Digital wallets, digital payments, Mobile banking, UPI: India
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Digital wallets, digital payments
Limited liability
Ombudsman, limited liability cover to make e-wallets safer, December 6, 2018: The Times of India
To inspire confidence among users of digital payments, the RBI has said that it will introduce the concept of limited liability for prepaid instruments, which includes digital wallets. Also, a new office of ombudsman for digital transaction is being created to take up complaints from individuals for prepaid instruments.
Last year, the central bank had introduced the concept of ‘zero liability’ for card users, provided they acted prudently in not divulging credentials and reported frauds in time. Under this policy, cardholders who lost money due to a thirdparty breach and who reported the loss within three days would get all their money back.
Even where there is some negligence on the part of the customer in not responding to alerts and not notifying the bank, the maximum liability was capped at Rs 5,000 for a basic savings account and Rs 10,000 for most other accounts. For credit cards with limits above Rs 5 lakh, the maximum liability has been fixed at Rs 25,000. However, where the customer has shared his password, he will be liable for all the losses until he reports it to the bank.
On Wednesday, the RBI said that the same limited liability concept will be extended to users of prepaid instruments. The liability limits will be announced by the RBI. According to banks, the liability limits for e-wallets is likely to be lower, considering the smaller transaction size and lower balances.
The creation of an ombudsman for digital transactions, besides providing a platform for customers, will enable the RBI to keep track of discrepancies.
“RBI’s endeavours to promote a less-cash society has resulted in a significant rise in the volume, value and channels for conducting digital transactions. For promoting the level of trust, a dedicated and empowered grievance redressal system is a pre-requisite,” said RBI deputy governor M K Jain. “It will cover all entities falling within RBI’s jurisdiction, which means nonbanks as well,” said Jain.
The usage of digital wallets/ e-wallets
2016-18
From: Ombudsman, limited liability cover to make e-wallets safer, December 6, 2018: The Times of India
See graphic:
The use of Digital wallets, 2016-18
2018: Indians install e-wallets, but don’t use them
Rachel Chitra, January 28, 2019: The Times of India
From: Rachel Chitra, January 28, 2019: The Times of India
As many as 85% of Indian users install e-wallets and fintech apps like MobiKwik and Paytm, only to let them remain dormant, according to a study.
“Companies spend huge sums of money to advertise, market themselves, offer discounts and cashbacks to get users on board. But after getting them on board, if usage is low, then it is an indicator that the apps aren’t doing enough to keep customers engaged. And the churn rate (defined by no transaction done in the first two weeks) for India at 85% is worrisome — and is higher than the global average of 77%,” said Almitra Karnik, head of marketing and global growth at CleverTap, which conducted the study.
CleverTap is a Californiabased behavioural analytics company that measured usage patterns in 700 million mobile devices globally for the study. Karnik said if the app is not used in the first two weeks, it will invariably remain dormant thereafter, until a day when the user decides to uninstall it.
About 27% of Indian users uninstall e-wallets within two weeks of usage. But Indian apps seem to have better retention power than their global peers, who have a higher uninstallation rate of 35%. The average rate of reinstallation in India was a low 3%, showing that when a customer has a bad experience with a financial services app, s/he is unlikely to ever return to it.
Paytm did not respond to a request for a comment. Payment services firm PhonePe’s CEO Sameer Nigam said its app retention numbers are much healthier than what the CleverTap study shows. He said that was because a large percentage of its installs are organic (without providing incentives for the download) or referral-driven. “More than 75% of uninstalls happen when the installs are driven by low-quality digital marketing,” he said.
Fintech firm PayU’s CEO Jitendra Gupta also said 85% of downloads of its consumer-facing app LazyPay is organic. The user, he said, sees a clear proposition and is not driven by things like cashbacks. He admitted that the uninstall rate is 28-30%, but said this cannot be the only criterion to judge an app by. “On an average, every user is using LazyPay six times a month. We have 90% repeat users on a monthly basis. Besides, our uninstalls happen in cases where we don’t provide credit facility to the user, and those are obvious cases for uninstallation,” he said. LazyPay provides personal loans and pay-later options.
