of running a robot to
help with
automation is nothing compared the cost of paying someone to do the same tasks much
less
efficiently.Robotics Process Automation can and will help financial services
institutions increase
efficiency and eliminate wasted time, particularly when it comes to tedious, easily
repeatable tasks.
As of the end of 2017, 11% of financial institutions viewed themselves as
having adopted RPA
widely across their organization. The improvements seen in robots as well as an
improvement in the
knowledge about RPA and its potential use cases will drive an upswing in adoption
and deployment
in 2019, and continue over the next few years.
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2. Mobile Payments Grow Globally
● Prediction: the worldwide volume of mobile payments will grow by 60% over the
next two
years. Mobile payments‘ growth will exceed 75% in Latin America and sub-
Saharan Africa
during the same period.
The worldwide mobile banking and payments industry is massive, processing over a
billion dollars
per day in 2017. Latin America and sub-Saharan Africa in particular have seen
widespread adoption
of mobile payments because of financial exclusion. Financial exclusion refers to
situations in which
financial services (banking, payments, etc.) are not available. This often occurs
in more economically
disadvantaged areas, or areas that traditional financial services institutions have
deemed not worth the
investment.
Barriers to entry put up by traditional brick-and-mortar banks have catalyzed the
development and widespread
use of mobile banking as both a primary and exclusive method of financial
management. The proof of
identification and funds that traditional bank applications require bar some from
qualifying for an account,
while distance to a brick-and-mortar location (experienced by those in rural areas)
is a barrier for others.
Mobile payments allow them to gain some degree of financial inclusion without
meeting the standards
typically set by traditional financial institutions.
Mobile banking can be far more accessible than traditional banks, and smartphone
adoption is driving that
accessibility. Anyone with a smartphone and internet access can become a part of
the financial system without
the need to open a traditional bank account.
In sub-Saharan Africa, one of the regions with the most potential for mobile money
use, 21% of residents
currently had a mobile money account in 2017, double the number that did in 2014.
If the past is any
indication, the mobile money market will continue to grow at an astonishing rate in
the region, as well as in
other regions with low financial inclusion but relatively widespread internet
access and smartphone use.
Mobile banking will continue to grow rapidly, particularly in areas currently
reliant on the technology. In
addition, blockchain will tie itself into the industry and become an integral part
of fintech within the mobile
banking industry. Blockchain technology will provide an immutable record of
personal data for individuals
looking to use mobile payment solutions, giving the industry an added layer of
security. The security inherent
in these blockchain solutions will prevent fraud and improve the ability for people
to become part of the
financial system.
Another development that will support mobile payments adoption is the development
and deployment of 5G
technology. For mobile banking to become ubiquitous, the development of 5G
technology is paramount. 5G
tech reduces latency and transaction times, which is key to ensuring the network
can handle the amount of
transactions at scale.
3. Payment Services Directive 2.0 (PSD2) and Fintech App Development
● Prediction: 75% of large banks will be actively engaged in supporting
fintech application
development through open banking. This will have driven by Payment Services
Directive 2.0 (PSD2)
Page | 27
PSD2is a European Union regulatory directive designed to increase competition
within the European payments
industry, solicit participation in the industry from non-banks, and protect payment
solution users. While PSD2
is a European directive, the concept of open banking has spread internationally and
will drive financial product
development. Enhancing consumer protection and a desire to create legitimate
competition is healthy
for the banking industry, and will drive innovation in the financial services
sector, specifically in the
banking sector.
Open banking, while perhaps far from being codified and mandated in the U.S., is
here to stay. Open
banking refers to banks being forced to release their data sets in a secure and
standardized manner.
This data can include everything from bank locations to customer transaction
records. The ultimate
goal is to allow third parties (or the tech division within a bank) to utilize that
data to create products.
To stay ahead of the curve and reap some of the benefits of that innovation, banks
will actively
engage in supporting fintech application development by giving more access to their
data than
explicitly stated in PSD2 or any other directive that comes from the regulatory
bodies. By actively
promoting open banking innovation and forging fintech partnerships with companies
using their data
sets, banks will be able to enhance their existing products and leverage innovative
fintech products
being created with their data. In this way, banks can exert some degree of control
over how their data
is being used and ideally (for them, if not for the market) get something out of
it.
4. Fintech Companies Become the Norm
● Prediction: Fintech companies will shift from disruptors to partners in the
financial services
industry.
This will be prompted by the regulatory difficulties experienced by both fintech
and traditional
financial institutions and the need for high-level buy-in to get widespread
adoption. Fintech has, until
now, been viewed by the financial services industry as a potential disruptor. This
is due in part to the
shadow of revolution that blockchain and the cryptocurrency hype cast over the
entire industry. Fair
or not, fintech and cryptocurrency were entwined in the public eye. Now, however,
particularly in the
financial services industry, there is a greater degree of understanding of the
technology. The industry
saw fintech as potentially operating outside the realm of regulation, which is the
initial intention of
cryptocurrencies. However, crypto is a small subset of the potential uses housed
under the fintech
umbrella. Additional applications labeled as fintech include regulatory technology
(regtech),
insurance technology (insurtech), and smart contracts. Fintech companies will still
disrupt the
industry, but not revolutionize it as previously thought because of the wall of
regulation they have run
into.
While powerful regulatory bodies have yet to pass specific directives
regarding the rules that
govern fintech, they have engaged in multiple enforcement actions against fintech
companies. In
addition, the Office of the Comptroller of the Currency (OCC) recently created and
released
Page | 28
theFintech Charter. In it, the agency lays down relatively ambiguous guidelines for
fintech companies
that indicate their desire to shackle them to existing financial services
regulations. Instead of
revolutionizing, fintech companies will contribute to the evolution of the
financial services industry.
To have the desired degree of impact, particularly in the banking industry, fintech
companies will
partner with traditional financial services institutions.
The institutions themselves will likely be the drivers of these partnerships, as
they have more to gain
from leveraging new technology and the resources to sink into promising projects
without risking
many resources. One prime example of a successful partnership is that of
CurrencyCloud and
Monese, a mobile-only UK based bank. Monese needed the ability to have customers
make
international transactions, but there was a ton of regulatory hurdles that needed
to be cleared for that
to happen. They ended up partnering with CurrencyCloud, a fintech that gave them
access to their
API, allowed them to bypass those hurdles, reduce forex costs, and reduce payment
costs as well.
These partnerships, while currently more popular for community banks, will be seen
at a larger scale
in 2019 and over the next few years.
5. Smart Contracts and the Real-Estate Industry

