Modes of Card Based and Biometric Based Digital Payments 8
This unit is also based on the topics already covered in class 7, but in more detail now.
Payments Acceptance Ecosystem
Acquirer: An acquirer is a bank that is in contract with merchants to accept card-based payments for goods and services. The acquirer installs the payments acceptance machine such as PoS to accept the cardholder payments at the merchant locations.
Issuer: An issuer is a bank that issues banking cards such as debit cards to its customers.
Payment Gateway: A payment gateway facilitates the transfer of information between a payment portal (such as a website, mobile phone or Interactive Voice Response) and the Front End Processor or acquiring bank.
Payment gateways protect sensitive information and ensure that information is passed securely between the customer and the merchant and also between merchant and the payment gateway.
Payment Aggregator: A payment aggregator is a service provider that registers and enables e-commerce merchants to accept various payment modes and process e-commerce and mobile payment transactions, without the need of merchant setting up a separate bank account.
An example of a payment aggregator in India is Razorpay. Other famous examples of payment aggregators are PayPal, Google Pay etc.
Use of Banking Cards
The use of banking cards has brought a revolution the way people shop and pay for goods and services.
Types of Banking Cards
Debit Cards
Credit Cards
Prepaid Cards
Virtual Cards
Co-branded Cards
Contactless Cards: Contactless cards allow for safer and more convenient transactions with just a contactless tab on the card machine. E.g. RuPay Contactless card
Modes of Card Based and Biometric Based Digital Payments 8
Guidelines for Use of Banking Cards
Activation of Banking Cards
- The functioning of banking cards is controlled by the central computer systems of the issuing bank
- A card would work only when it is set in ‘active’ state by the bank’s system on confirmation from the user
- Newly issued cards are activated once the bank receives confirmation that the card is in possession of the authorised person
- Card holders can activate their cards either by using Internet Banking, Mobile Banking, Phone Banking or by using the ATM machine of the issuing bank
- Each card comes with ‘valid till’ date beyond which it automatically gets deactivated
Do’s and Don’ts while using Banking Cards
- Keep the banking cards in a safe and secure place.
- Do not delay informing the bank immediately in case of a lost or stolen card.
- Keep the card secure with a PIN number which is not easy to guess.
- Do not share the PIN number, CVV number and details like card number and validity date with anyone.
- Clear your credit card dues in time to avoid interest and penalty by the bank.
- Do not use credit card for extravagance, use it for convenience.
Modes of Card Based and Biometric Based Digital Payments 8
Various channels for acceptance of Card Based Digital Payments
Point of Sale (PoS)
PoS ‒ Benefits to Merchants
- Faster Process: PoS makes the sales process much faster and this helps improve the customer service levels while also saving time.
- Inventory Management: The PoS system allows for more professional and automatic inventory record management. This enables more efficient stock keeping and improved opportunities for sales.
- Sales Report: PoS makes it easy and convenient to generate the sales report at any time. This enables the store owner to keep regular track of his income and profits.
- Improved Customer Satisfaction: When customers experience a faster and more efficient way of shopping through PoS, it leads to an increase in the customer experience levels of the store.
PoS ‒ Benefits to Customers
- Faster Billing: PoS system makes the billing process automated and faster leading to a more comfortable experience for the customers.
- Better Accuracy: With the use of PoS system, there is minimal risk of incorrect billing and higher accuracy is ensured.
- Improved Shopping Experience: PoS system enables a fast, convenient and hassle-free shopping experience leading to an enhanced and superior shopping experience for customers.
Modes of Card Based and Biometric Based Digital Payments 8
Types of POS systems for different retailers
- Counter-based point of sale systems
- Mobile point of sale systems
- Online point of sale – e-commerce
- Omni-channel point of sale
mPoS ‒ Mobile Point of Sale
The Mobile Phone based application is a Java/IOS application that is designed for simple use
by the merchant/retailer. Once the card is swiped, the application encrypts the data and sends the encrypted data to the server for authentication.
Series of actions in use of Mobile Point of Sale are as follows:
- Login to the application using the user ID and password
- Select a transaction type in mPOS application e.g. Card Sale
- Select the amount and enter 4 digits of the card number (as in traditional POS device)
- Swipe/Dip the card – at this time the application powers the card reader through Bluetooth/Audio jack and accepts the encrypted data from the device. PIN will be captured appropriately
- Transaction is sent for authorization
- If authorization is accepted, then email receipt is sent to the customer
Soft PoS
Soft PoS uses ‘Tap-on-Phone’ technology. This technology allows merchants to accept payment from contactless cards directly without the requirement for any additional connected hardware.
This makes the product affordable and enables larger market penetration.
E-commerce payment
The Online point of sale – e-commerce, is a kind of PoS system specially used for e-commerce transactions done on internet through the use of online banking or banking cards.
Automated Teller Machine (ATM)
ATM ‒ Benefits to Banks
ATM ‒ Benefits to Customers
Types of ATM Deployments
Apart from the above,
ATMs that are deployed at Bank branches are called Onsite ATMs and the ones located away from the bank branches are called Offsite ATMs.
Modes of Card Based and Biometric Based Digital Payments 8
Cash Deposit Machines (CDM) and Cash Recyclers:
Advantages of Cash Deposit Machines:
- It easy and convenient to deposit cash without filling deposit slip.
- Time saving as waiting time is saved.
Cash Recyclers
Banks and White Label ATM Operators (WLAOs) have also begun deploying Cash Recyclers. In addition to the normal services of ATM, they also facilitate cash deposits, thus increasing the convenience to the customers and optimizing the cost of operations /cash handling for banks/WLAOs. Some banks have also started offering Interoperable Cash Deposit (ICD) services.
RuPay Network and RuPay Card
A product of National Payments Corporation of India (NPCI), RuPay is the first-domestic card payment network exclusively created for the Indian market. Its name is derived from the words ‘Rupee and ‘Payment’. RuPay is a highly secure network that protects against threats such as phishing.
RuPay fulfils RBI’s vision of creating a ‘cash less’ economy by encouraging banks and other financial institutions to facilitate payments.
Types of RuPay card:
- RuPay Classic
- RuPay Platinum
- RuPay Select
- RuPay Corporate
Modes of Card Based and Biometric Based Digital Payments 8
Biometric-based digital payment systems include:
- Aadhaar Enabled Payment System (AePS)
- Micro ATMs
- Bharat Interface for Money (BHIM) Aadhaar Pay
Micro ATMs ‒ Benefits
- Low cost and portable.
- Easy to carry, easy to setup anywhere in the remote area.
- Biometric enabled secured transactions.
- Interoperable device and can work for any bank.
Steps for First Time BHIM Aadhaar Pay User
- The merchant needs to download the application from the Google Play store.
- Register himself using his Aadhaar number and biometric credentials.
- During the registration process, the merchant selects his/her bank account where he wants the payments to be credited.
- The merchant is asked to agree to the terms and conditions for using the app.