Page 34 - Banking Finance March 2021

ARTICLE

For financial inclusion as well as digitising government same. There is a presence of over five lakh Point of sale
payments and to enhance efficiency and transparency, the (POS) terminals in the country, which are enabling customers
use of Aadhaar for beneficiary identification and to make payments for purchases of goods and services by
authentication in payments has been employed. In order to means of credit/debit cards. To facilitate customer
facilitate bulk and repetitive government benefits and convenience the Banks are also permitting cash withdrawal
payments of subsidy to identified beneficiaries, the Aadhaar using debit cards issued by the banks at POS terminals.
Payments Bridge System (APBS)has been put in place. Businesses are increasingly adopting POS systems.
National Payment Corporation of India (NPCI) manages this
system with linkage to Public Management Financial System In the early 2000s, a big technological breakthrough in the
(PFMS) through accredited government banks and sponsor form of cloud based data storage happened. With the
banks of NACH. introduction of cloud-based storage and computing heralded
the next step in POS technologies evolution: The 'mobility'.
Aadhaar Enabled Payments System (AEPS) which is a similar As a result of cloud-based servers the retailers could start
payment system for retail segment facilitates operations accessing their POS system by picking up any device with
from Aadhaar seeded bank accounts using biometric internet connectivity. A mobile POS system thus helped
authentication of customers. Today AEPS has foundan retailers manage their entire business from any device, any
increasing use for Business Correspondent (BC) operations time. Technological changes in POS resulted in reduced
of own-bank customers and also customers of other banks, lineups to pay and thus facilitated a faster customer service.
in an interoperable manner.
Payment Gateways:
Mobile Banking System: From credit cards to one-click payments, India have made
The ubiquity of mobile phones, combined with affordability a significant advancement in how payments are done in the
and availability of internet data has led to an increase in last few years. India is continuously growing towards a "less-
number of mobile internet users. Taking advantage of this, cash economy". In the pre-internet era, electronic payments,
an increasing number of payment facilities are being especially credit and debit cards, became the most dominant
integrated into the mobile channel. Customers are now forms of non-cash payments. Credit card was first introduced
using their net banking application on their smartphone and by the Central bank of India in 1980 in association with Visa
are sending money on-the-go using IMPS or NEFT. Reserve and Master Card.
Bank has brought out a set of operating guidelines on mobile
banking for banks in October 2008. The welcome change was quickly adopted by retailers and
the consumers as an easy way of making payments. With
These guidelines have rules that the banks which are the establishment of the internet over a wide area in the
licensed and supervised in India and have a physical mid-90s, it brought in a new kind of adoption with people
presence in India only are permitted to offer mobile banking selling their products and service online, now known as "E-
services after obtaining necessary approval from the central commerce". India's first e-commerce website was launched
Bank. The guidelines gives direction on establishing systems by Indiaplaza.com in 1999.
for security and inter-bank transfer arrangements through
Reserve Bank's authorized systems. The objective is to Thereafter first-ever payment aggregator "BILLDESK"
develop an inter-operable standards so as to facilitate funds launched its operations in India, in 2000. In 2007, a startup
transfer among accounts of same or different banks on a called Flipkart opened its business online and was later joined
real time basis irrespective of the mobile network a by other e-commerce players. E-commerce players changed
customer has subscribed to. the way people shopped online by giving all products and
services in one place. As e-commerce business grew, the
ATMs / Point of Sale (POS) Terminals: need for integrating a secure and reliable payment gateway
Presently, there are over 61,000 ATMs in India and a bank gained prime importance. Payment gateways help in
customer can withdraw cash from ATM terminal of any bank transactions between merchants and their consumers,
up to 3 times in a month without being charged for the quickly and safely. The payments are processed in one click

34 | 2021 | MARCH | BANKING FINANCE