● Prediction: Smart contracts will catalyse the evolution and improve the
efficiency of the real
estate industry. Twenty percent of real estate transactions will be made
using smart contracts
by 2020
Real estate is an industry riddled with inefficiencies. There are huge swaths of
the sector—title
companies being an area that jumps immediately to mind—that will be greatly reduced
and
potentially eliminated by the implementation of blockchain-based smart contracts.
Smart contracts
remove the need for intermediaries, which clog up the real estate industry and slow
down every
transaction. While this is not a good thing if you happen to work in one of the
areas that will be
affected, it is fantastic for consumers and property owners who are able to cut out
functionaries and
reduce transaction costs.
Immediately upon completion of a desired and agreed upon task, the
contract releases the
agreed upon amount of money to the party which has completed the task. The
contract, being housed
on a blockchain, then creates an immutable transaction record, which contributes to
anti-money
laundering (AML) efforts and ensures the legitimacy of transactions that are listed
on the blockchain.
6. Blockchain Technology and Financial Inclusion

Page | 29
● Prediction: Blockchain technology will open up opportunities for the unbanked
or under
banked to gain financial inclusion. The number of unbanked will fall from
1.7 billion to under
1 billion by the end of 2020
The large swath of people who will gain financial inclusion will stem from the
increased adoption of
mobile banking, driven by blockchain implementation. Financial inclusion refers to
individuals and
businesses having access to financial products and services, such as a bank
account, loans, and credit.
An increase in financial inclusion means an increase in the number of people

actively contributing to
the transfer and movement of money around the globe, which is a positive. It also
means there are
more opportunities for financially included individuals and businesses to improve
their situations,
build and leverage credit for growth opportunities, and more.
There are massive markets waiting to be tapped by fintech companies looking to
expand the number
of the financially included. While there may be a degree of altruism driving
fintech application
development geared towards increasing financial inclusion, the real motivator is
the size of the
market.
Page | 30
Blockchain pushed fintech into the media spotlight, and blockchain technology will
drive mobile
banking adoption outside of the high growth areas in which it currently maintains
the most market
share.
While cryptocurrency may never solidify itself as a mainstay in the
markets due to its volatility
and the uncertainties regarding its viability as a store of value, the underlying
technology is
applicable. Blockchain, by providing unbanked individuals a verifiable, easily
created online identity,
will allow more individuals to be financially included than ever before.
2.4 OPPORTUNITIES
1. Rural Areas
Rural areas always have a huge impact on the overall economic development of any
country. In the
same remote are you find that most people do not have bank accounts. By using
mobile wallets
people can conveniently create bank accounts without physically going to a bank
branch. Mobile
wallets also present transparency in a business transaction in the rural area. The
increasing number of
mobile and internet users in the rural area will pave ways for the use of better
digital payment solution
over time.
2. Payments and Loyalty
Most households in the United States have joined more than 15 consumers‘ loyalty
program but only
participate in less than eight. Research shows that most consumers are reluctant in
using a consumer
loyalty program if it is not accompanied by a Smartphone app. A total of 69% of
people reported that
they continuously use they loyalty card if it was
on their phone.
The secret to mobile payment usage is loyalty, not payment. It is clear that
consumers engage more
Page | 31
with brands that they are loyal to. Companies can gain consumer engagement by
offering discount
and rewards within mobile wallets.
3. Increase in Number of Smartphone Owners
Not long ago surveys were carried out to show the growth of Smartphone ownership.
Now, 4 in 10
people own a Smartphone. The number is still growing as more people are anticipated
to be owners of
a Smartphone. With the high increase in Smartphone owners, so is the number of
mobile payment
users. Consumers can only use a Smartphone to make mobile payments hence this
cannot happen if
they do not have one.
4. Increased Interest in Mobile Payment among Smartphone Owners
More people who own a Smartphones understand and are interested in cashless payment
than before.
This is evident in the younger and the more tech-savvy population. The Federal
Reserve survey
pointed out that 3 in 10 people are open to using cashless payment if the
opportunity arises.
More people in today‘s world have shopping apps on their phones. They check prices,
research items,
purchase goods, and check receipts and coupons. This shows that price indications
and detailed
information increase the gratification of mobile-oriented consumers. Most of this
consumer would be
interested to use their mobile wallets instead of credit cards.
5. Mobile Banking and Inventive Mobile Payment Application
More banks are now offering mobile banking services to their customers. A huge
number of mobile
owner use this service to transfer money from one account to the other, check their
balance and recent
transaction. This service acts as a catalyst to increase the use of cashless
payment. Financial
institutions have also come up with inventive applications for mobile transfer.
Mobile remote deposit capture is one of the applications that is steadily gaining
popularity. Through
the application, consumers can easily deposit their checks by taking a photo of the
check and sending
it electronically to the bank. This promotes efficiency and convenience for the
bank and the
consumer. Satisfied mobile banking consumers are more likely to adapt to mobile
wallets than other.
2.5 ISSUES/KEY BARRIERS FOR ADOPTION
An average user of digital payment instrument today uses the instrument across
stays three different
use cases, and typically uses the instrument 7-8 times in a month. While consumers
have exhibited an
enthusiastic response towards digital payments, they have also voiced several
concerns that act as
impediments preventing their shift to and belief in digital payment methods.
➢ Habit to use cash:
A large percentage of the Indian population is still habituated to cash even when
making online
purchases with 68 % of the surveyed consumers admitting to using cash as a means of
payment. This
Page | 32
has led all leading national and international players in the e-commerce arena to
include cash on
delivery as an option to suit Indian consumers. Consumers also feel that spending
money in cash aids
in budget management and keeps spending patterns in check. Although they
acknowledge that
handling cash is inconvenient, they are satisfied with the way it works and are not
enthusiastic about
changing how they handle money very easily as it is so ingrained in their day-to-
day life.
Figure 2.2 | Key Barriers for Adoption
Digital payments: Barriers to

trying
Fraud/hid
Inertia of
den
Non-cash
charges
methods
(27%)
(33%)
Complexity
Incentives/off
of using
ers from
(55%)
other
methods
(29%)
Lack of
compelling
Reach
value
proposition
(16%)
(48%)
Habit to use
cash (68%)
Sources: Google–BCG market study based on Nielsen consumer survey of 1,516

consumers, 2016.
Note: Figures in (%). Sample–Non Users.

