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Digital PaymentsVAIBHAV JOSHI
Digital Wallets & Prepaid Payment Ecosystem
Types of Prepaid Payment Instruments
Closed Loop Semi-Closed Loop Open Loop
Digital Wallets• Digital Wallet is a Prepaid Payment Instrument governed by
Reserve Bank of India’s (RBI) under the “Issuance and Operations of Prepaid Payment Issuer guideline”
• As per RBI any Prepaid Instrument can only be issued by the following entities:
1) Banks 2) Prepaid Payment Instrument Issuers (PPIs)• Any entity willing to come up with their own digital wallet
needs to be either a PPI or should tie-up with a Bank to use their license for the wallet issuance
What is a Digital Wallet?• Digital Wallet or Wallet is a Prepaid Payment Instrument• There are separate platform/System of Records for Prepaid Instruments
similar to the Core Banking systems that are for CA SA• It is accessed via a mobile app or a portal app• Wallet can be used to make digital payments only• The limits for semi close Prepaid Instrument without KYC is 10k per
month, with KYC is 100k at any point of time• The limits for Open loop Prepaid Instrument is 50k at any point of time,
Open loop can only be done post KYC (Bank Issued Card Plastic only)
Prepaid Instrument Load Methods
• Load via Payment Gateway• Load via NEFT• Load via IMPS• Load via Cash
Bank Issued vs PPI IssuedBank Issued Prepaid Instrument PPI Issued Prepaid InstrumentCan be semi close (eComm only) and open loop (eComm, POS, ATMs)
Can only be semi close (eComm only)
Can work across MasterCard/VISA/Rupay network
Can only work across the merchants with whom the PPI has done a specific contract and tie-up
Can work across all POS terminals and eComm
If a plastic is issued, it will only work on the POS terminal which has been deployed by the PPI – more of a closed loop type of transaction
Ability to withdraw cash at ATMs Can not be used at ATMsCan be loaded through PG, Cash Can be loaded through PG if PPI has contracted PG
services for load, Cash only if PPI has own set of Retail network
Co brand with Bank has better visibility and brand recognition
Co brand subject to RBI approval
Auto load through NACH, wallet to wallet, wallet to Account etc..
Features differ from PPI to PPI, primarily used for closed user group
Balance in Pool A/c maintained by Bank Balance in Escrow A/c, but maintained at Bank
Sample Transaction FlowUse of wallet at eComm portal
Merchant site requests
authorization from acquiring host
Acquiring host requests
authorization from Card host
Card host checks balance and
authorize transaction
Card host authorizes transaction
Settlement processed by
issuing Bank based on the report
received from Card host
Important Note: For MasterCard/VISA/Rupay branded wallets, the acquiring switch will speak with the network who will in turn seek authorization from the acquiring host
Benefits• Instant payment and realization, no dependency on external networks• On Us transactions, saving on transaction charges on own portal• Secured transaction, limited exposure• Integrated wallet, designed to simplify online payment check out process• No need to manually input payment info every time• Loyalty & Rewards calculation become easier with payment track record• Faster check out process, leading to higher conversion rate and more revenue• Universal acceptance• Multiple acceptance modes – Web, Mobile, POS etc..• Customer engagement, build more stickiness
Use Cases – Cashless Campus Tap & Go Payments via NFC Student ID plus Payments Card
RFID for Access Magstrip for Payments
Semi-Closed Loop Open Loop Accessible via Mobile App
Merchant POS NFC / Magstripe acquiring QR Code based Mobile App based payments Card Not Present Mobile to Mobile Payments Card Not Present Sound Wave frequency based Payments Card Not Present URL based Payments
Use Cases – Card for NRIs / Foreign Tourists
Get Prepaid Card at Airport Money Exchange Counter Provide Passport as KYC Limit of INR 200,000 Cash withdrawal limit of INR 50,000
Use Cases – Money Transfer Service Scheme (MTSS)
For all Foreign Inward Remittances Beneficiary can walk into a BC Agent outlet that is also licensed
for MTSS Instead of taking Cash, take the proceedings on a Card Limit of INR 50,000 Subject to KYC
Use Cases – Gift Card
Semi-Closed Prepaid Instrument One time load Limit of INR 50,000 No Cash Withdrawal allowed
Emerging Payment Methods & Technology
NACH IMPS UPI AEPS ABPS QR Code based Mobile payments
NACH Simplified NACH is the product of NPCI to provide a better & efficient Mandate
based debit services to the banks Automated processing and exchange of mandate information
electronically with well-defined timelines for acknowledgement/confirmation
How it works? Bank A/c holder fill NACH mandate and gives to Corporate Corporate processes NACH as per mandate for automated payments Payments can at a specified regular internals; OR Payments can be initiated upon certain instances
NACH
Aadhaar Payment Bridge (APB) System
Used by Govt Departments for Direct Benefit Transfer (DBT) to Citizens such as: LPG Subsidy MNREGA Old Age Pensions Student Scholarships 30+ other welfare schemes
Aadhaar Seeding Process
APB Process Flow
Aadhaar Enabled Payment System (AEPS)
Thank You