Mobile banking
See Digital wallets, digital payments, Mobile banking, UPI: India
Bank Board Bureau/ 2016
The Hindu, February 29, 2016
Prime Minister Narendra Modi approved the setting up of the Bank Board Bureau with former Comptroller and Auditor-General of India Vinod Rai as its first Chairman.
The Bureau is mandated to play a critical role in reforming the troubled public sector banks by recommending appointments to leadership positions and boards in those banks and advise them on ways to raise funds and how to go ahead with mergers and acquisitions.
“With a view to improve the governance of public sector banks, the government had decided to set up an autonomous Bank Board Bureau. The bureau will recommend for selection the heads of public sector banks and financial institutions and help banks in developing strategies and capital raising plans,” the government said in a release.
The bureau was announced in August 2015 as part of the seven-point Indradhanush plan to revamp these banks. It will constantly engage with the boards of all 22 public sector banks to formulate appropriate strategies for their growth and development.
The bureau, led by Mr Rai, will select the heads of public sector banks (even from the private sector, if need be) and aid them in formulating strategies to raise additional capital. It will select and appoint non-executive chairmen and non-official directors.
The non-performing assets of public sector banks are estimated at almost Rs. 4 lakh crore, and they need to raise capital of Rs. 2.4 lakh crore by 2018 to conform to Basel-III capital requirement norms, according to the government.
While some questions have been raised on Mr. Rai's appointment as a CAG cannot hold a government office post-retirement, former senior civil servants say the role is advisory in nature and a part-time position. The government release said the appointments have been made for a period of two years.
The bureau will have three ex-officio members and three expert members, in addition to the Chairman.
Unified Payment System/ UPI
The Times of India, August 26, 2016
Mayur Shetty
The RBI has cleared a Unified Payment System a platform which links bank account numbers to virtual payment addresses (aliases). The UPI-enabled app in effect turns your smartphone into a bank and has come as a boost to a cashless economy .
Just as an ATM of one bank can be used to access accounts in all banks in the network, any UPI-enabled app can be used to log into one's accounts in other banks. Second, the interface overcomes one of the biggest pain points in sending money online -that of knowing 15-digit account numbers and an 11digit IFSC code (used to identify bank branches). Instead of account details, the receiver has to merely share an alias like xyz@axisbank. The UPI makes use of the existing Immediate Payment System (IMPS) which allows funds transfer using bank account number, an IFSC code and other credentials.
“Real-time sending and receiving money through a mobile application at such a scale on interoperable basis has not been attempted anywhere else in the world. The UPI app will be made available on Google Play Store by banks,“ NPCI managing director and CEO A P Hota said here on Thursday .
Twenty-one banks will go live over the next couple of days. But the country's largest bank, SBI, has expressed concerns and has kept it on hold until it gets more clarity from the National Payments Corporation of India (NPCI), the umbrella organisation for retail payment systems in India. Of the 21 banks, eight banks have gone live.
“Our app is still under development. We have raised some security concerns on the registration process and transactions being timed out. The NPCI has not yet come back.We will be ready by Septemberend. But the decision to join will depend on NPCI coming back to us with clarifications,“ said Manju Agarwal, deputy MD, SBI. HDFC Bank too is working on its application and expects to be ready in three weeks. ICICI Bank has announced that it will integrate its iMobile and Pockets app with UPI in the next few days. iMobile is for the bank's customers, while Pockets is an app with a prepaid instrument available to anyone who downloads it.
Kotak Mahindra Bank has decided to play it safe and provide a separate application for UPI. “We are in process of development and certification of UPI-enabled app. We will launch a new app which will be UPI-enabled in 4-6 weeks. “ said Deepak Sharma, chief digital officer, Kotak Mahindra Bank.