➢ Complexity of usage:
Product complexity is considered to be one of the biggest reasons behind non-usage
of digital
payments. 1 in every 2 non-users do not use digital payments because they find it
‗too complicated‘ to
understand. (Refer Exhibit 3.5). In fact, 1 in 3 non-users admit to not knowing how
to use the product
while 1 in 5 think it to be too complicated to try. As digital payments target
heterogeneous user and
merchant segments across the value chain product design needs to ensure that the
solution is built for
Page | 33
the base and communicated appropriately. This is critical for universal acceptance.
In comparison,
cash is still the most preferred instrument of payment, simply because of its
absolute ease of
understanding even though it is not the most convenient option. Payment innovations
have to ensure
increasing simplicity of the product. A large range of value propositions,
standards and technologies
are likely creating confusion and excluding unevolved users, unless they are
communicated clearly
and built for the base.
➢ A Perceived lack of compelling value proposition:
About half of the users who had never tried a digital payment instrument, said that
the reason they
haven‘t used it is because they could not fully comprehend the benefits or value.
It is evidenced in the
fact that they have not heard a lot of people use or talk about digital payments.
This does not give
them a very strong motivation to alter behavior or adopt digital payments. For non-
users, the chief
barriers to trial are habit of using cash, complexity, and lack of a compelling
value proposition offered
by a digital payment method. In order to acquire customers onto a digital payment
instrument, certain
key points need to be addressed by the payment service providers. The offering can
be made more
appealing through incentives and offers to enable adoption. In addition, the user
interface needs to be
intuitive and simple to ensure a seamless customer experience. To drive mass
adoption by consumers,
expanding merchant acceptance is critical. Providers can also look to educate
customers and
communicate the benefits clearly.
➢ Inconvenience
low reach and possibility of making mistake arresting usage. Consumers who have
tried using digital
payments but have now shifted to other modes such as cash, card, online banking
etc., say that
inconvenience of remembering login credentials, insufficient acceptance,
possibility of a technical or
to win back churned consumer‘s payment service providers need to address critical
pain points.
For example, introducing biometric authentication would eliminate the need of
multiple user names
and passwords. Furthermore, acquisition and integration of merchants under the
system would
increase the use cases and thereby increase acceptance of digital payments. High
frequency
transactions must be brought under the ambit of digital payments to urge consumers‘
movement in
that direction. Auto-sweep features can aid in addressing low account balances and
the maintenance
of requisite minimum balances in the digital payment account.
➢ Security, identity theft and fraud are not big barriers in India:
Primary research data indicates that fraud and hidden fees do not emerge as top
reasons hindering
digital payment instruments. In fact, 2 in 3 consumers who have never used any
digital payments
instrument, have no fear of fraud / hidden charges. Even for those customers who
tried and quit, the
likelihood of fraud, identity theft and hidden charges did not feature as prominent
pain points.
Page | 34
➢ Out of 4 merchants believe digital will grow big, accelerating future sales:
According to 84 percent merchants participating in the survey, the most important
driver for digital
payment usage amongst merchants, who are aware of digital payments, is convenience
over cash. The
research also highlights the fact that most merchants struggle with small change,
with some literally
paying money to obtain the requisite change to manage their day. Merchants value
the avoidance of
this struggle for change, the convenience of not having to store and manage cash,
and the added bene-
fit of being able to account for and track transactions. 75 % of merchants believe
that using digital
payments would accelerate future sales. The possibility of additional sales is
another primary
motivation that draws merchants to digital payments. 75% of merchants believe that
the acceptance of
digital payment instruments would accelerate future sales.
Figure 2.3 | Reason for Stopping Usage of Digital Payments
Reason for Stopping usage of Digital Payments

50%
45%
47%
40% 44% 43% 42%
35%
30%
25%
29%
20%
15%
10%
5%
10%
0%
Need to remember Not everyone Possibility for Not enough
Likelihood of fraud Hidden charges
multiple accepts this technical/human balance
passwords and payment mistakes
usernames

consumers, 2016.
Note: Figures in (%). Sample–Lapsers.
➢ No clear benefits, proclivity towards cash and complexity are key barriers for
merchant
trials:
87% merchants who have never tried digital payments state that digital payment
instruments do not
offer significant advantages / value benefits over existing methods such as cards.
They are used to
dealing in cards and believe that other methods provide better incentives and
given many other
Page | 35
options, there does not exist a catalyst to drive adoption of digital payments.
➢ Transactional speed:
Itis critical while competing with cash. Even though time saved in managing large
bills in cash,
finding change, or engaging in daily cash counts and bank trips is acknowledged,
the loss of time in
peak hours due to time consuming transactions and falling quality of customer
experience given
delays in accepting digital payments are perceived to be serious challenges. 78
percent merchants
prefer cash.
The complexity of use presents a problem for merchants, some merchants who don‘t
Accept
payments by wallets, are unclear of how it works or find it very complicated. They
also feel that there
is not enough pull from customers as not many customers currently ask to pay using
digital payment
instruments.
Table 2.4 | Trigger for Digital Payment Usage for Merchants
Convenience over cash (84%)
Increase
sales
24X7 access (77%)
(75%)
Competitive
Marketing Customer
use
advantage
(23%) it (14%)
(37%)
Note: Figures in (%), Sample–Trialists.

