How the way you pay to shop is changing
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The payments landscape in the country is changing with the launch of multiple payment options for individuals and merchants. The government’s push towards digital payments, coupled with National Payment Corp. of India’s (NPCI) payment railroads such as Immediate Payment Service (IMPS) and Unified Payments Interface (UPI), have led to innovations in payment products. After demonetization, the major push has been towards enabling person-to-merchant transactions. Here is a look at some of the products that will change the way you pay when you shop.
If you have an Aadhaar number, you should be able to pay with your fingerprint. This facility moved one step closer towards reality on 14 April when the government launched Bhim-Aadhaar Pay, focusing on merchant payments. For this service, merchants have to download the Bhim-Aadhaar Pay app to a smartphone and register themselves on it. They also need to have a bank account linked to Aadhaar, where the money can be collected. Merchants will also need a smartphone-compatible biometric scanner to scan fingerprints and accept payments. The customers need to have a bank account linked to their Aadhaar. To make a payment, you will just have to authenticate the transaction with your fingerprint and the money will be automatically debited from your account and credited to the merchant’s account. Since the underlying infrastructure runs on IMPS, money is credited immediately. Earlier too, in 2016, IDFC Bank had launched IDFC Aadhaar Pay, where a customer could enter her bank’s name and authenticate with Aadhaar number and fingerprint.
Scan and pay
Since 2015, banks and fintech companies have started working on payment products that allow you to scan a quick response code (QR code) and make payments. Though the concept is relatively old, this payment mode is set to pickup pace since the government has rolled out a standard option called the Bharat QR code. So far, the QR system worked in closed loop. To make a payment, a customer needed a smartphone, a QR code-enabled app, and a virtual debit card in the app. Since Bharat QR code is standardized, it will work seamlessly across network providers. However, it needs to be customized based on the merchant, say, a restaurant, hospital or grocery store. Both fintech companies and banks are currently working on building customized products on the Bharat QR railroad. “We are building products around two technologies—Bharat QR and UPI. Bharat QR works on the debit card payment infrastructure. Banks provide raw APIs (application programming interfaces), which are customized for individual merchants,” said Vivek Lohcheb , co-founder, Trupay, a digital payments solution provider.
Merchants can allow you to make payments through links sent over an email or SMS. To use this facility, you don’t need to download apps or link your Aadhaar to a bank account. Merchants have to first register with a fintech company or bank that provides this service. Banks such as ICICI Bank Ltd and fintech companies such as Instamojo provide this facility. To on-board, a merchant needs to register with her details, Permanent Account Number (PAN) and bank account details (account number, IFSC and bank name) where she needs the money to be credited. Once registered, the merchant can create payment links, which include product descriptions and the amount. As a consumer, say, you want to pay your child’s tuition fee. The school administration (the merchant in this case) will send you a link which will have details such as the month and amount of fee, through an SMS or email. You just need to click on the link, see if the details are correct and click to make the payment. You can choose the mode of payment you find convenient. “It can work both on mobiles and desktops. The link carries information about your purchases and services. You can make payments through your card details, Net banking, e-wallet and UPI,” said Sampad Swain, chief executive officer and co-founder, Instamojo Technologies Pvt. Ltd. Several educational institutions and home-based businesses have started using this facility.
What it means for you
All financial services institutions, which have a presence in the payments space, are increasingly focusing on building an electronic payment infrastructure, thanks to the government’s digital push. “When there is a call from the government, and the Prime Minister wants all PSU banks to drive it... we are focusing on it. Currently, there is a lot of confusion in the form of machines, settlements, disputes and cyber security when it comes to payments,” said Shyam Sundar Banik, general manager (alternate delivery channels), Bank of India. In fact, many banks are looking at customizing digital payment instruments to merchants’ needs.
So, the next time you shop, you may have multiple digital payment options. It is still too early to say which mode of payment will work best. However, be careful while making any transaction. Check the provider's details carefully. Don’t disclose any sensitive information such as one-time password or personal identification.