2016: Mobile banking transactions
The Economic Times, Mar 22, 2016
Mayur Shetty
Top 5 banks generate 92% of mobile banking value
Mobile banking penetration in India is concentrated among customers of five banks. According to data released by the Reserve Bank of India, the top five banks account for more than 92% of the entire value of mobile banking transactions in the country.
State Bank of India leads the pack with 36% market share, followed by ICICI Bank (21.5%), HDFC Bank (17.8%), Axis Bank (12.8%) and Kotak Bank (4.7%). These banks have managed to increase the number of mobile transactions by being proactive in development of mobile apps and making mobile banking feature-rich.
According to Deepak Sharma, head of digital banking at Kotak Mahindra Bank, his customers are leapfrogging to mobile banking directly from branch banking without using the browser. "Around 35% of our online banking customers are coming in from their mobile phones without having used net banking," he said. As against its market share of 1.4% of deposits, the bank has over 4.5% share of mobile banking. He said that online has already become the primary channel for most of the customers in the bank.
"Overall, 60% of fixed deposits have moved online. But if you look at only retail, nearly 80% of FDs are opened online," said Sharma. He added that it was largely bu sinesses that were obtaining fixed deposits in the branch.
"In terms of number of logins, mobile banking had overtaken net banking more than six months ago. Now mobile banking is ahead of net banking in terms of transactions as well," said Sharma. He said that the fastest growing segment is online recharge, which is driving transactions.
"We are now getting more and more categories online, like bill pay and IPO subscription. We are also seeing systematic investment plans (SIPs) gaining traction. We feel that any simple product that is easy to start, liquidate and monitor will pick up online," said Sharma.
In terms of volumes, the top five banks account for more than 85% of all mobile banking transactions. While the banks are the same as the toppers in transaction value, the rankings and consequent market shares vary slightly for volumes.State Bank of India again led the pack with a 38.5% market share, followed by ICICI Bank at 17.7%, Axis (15.3%), HDFC Bank (9.9%) and Kotak Bank (4.3%).
2018: mobile banking increases
Mayur Shetty, When m-app matters more than branches, December 5, 2018: The Times of India
From: Mayur Shetty, When m-app matters more than branches, December 5, 2018: The Times of India
Mobile Is Primary Channel For Transactions At HDFC Bank
HDFC Bank’s mobile banking outage has caused a bigger stir than the usual closure of all bank branches on weekends.
A glitch had made HDFC Bank’s new mobile app nonfunctional for six days. Why was the HDFC Bank mobile app blackout such a major issue? The reason is the sheer volume of transactions that take place through this channel. HDFC Bank’s mobile app accounted for Rs 34,335 crore of transactions in August, which is almost twice the Rs 18,597 crore that its customers conducted through ATMs.
If non-financial aspects such as balance enquiry are included, more than twothirds of all transactions today take place through the mobile app for HDFC Bank. According to a source in the bank, the mobile app has become the primary channel for many customers with all the functionalities of internet banking available within it.
Meanwhile, HDFC Bank finally restored its mobile services on Tuesday evening by providing its older app on Android Play and Apple’s App Store, thereby restoring the m-banking channel.
In terms of value, HDFC Bank accounts for 15% of all mobile banking transactions in the country. Also, HDFC Bank and other private lenders have been most successful in digitising their customers compared to PSU peers. For instance, while State Bank of India records a higher volume of mobile banking transactions, the value of its m-banking transactions at Rs 30,411 crore is less than a third of the value of ATM transactions at Rs 1.10 lakh crore.
According to bankers, the security level in banking through mobile applications is also higher because there are several levels of authentication, including the device and mobile number. “In India, many customers have leapfrogged to mobile banking without using internet banking. Even in internet banking — where customers log into the bank’s website — it is the mobile device that is being used,” said an executive with a private bank. Given that many customers do not visit the bank branch even once a month, savings account holders are more affected by a mobile banking downtime than a bank strike, he added.