consumers, 2016.
Page | 36
Figure 2.5| Key Barriers for Merchant Trials
No clear benefits
Proclivity towards
over other payment Lack of
Clarity (77%)
Cash (78%)
methods (87%)
Not enough customer Technical issues

pull (67%) (48%)
Sources: Google–BCG market study based on Nielsen consumer survey of 917 merchants,
2016.
Note: Figures in (%). Sample–Non Users.
➢ Proclivity towards cash, complexity and perceived lack of value proposition

are barriers
for trials:
A real problem that is also presented by digital payments is the perception of
inferior technology and
poor supporting infrastructure. 48 % merchants do not want to try digital payments
as they are wary
of technical issues during the transaction leading to them being stuck between the
payment service
provider and customer. Merchants would also prefer having a physical access point
for managing
disputes or for query resolution.
Education, in-store demonstration or workshops etc. would be crucial in on-boarding
of merchants.
Providing resources to merchants in seeking assistance and information on platform
usage or queries
would encourage merchants to invest in a good internet network, leading to
seamless transaction
speed and quality. It will help in retaining higher number of merchants in the
digital system.
2.6 RISE IN ADOPTION OF DIGITAL PAYMENTS IN INDIA

It truly seems to be going digital and this is validated by the exponential growth
of its digital
marketplace. The volume of mobile banking transactions in 2012-13 was similar to
that of mWallet
Page | 37
and Prepaid Payment Instruments (PPI) transactions combined. Prepaid instruments
transactions
almost 2X of mobile banking transactions.Within the next 4-year span, PPI (mWallet
and prepaid
card) transactions have grown
Figure 2.6 | Prepaid Instruments Transactions Almost 2X of mobile-Banking

Transactions
Mobile
banking
No.
of
transactions(mi
Year
llion)
201
2-13
53
201
3-14
95
201
4-15
172
201
5-16
387
450
400
387
350
300
250
200 172
150
95
100
53
50
0
2012-13 2013-14 2014-15
2015-16
No. of transactions(million)
Page | 38
Prepaid
Instrument
s
No. of
transactions(mill
Year ion)
2012
-13 66
2013
-14 133
2014
-15 314
2015
-16 747
800
747
700
600
500
400
314
300
200 133
100 66
0
2012-13 2013-14 2014-15
2015-16
No. of transactions(million)
Source: RBI Payment System Indicators, BCG Analysis.
much more rapidly to become almost double of mobile banking transactions in the
same period. In the year
2015-16, around 747 million transactions occurred through mWallet and prepaid
cards combined, whereas
only 390 million transactions happened through mobile banking. This being said, the
majority of transactions
through mWallet are smaller with an average ticket size of INR 620, while mobile
banking transactions are on
an average INR 10,400 per transaction, notching up a gross annual transaction
value of INR 4,000 billion.
mWallet is largely preferred for micro transactions while high value transactions
take place through mobile
banking.
In terms of how many people use wallets versus how many actively transact through
online banking, the
Page | 39
number of unique active wallet users (80-85 million) has already surpassed that of
online banking users (60
million). Wallet users already more than mobile banking users and triple the number
of credit card users.
This contribution comes from those users who do not use net banking but fund their
wallets through credit
cards, debit cards or cash. The number of wallet users is already 3X the number of
credit cards issued in the
country (24 million in 2015-16).
In the last six years ( July 2010 to Jun 2016), if we look at the growth in
internet search queries, we‘ll see that
queries containing the word ―pay‖ grew by 18X since July 2010. This has been taken
as a surrogate for the
demand for online payments. Queries regarding remitting, transferring or sending
money grew by 5X in last 6
years, whereas queries for mobile wallet brands also grew by 5X since July 2010.
Search queries for ―pay /
wallet / money transfer‖ grew much faster in the last year, at 3X rate, as compared
to search queries for
industries like e-commerce, credit cards and insurance.
The digital payment market in India is still nascent despite concentrated activity
over the past 2-3 years. The
landscape is dynamic and is rapidly evolving given changing use cases, customer
propositions and business
models.
Supported by a favorable regulatory environment and coupled with a young demography

eager to try and test
new digital technologies, the Indian payment industry is bound to grow multi-fold
in the coming decade.
2.7 ADVANTAGES/ BENEFITS OF DIGITAL PAYMENTS

1. Faster, easier, more convenient: Perhaps, one of the biggest advantages of
cashless
payments is that it speeds up the payment process and there is no need to
fill in lengthy
information. There is no need to stand in a line to withdraw money from
an ATM or carry
cards in the wallet. Also, with the move to digital, banking services
will be available to
customers on a 24/7 basis and on all days of a year, including bank
holidays. Many services
like digital wallets, UPI, etc., work on this basis.
2. Economical and less transaction fee: There are many payment apps and mobile
wallets that
do not charge any kind of service fee or processing fee for the service
provided. The UPI
interface is one such example, where services can be utilized by the
customer free of cost.
Various digital payments systems are bringing down costs.It is cost
effective. If self service
payment banks become popular, banks can save a lot of money which is
spent on paying huge
salaries to their employees. Also the cost of printing and circulating
currency is quite high.
Going cashless can eliminate these costs.
3. Waivers, discounts and cashbacks: There are many rewards and discounts
offered to
customers using digital payment apps and mobile wallets. There are
attractive cash back offers
Page | 40
given by many digital payment banks. This comes as boon to customers and
also acts a
motivational factor to go cashless.
4. Digital record of transactions: One of the other benefits of going digital is
that all
transaction records can be maintained. Customers can track each and every
transaction that is
made, no matter how small the transaction amount this.
5. One stop solution for paying bills: Many digital wallets and payment apps
have become a
convenient platform for paying utility bills. Be it mobile phone bills,
internet or electricity
bills, all such utility bills can be paid through a single app without any
hassle.
6. Helps keep black money under control: Digital transactions will help the
government keep
a track of things and it will help eliminate the circulation of black money
and counterfeit notes
in the long run. Apart from this, this may also give a boost to the economy
as the cost of
minting currency also goes down.
7. Reduction in tax evasion and greater tax compliance: By going cashless, all
data regarding
the source of income of people will be available with the government so a
lot of transparency
will be introduced into the system which will reduce tax evasion and
increase the government
revenues.
8. Security: In case we lose our debit /credit cards, we can easily get them
blocked so the risk of
losing money is less as compared to physical currency.
9. Reduction in criminal activities: Going cashless will reduce the circulation
of fake
currencies. Illegal activities like drug abuse, human trafficking etc. will
be discouraged as the
mode of transaction for these activities is cash.
10. Reduce cost of Managing Cash in the Economy: Build a transactional history
to enable
improved financial inclusion.
2.8DRAWBACKS/ DISADVANTAGES OF DIGITAL PAYMENTS

1) 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
Page | 41
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.
2) 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.
3) 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.
4) 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.
2.9INNOVATION: TECHNOLOGY WILL MAKE DIGITAL PAYMENTS

SIMPLER
Page | 42
Widespread adoption of digital payments will require such transactions to be just
as convenient and safe, if not
more, as cash. This is only possible with new solutions being developed to make
digital payments easier for
customers as well as merchants. Smartphones are expected to displace cards, ATMs
and POS as an issuing and
acquiring device. Universal connectivity, biometrics, tokenisation, cloud computing
and the Internet of Things
are just a few of the trends that will affect the way consumers transact and
interact with payment service
providers in the future.
Some payment innovations that could be relevant in the Indian context are:
1. Contact-less payments: Near-Field Communication (NFC) has not been very

successful in the Indian
context on account of the high costs associated with embedding it in
smartphones as well as merchant
terminals. However, other forms of contact-less payments that have worked
in emerging markets like
China may be more appropriate. For example, the use of QR code technology
can make point-of- sale
mobile payments convenient. Customers will just need to ash the mobile app
with the QR code at
check-out, which can be read by the cashier and accordingly the amount can
be debited from the
customer‘s wallet / account. Customers authorize the transaction using a
simple 4-digit pin or
biometric scanners.
2. Reduced dependence on mobile internet: Even though penetration and usage of
the internet on
mobiles is continuously increasing, mobile data networks in the country are
still unreliable and
expensive for certain customer segments. Technologies that require only one
of the two transacting
parties to have access to mobile data can significantly drive up
transaction success rates and further
adoption of mobile payments.
3. Internet of Things: We expect that the Internet of Things will fuel online
transactions in the next few
years. Automation and connectivity of gadgets and devices will become
seamless. Customers will be
able to initiate a purchase and / or payment from any electronic gadget at
their home or office. For
example, consumers could use an internet connected refrigerator at home to
order groceries and pay for
it real-time using a digital payments instrument.
4. Block chain: Technologies like block chain could be used to create digital
currency (like bitcoin)
making peer-to- peer digital payments seamless and secure.
5. Voice based payments: Banks and payments service providers could offer
solutions that enable
customers to log in and pay through voice-based authentication. This would
mean that customers no
longer need to enter a PIN or a password while shopping as the app can
compare stored voice
recordings to verify each transaction through a simple voice phrase. This
will allow aged and illiterate
users to easily access such services and drive acceptance / penetration
further.
6. Biometric / Iris authentication through mobiles: NTT Docomo has launched

smartphones with iris
recognition capability. This makes transaction facility on the phone
accessible only to the primary user
of the device. The cost of adding this feature to the phone is less than
INR 500 and costs are expected
to further de- crease. In the future, a significant proportion of phones
could be iris enabled, making
Page | 43
online authentication simpler. In summary, while the exact uptake and
penetration of
differenttechnologies is unclear, it is obvious that technology will be a
key disruptor and further
developments will make digital payments simpler, more convenient and easier
to use.
2.10 TECHNOLOGICAL THREAT BACKGROUND
Over the last few years, the technology landscape has been undergoing rapid
changes. The advent of
technologies like block chain, machine learning, bots, cloud, crypto currencies,
etc., are exploring development
of new financial technologies. The business delivery and architectural models are
changing due to these
technological movements. Block chain may overhaul how financial services firms
operate, migrating from
centralized to decentralized models of conducting business and operations. It may
reduce the cost of various
financial activities to near zero especially where it involves third parties;
financial institutions may no longer
face the millstone of operating costs due to the success of block chain based
digital payments. Cloud delivery
models bring advantages such as scalability, flexibility, agility and cost savings.
The area in which financial
sector is adopting cloud are card and mobile payment processing, core banking,
human resources & talent
management, and infrastructure as a service etc. It is expected that cloud
technologies coupled with analytics,
mobile technologies and big data, may allow financial institutions to extract real
value from the data.
Improvements in algorithms and automation of financial activities may impact
domains such as optimization of
business processes, removing inefficiencies from operations, enhancing fraud and
risk management, changing
customer services models and application of virtual assistants instead of humans.
Another technological advancement which is making headlines in the digital payment

sector is usage of Bots.
Currently, its primary use is in the area of customer services because it delivers
instant communication,
optimizes costs, can be deployed across different delivery models, streamlines
processes and reduces call load
of business process management centre‘s, etc. Together, these technological
advancements are going to
overhaul digital payment architectures and types of financial products which may
get introduced in the market.
The revolution has picked up in India with developments such as proliferation of
smart phones enabling rural
consumers, introduction of zero balance account resulting in financial inclusion of
larger population, Jan-Dhan
scheme to check on leakage of subsidies. This may result in usage of technology and
digital payment
infrastructure by majority of the population. Hence it is critical to examine cyber
threat landscape applicable
globally and in India. The current threat landscape applicable to digital payment
space are such as phishing,
lack of user education, fake apps, etc., and futuristic threats may consist of
attack on two-factor authentication
and misuse of emerging technologies etc. Basis this study analysis, the threat
landscape for digital payment
sector ecosystem is described as follows keeping into consideration current and
future technological evolutions
in the realm of digital payments.
Figure 2.7: Threats
Page | 44
User Threats
-Malware/ransomware
- Phishing & social
Engineering
- Fraudulent wallet
Applications
- Man-in the middle
attack
Platform threath
- Network provider
- Payment
application provider
Current
Crime-as-service
Impersonate Organisation
Malicious Insider
Two- Factor
authentication
Threats
Hardware
Vulnerabilities
Mobile
Malware Automation
Cyber
Warfare/Espionage
Emerging
Tech & Platform Missuse
Future - National Unique ID
Ubiquity
- LoT Attacks
- Social Media
- Advanced
technology Attacks
- Crypto currency
Digital Payment
Infrastructure Complexities
➢ Current Threats
1. Users Threats
Malware or RansomwareUsers unaware of malware infection in their devices carry out