2018: UPI
From: Dilip Asbe, UPI 2.0 can turn into a mega citizen-scale pay system, January 11, 2019: The Times of India
The writer is the MD & CEO of NPCI
India capable of replicating China’s digital economy — better & faster
India enters 2019 on the cusp of a digital revolution, mainly due to major influencers. First, we have a regulator defining the landscape by innovation-led policies, fuelling new-age business models and maintaining security and risk management standards to highest levels. Second, we have a government that is focused on moving towards a digital or less-cash economy. Third, we have banks embracing technology to accelerate digital payments, proliferation of financial inclusion and superior customer services. And last, we have fin-tech innovators who are re-imagining solutions for our day-to-day problems and providing superior consumer experience for digital payments.
The Unified Payments Interface (UPI), the most advanced payment system in the world, was launched in 2016, designed on the principles of interoperability, consumer choice and forging partnerships between banks and fintechs, leveraging each other’s strengths. The RBI’s payment system division DPSS, under the governorship of Raghuram Rajan, played a key role in bringing banks together to promote this initiative. Support of the Indian Banks’ Association (IBA) and leading lenders has been a critical factor in its success. In the second half of 2018, the National Payments Corporation of India (NPCI) launched UPI 2.0 with the support of regulatory teams under former RBI governor Urjit Patel and deputy governor B P Kanungo to incorporate path-breaking features.
Several milestones were achieved in domestic payments last year. India’s RuPay Card crossed 500 million and Bharat BillPay on-boarded over 100 billers in its ecosystem. The Aadhaar payments services, too, surpassed 100 million unique customers every month. After demonetisation, the UPI-based ‘Bharat Interface for Money’ (BHIM) app, launched by Prime Minister Narendra Modi, has acted as a catalyst to nudge many third-party providers to launch the UPI app. We are
now seeing the results. Sticking to the design principle of “consumer choice”, there are now over 90 BHIM UPI apps provided by banks or thirdparty providers to customers of 130 banks.
The Supreme Court’s decision to limit the use of Aadhaar database was a setback. The fintech community is relying on the government to identify a solution to use Aadhaar systems based on voluntary sharing by the customer. The NPCI had to stop the e-NACH (National Automated Clearing House) using e-sign due to the SC judgment. However, we are working to create alternatives, but it may take time.
While it was a practice to look towards the latest trends in Silicon Valley in the US, with UPI, the West has turned to partner with India for innovation. Many global giants (Google, WhatsApp, Amazon, Samsung, Truecaller, Xiaomi, etc) and Indian unicorns (Paytm, PhonePe, Hike, etc) have joined the UPI bandwagon in collaboration with banks.
Unlike China that operates mobile payments mostly under two players in a closedloop manner, the RBI has been
clear from the start to set UPI as an interoperable system. When it comes to mobile payments and financial inclusion using Aadhaar, India has an edge due to innovation.
While there are multiple ways for making payments, the market is broadly divided into three parts — a) financial inclusion that covers the JAM trinity, i.e. Jan-Dhan, Aadhaar and mobile (additionally, it covers Direct Benefit Transfers, e-KYC, etc), b) mobile and internet payments powered by UPI, IMPS (Immediate Payment Service), net/mobile banking and interoperable QR codes, and c) card-based payments.
In the coming years, we will see a significant shift to a mobile-first strategy with consumers using functionalityrich and user-friendly apps for P2P (peer-to-peer) or P2M (peer-to-merchant) payments. The electronification of all kinds of C2G (citizen-to-government) payments is a big opportunity. I’m glad to see the efforts from all government divisions pushed by the ministry of electronics and information technology (MeitY) and the department of financial services (DFS).
If the growth momentum continues, we hope that the use of UPI will take the shape of citizen-scale payments system. Volumes may come down in the short term once firms go slow on promotional offers. However, the outlook is very strong for medium to long term. We have started an awareness campaign to protect customers from social frauds. But, more needs to be done. Now that diverse payment platforms are available to customers, our goal would be to drive adoption among the masses. We have the potential and capability to do what China has done to build its digital economy, better and faster. Startups/fintechs, in collaboration with banks, should build specific-use cases to drive adoption that will be the main attraction of 2019.