transactions, and then
the malware is able to extract user credentials and share it with the adversaries.
Leveraging their credentials,
adversaries are able to conduct fraudulent transactions and draw o user finances or
deny services and may be
demand ransom for services continuation. For example, last year according to report
by Kaspersky Labs, a new
malware Xafecopy Trojan was detected in India which stole money through victims‘
mobile phones and it was
cited that 40 % of this malware attacks were in India.
Phishing and social engineering are the most commonly used techniques to carry out
cyber- attacks on the
end users in the digital payment space. In phishing, deceptive link is sent to the
user which appears legitimate
and they are redirected to sites which belongs to cyber adversaries. The user
without knowing about it transacts
on it leading to loss of their credentials. Social engineers are everywhere
navigating for opportunities either via
telephonic conversations or well-crafted emails to fraud gullible users.
Page | 45
The adversaries may build fraudulent wallet applications and post it on the popular
market places. There had
been instances in which users transacted via illegitimate wallet applications
instead of legitimate ones.
Adversaries may also introduce backdoor or rootkit in the wallet applications to
redirect user funds or gain
information on user credentials to conduct frauds.
Man-in-the-middle attack. The communication layer of the transactions is vulnerable

to cyber threats. In case
of non-secure network implementation, adversaries are able to eavesdrop and re a
man-in- the-middle attack.
With this method they can change the data packets integrity or obtain key
information to conduct frauds against
users.
NFC based attack: One of the most common concerns with NFC technology is that of
eavesdropping.
Eavesdropping occurs when a third party intercepts the signal sent between two
devices. For example,
adversaries might also pick up other personal information passed between two
smartphones.
2. Platform Threat:
Network Provider Threats:When cyber attackers gain access to network providers‘

organizational
infrastructure, it may compromise the end IT workforce token services used by them
for work related activities.
It is possible that the token information residing with the adversaries can be used
to siphon of user finances or
data to which the IT workforce had access.
Adversaries may good network providers with plethora of ping or web requests which
may appear as legitimate
traffic. It may lead to Denial of Services as the functioning of the digital
payment instruments may deteriorate
or resulting in non-availability of the prepaid payment instruments.
Payment Application Provider threats:A typical prepaid payment instrument consists

of players such as
payment application and infrastructure providers. The digital infrastructure of
payment application provider
ecosystem is to be protected against cyber threats. The threat landscape applicable
on payment application
provider is mentioned below.
– Compromise of the user data
– Token data leakage
– Denial of Services attack on application provider‘s infrastructure
– Weak or insecure code
– Immature web application
– Denial of services
Page | 46
3. Crime- as- a – server:
Organized cyber gangs may be given a bounty by the adversaries to dupe end users
transacting on the digital
payment ecosystem. The gangs may originate with de ned product and services. This
may lead to many
systematic organized crimes in the cyber space.
4. Impersonate Organizations:
The current phishing techniques may get scaled to creating end-to-end fake online
presence of the
organizations to pro t in billions as users may fall prey to it.
Third Party: Organizations perimeters are getting blurred day-by-day, as more and
more work is outsourced
to third parties. The environment of third parties can also be responsible to
introduce new cyber threats into the
core operational environment.
5. Malicious Insider:
A disgruntled employee may cause havoc in an organization by stealing data,

disrupting operations, inserting a
backdoor in a financial services application or infrastructure based on the role
he/she performs.
6. Attacks on two-factor authentication:
Techniques such as SMS or Biometrics are being leveraged as second factor of

authentication for carrying out
digital payment transactions. In future, large scale social engineering attacks may
be launched to obtain OTPs
or unauthorized access into systems to steal biometrics of end users.
7. Hardware Vulnerabilities:
Unpatched vulnerabilities of numerous hardware leveraged in digital payment

ecosystem may get exploited to
conduct frauds.
➢ Future Threats
1. Mobile Malware Automation:
With the use of advanced techniques such as machine learning and AI, adversaries
are developing malwares
which can infect user devices surreptitiously in an automated way, with no human
intervention.
2. Cyber Warfare/Espionage:
Nations are leveraging cyberspace as ground for cyber war; it may impact
functioning of digital payment
infrastructure at large.
Page | 47
Adversaries breaching organizationsIT boundaries to steal corporate or R&D secrets,
resulting in cyber
espionage.
3. Misuse of emerging technologies and platform:
National Unique ID Ubiquity: Mandating National Unique ID linking with every

services in India may
expand the user threat surface. As adversaries may get enticed to break into
financial systems via National
Unique ID.
IoT Attacks: Users of digital payments are adopting wearable‘s such as smart
watches to conduct commerce.
These wearable devices are vulnerable to cyber threats such as acting as botnets in
which they are used to
conduct denial of services attacks without user knowledge.
Social Media Attacks: Social media integration with digital payments is getting
prevalent. Users are using
their social media pro les to login into payment applications. So, compromise of
social media account details or
identity theft may also result in digital payment frauds. The attack techniques of
the adversaries may evolve to
avatar hijacking from current identity thefts. This may get feasible due to
increase of digital footprints of the
next generation users. The adversaries may be able to clone an illegitimate digital
avatar of the user in the
cyber space. Organizations may not able to distinguish between real and fake
avatars of the users.
Advanced Technology Attacks: Techniques such as artificial intelligence, machine

learning and deep learning
may increase complexities of cyber attacks and may automate them with minimum human
intervention.
Crypto currency: Ransom demanded in crypto currencies which are untraceable may
propel rise of cyber
attacks on financial services and its users, with more motivation.
4. Complexities in Digital Payment Infrastructure:
With implementation of technology advancement in the products, integrating multiple

services or components
which may result in mesh of IT architecture, this may result in uncovered
vulnerabilities in the system leading
to cyber incidents.
2.11 STEPS SHOULD BE TAKEN TO FOCUS CASHLESS ECONOMY ON

RURAL AREAS
➢ The Jan DhanAadhaar 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.
Page | 48
➢ 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.
2.12 CHALLENGES
1. Regulatory Compliance
All mobile payment services need to abide by the legal requirements. This entails
both the financial
and consumer-based regulations. This can be a problem for new players who want to
invest in a new
market.
2. Fraud Risk
This is one of the biggest reasons why most consumers are reluctant to adapt to
mobile wallets.
Contactless payment presents huge unknown risk and fraud like leaked data, hacking,
undetected
malware, e-wallet vulnerabilities. Making the technology secure for all consumer
will aid in stopping
any potential financial breaches.
3. Low Perception
Consumers still perceive that mobile wallets do not solve anything. They are still
not informed of the
benefits of using mobile wallets over using cash or credit cards. That is why most
of them still use
credit cards and debit cards for online payment and buying expensive items.
4. Low Trust in Mobile Wallets
Consumers say that the idea of using mobile wallets is good but not possible. They
feel that they give
up a lot of their control when using mobile wallets. A research carried out by
YouGov shows that
43% of mobile users don‘t trust mobile wallets, 38% fear that if their phones get
lost they might not
Page | 49
be able to make any payment.
Another research related carried out by Experian concluded that 55% of consumers
feel safer using
credit cards. A survey carried out by Auriemma reported that consumers who use
mobile wallets will
not recommend it to their friends or family.
5. No Rewards
Unlike cards and cash-back programs, they are no rewards offered when using mobile
wallets. People
using credits and cash have the opportunity of receiving discounts, rewards, and
coupons. Financial
marketers seeking to boost the usage of mobile wallets should take this as an
opportunity to get more
consumers.
Page | 50
Chapter III
Literature Review
Government's digital push has ushered in a new era of digitalization in India.
Digitalization is not just
a part of our lives anymore. It is life. How digital economy & its tool impacts
society and in turn, how
society shapes those evolving tools is something that will ultimately define our
future. As the digital
economy is still evolving, there are obvious questions about this new economic
model that have yet to
be answered. Post demonetization in India, some wonder whether cash will become
extinct while
others have doubts about digital transformation of India. Infact, many have asked
whether a single
globally accepted currency will emerge. This book is an attempt to simplify all
these questions,
doubts and apprehensions. The book (Journey Towards Cashless India by
JayantParikshit) will
explain all the relevant fundamental concepts using real life examples as well as
case studies. This
will be a useful book not only for students preparing for competitive exams like
UPSC, State PCS, Banking, MBA etc. but, for anyone who wants to understand India's
challenging
journey towards a cashless economy amidst the dark clouds of black money.The
purpose of
literature review is to extract the essence of the concept related to research. The
theories that are
evolved by writers and scholars are included for gaining a complete
result.According to a 2015 report
by Price Water House Coopers, India‘s unbanked population was at 233 million. Even
for people with
access to banking, the ability to use their debit or credit card is limited because
there are only about
1.46 million points of sale which accept payments through cards. A study by Boston
Consulting
Group and Google in July noted that wallet users have already surpassed the number
of mobile
banking users and are three times the number of credit card users.
Sanghita Roy, Dr.Indrajit Sinha (2014) . stated that E- payment system in India,
has shown
tremendous growth, but still there has lot to be done to increase its usage. Still
90% of the transactions
are cash based. Technology Acceptance Model used for the purpose of study. They
found Innovation,
incentive, customer convenience and legal framework are the four factors which
contribute to
strengthen the E- payment system.
E-payment systems are important mechanisms used by individual and organizations as

a secured and
convenient way of making payments over the internet and at the same time a gateway
to technological
advancement in the field of world economy (Slozko&Pello, 2015).
Rakesh H M &Ramya T J (2014) in their research paper titled ―A Study on Factors

Influencing
Consumer Adoption of Internet Banking in India‖ tried to examine the factors that
influence internet
banking adoption. It is found that internet banking is influenced by its perceived
reliability, Perceived
ease of use and Perceived usefulness. In the process of internet banking services
expert should
Page | 51
emphasize the benefits its adoption provides and awareness can also be improved to
attract
consumers‟ attention to internet banking services.
KartikeyaBolar (2014)In his research paper ―End-user Acceptance of Technology

Interface In
Transaction Based Environment ―stated that Creators and investors of technology
need information
about the customers‟ evaluation of their technology interface based on the features
and various
quality dimensions to make strategic decisions in improving technology interfaces
and compete on
various quality dimensions.
Nitsure (2014) in his paper observed that the problem being faced by developing
countries like India
in the adoption of E-banking initiatives due to low dissemination of Information
Technology. The
paper highlighted the problems such as security concerns, rules, regulation and
management. In India
there is a major risk of the emergence of a digital split as the poor are excluded
from the internet and
so from the financial system.
BalazsVinnai, general manager, Digital Channels, Misys(April 25, 2016), says that
―It is critical for
banks to consider new digital channels as part of an integrated strategy and evolve
from first to
second generation digital banking: switching digital from a supporting role, to the
primary sales and
communication channel for banks,‖ says Vinnai. ―Reengineering processes around the
customer is not
easy, but banks must embrace digital banking to remain competitive and relevant.‖
Page | 52
Chapter IV
Research Methodology
4.1 RESEARCH METHODOLOGY
This report is based on secondary data. One of the most important users of research
methodology is
that it helps in identifying the problem, collecting, analyzing the required
information data and
providing an alternative solution to the problem .It also helps in collecting the
vital information that is
required by the top management to assist them for the better decision making both
day to day decision
and critical ones.
Data Source:
Secondary Data: Journals, websites, article, research papers, Magazines.Software‘s
& tools used:
MS office, Personal computer, Internet.
4.2 NEED OF THESTUDY

➢ 21st century IT infrastructure in software capabilities
➢ E-governance of the future
➢ Heath care of all
➢ Quality education for all
➢ Energy for all
➢ Next generation financial services
➢ Doubling famers income
➢ Jobs and skills for all
MAKING DIGITAL INDIA, MAKE FOR INDIA, MAKE FOR THE WORLD
Page | 53
4.3 RESEARCHDESIGN
―The research design is at the precise core of the scientific methodology; it can
be used to answer
practical questions or to test theoretical proposition/hypothesis (Luthans;1998)
➢ In this study we have used Descriptive Research design method to answer the
questions of
who (influence the study),
➢ What (is the Need of digital payments, Benefits, Drawbacks, Threats),
➢ Where (the people will attract),
➢ When (the order was started),
➢ And how (the system will work and effect the economy).
4.4 Data Collection Methods

Data collection is an essential part of every project as the base of conduction of
the study depends on
the accuracy of collection of data. Achievement or failure of projects also depends
on the method of
collection of the data.
After identifying and defining the research problem and determining specific
information required
solving the problem the task is to look for the type and source of data which may
generate the desired
result.
Secondary data
We have used secondary data in our study and this data is used to gain insight into
the detailed study
regarding the Digital payments in India. The data has been collected to understand
what these are all
about are and how it is being implementing in our present life and also implemented
in future. The
secondary data is collected through Economic Survey, through different websites,
research papers,
journals andnews.
Page | 54
Chapter V
Results & Conclusion
5.1 Findings
➢ After understanding the concept, we collectively found that:
➢ Digital payments have registered robust growth in 2017-18 both in volume and
value
terms.
➢ In volume terms the growth during the year 2017-18 was much higher than the
trend
growth rate during the last five years (2011-16).
➢ Growth in total retail payments in value terms has been three times higher than
the
trend rate of last five years.
➢ The UPI and IMPS segment in volume of transactions registered a spectacular

growth
during 2017-18.UPI, despite being new product in the payment segment has shown
great adoption rate among consumer and merchants.
➢ Total card payment continued its growth momentum and exceeded the trend growth
momentum and exceeded the trend growth rate of the last five years both in
volume
and value terms.
Page | 55
5.2 CONCLUSION
The first step taken to digital India was the demonetization of Rs 500 and Rs 1000
notes in India. We
do understand that it will be very difficult to adapt to such changes immediately
but if such instant
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. NarendraModi 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-banking, 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‖
Digital payments offer unique opportunities. The global trend indicates higher
costumer expectations
for value added services, increased competition due to emergence of new
technologies and an ever
changing regulatory escape
Page | 56
5.3 RECOMMENDATIONS
● Make payment regulation independent from the function of central banking(RBI).
● Withdraw charges levied by government department on digital payments.
● Reduce custom duties on payments acceptance equipment‘s.
● The opportunity for digital payments in India is promising yet quite sizable
with trends being
positive over the last two to three years.
● The seven key trends identified, we believe, will disrupt the payments space in
India making it
more digital over the next five years.
● It will include inversion of the cash / non-cash ratio for payment transactions
over the next
five to seven years.
● The onetime value of digital payment transactions could increase 10X by 2020
from current
levels.
Page | 57
Bibliography
RESEARCH PAPERS
● www.ijcrt.org ©2018 IJCRT | Conference on Recent Innovations in Emerging
Technology &
Science, April 6-7, 2018 | ISSN: 2320-2882 by JB Institute of Technology,
Dehradun &
IJCRT
● IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN:
2319-
7668PP 28-33.
● CASHLESS ECONOMY (DIGITAL INDIA) by srm university.
● Digital payments 2020 the making of a $500 billion ecosystem in india by

BCG(the boston
consulting group)A $500 BILLIO
● International Journal of Pure and Applied Mathematics Volume 119 No. 15 2018,
1259-1267
WEBSITES
● https://www.aciworldwide.com/-/media/files/collateral/trends/transactions-2025-
an-economic-
times-report-on-the-future-of-payments-in-india.pdf
● https://www.dotcominfoway.com/blog/opportunities-and-challenges-for-the-wallet-
integration
● https://www2.deloitte.com/us/en/pages/financial-services/articles/infocus-
payments-
trends.html
● https://learn.g2crowd.com/2019-fintech-trends
● https://learn.g2crowd.com/2019-digital-trends
● International Journal
● A Study on Digital Payments in India with Perspective of Consumer‟s Adoption
Page | 58

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“Digital Payments in India: Trends, Opportunity,

in partial fulfilment for the award of the degree

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS MANAGEMENT

Name Of Group: Team 12 Name Of Guides: Dr Kuldeep

Chapter 1 Introduction 1-12

1.2 Government ruler push for cashless 2-3

1.4 Present scenario of digital payments 5-10

1.5 Future scenario 10-11

1.6 Objective of the study 11

Chapter 2 Understanding the concept of digital 12-50

2.2 trends 22-25

2.3 Fintech trends in 2019 25-31

2.4 opportunities 31-32

2.5 Issues/Key barriers for adoption 32-37

2.6 Rise in adoption of digital payments 37-40

2.7 Advantages / benefits of digital 40-41

Figure No. Particulars Page Number

1.1 Growth in country digital adoption index 6

Analysis in growth trends is based on 7-8

1.3 Value-overall growth performance: Meity 8-9

1.4 Digital payment growth after 9

2.1 Analysis allow the payments ecosystem to 23

2.2 Key barriers for adoption 33

Reason for stopping usage of digital payments

Key barriers for merchant trials

Prepaid instrument transaction almost 2x mobile

Key Words: Digital payments, E-Payments, online payments,cashless, security,

Digital Payments – Definition

1.2 GOVERNMENTS RURAL PUSH FOR CASHLESS ECONOMY

1.3 BACKGROUND OF DIGITAL PAYMENTS

1.4 PRESENT SCENARIO OF DIGITAL PAYMENTS IN INDIA

As India rapidly transitions to a digital payment ecosystem, threats are also

GROWTH TRENDS( DURING 2011-12 TO 2017-18)

The following analysis on growth trends is based on data provided by MeitY

Volume – Overall Growth Performance (MeitY Data)

Volume – Overall Growth Performance

Value – Overall Growth Performance

Figure1.4- Digital payment growth after demonetization

1.5 FUTURE SCENARIO OF DIGITAL PAYMENTS IN INDIA

1.6 OBJECTIVES OF THE STUDY

As part of promoting cashless transactions and converting India into less-cash

2 USSD (Unstructured Supplementary Service Data)

3 AEPS Aadhaar Enabled Payment System (AEPS)

4 Unified Payments Interface (UPI)

7 POS A point of sale (PoS)

Different types of online financial transactions are here:

➢ Electronic Clearing System (ECS)

➢ Immediate Payment Service (IMPS)

One outcome we expect to see is trends-driven product commoditization and

Figure2.1. Analytics allow the payments ecosystem to respond to change

Source: InFocus | Payments trends 2019

1. Shifting from a product to service focus.

2. Unlocking the full value of data.

3. Modernizing the payments infrastructure.

4. Increasing collaboration between incumbents and FinTechs.

5. Conducting targeted M&A to add capabilities and/or scale.

2.3 FINTECH TRENDS IN 2019

1. Artificial Intelligence and Robotic Process Automation

5. Smart Contracts and the Real-Estate Industry

6. Blockchain Technology and Financial Inclusion

An increase in financial inclusion means an increase in the number of people

2.5 ISSUES/KEY BARRIERS FOR ADOPTION