MODERN FOOD ENTERPRISES PRIVATE LIMITED, KOCHI

SUMMER INTERNSHIP

Submitted to

RAJAGIRI COLLEGE OF SOCIAL SCIENCES (AUTONOMOUS)

(Affiliated to Mahatma Gandhi University, KOTTAYAM)

In partial fulfilment of the requirements for the award

of

MASTERS DEGREE IN BUSINESS ADMINISTRATION (MBA)

(2016-2018)

By
Amala P Anty
Reg. No: 16210011

RAJAGIRI COLLEGE OF SOCIAL SCIENCES (AUTONOMOUS)

RAJAGIRI VALLEY P.O
KOCHI-682039
 DECLARATION

I, Kevin Mani hereby declare that this internship report is a record of work carried out by me
at UAE Exchange and Financial Services Ltd during the period from 1st April to 31st May
2016 under the guidance of Prof. Jose K Puthur, Faculty, Rajagiri College of Social Sciences
(Autonomous).

This study was undertaken in partial fulfillment of the requirement of the award of the Masters
in Business Administration in Rajagiri College of Social Sciences (Autonomous).

I also declare that this report has not been submitted to any other university/board for the award
of any degree/diploma.

Place: Kochi Kevin Mani

Date:
 ACKNOWLEDGEMENT

The gratification and elation of this project will be incomplete without mentioning all the
people who helped me to make it possible, whose guidance and encouragement were valuable
to me.
First of all, I thank the God Almighty for his immense grace and blessings at each and every
stage of the organizational internship.

I take this opportunity to extend my sincere gratitude to Dr. Binoy Joseph, Principal, Rajagiri
College of Social Sciences (Autonomous), for providing this opportunity of practical learning
experience in the Organization.
I am thankful to my Faculty Guide at Rajagiri College of Social Sciences (Autonomous),
Kochi, Kerala, Prof. Jose K Puthur, for giving me his valuable guidance to execute the
Organisation Study as per university requirements.

My sincere thanks to my project guide, Mr. Athul Mathews, Digital Head, IT Department and
Mr. Nithin Kumar, Branch Head – for giving me an opportunity to carry out my project study
at UAE Exchange and Financial Services Ltd and for sparing their valuable time for the same.
It was a learning experience to work with them.

I would like to record my deepest sense of gratitude to my friends who encouraged me for
making this Organisation Study a success.

Kevin Mani
 TABLE OF CONTENTS

EXECUTIVE SUMMARY 1

Section I- Profile study of the organisation

1. INDUSTRY PROFILE

1.1 INDIAN FINANCIAL SYSTEM 4

1.2 NON-BANKING FINANCIAL COMPANIES 6

2. COMPANY PROFILE

2.1 UAE EXCHANGE GROUP 11

2.2 HISTORY 11

2.3 OPERATIONS IN INDIA 12

2.4 MISSION, VISION AND VALUES 13

2.5 ORGANISATIONAL STRUCTURE 14

2.6 MAJOR BUSINESS ACTIVITIES 16

2.7 FUNCTIONAL DEPARTMENTS 20

2.8 ORGANISATIONAL POLICIES 21

3. ORGANISATION ANALYSIS

3.1 FINANCIAL ANALYSIS 26

3.2 SWOT ANALYSIS 32

3.3 PORTER’S FIVE FORCES MODEL 33

Section 2 – Problem Centred Study

1. PROBLEM FORMULATION

1.1 BACKGROUND STUDY 36

1.2 PROBLEM STATEMENT 40

1.3 RELEVANCE OF THE STUDY 41

2. RESEARCH PROCESS

2.1 OBJECTIVES OF THE STUDY 42

2.2 RESEARCH DESIGN 42

2.3 SAMPLING DESIGN 42

2.4 TOOLS FOR DATA COLLECTION 42

2.5 METHOD OF STUDY 43

2.6 TOOLS FOR DATA ANALYSIS 43

2.7 SCOPE OF STUDY 43

2.8 LIMITATIONS OF STUDY 43

3. PRESENTATION AND ANALYSIS OF DATA 44

4. FINDINGS, SUGGESTIONS AND CONCLUSION

4.1 FINDINGS 55

4.2 RECOMMENDATIONS 56

4.3 CONCLUSION 57

Bibliography 58

Annexure 59
 LIST OF TABLES

TABLE NO: TABLE NAME PAGE NO:

Section 1 – Profile study of the organisation

1.1 Types of NBFCs and their Regulatory Bodies 9

3.1 Business Turnover and Profit\Loss 26

3.2 Capital Structure 26

3.3 Asset Turnover 27

3.4 Equity Turnover 28

3.5 Operating Profit Margin 29

3.6 Net Profit Margin 29

3.7 Earnings per Share (EPS) 31

3.8 Return on Investment (ROI) 31

3.9 SWOT Analysis 32

3.10 Porter’s Five Forces 34

Section 2 – Problem Centred Study

1.1 Features of wallet 40

3.1 Type of Business 44

 LIST OF FIGURES
FIGURE FIGURE NAME PAGE NO:
NO:

Section I- Profile study of the organisation

1.1 Indian Financial System 4

2.1 Organization Structure 14

2.2 Branch Structure 15

3.1 Product Contribution 30

3.2 Revenue 30

Section 2 – Problem Centred Study

1.1 Transformation of Payments 37

1.2 Classification of Wallets 37

3.1 Age Profile 44

3.2 Gender Profile 45

3.3 Education Qualification 45

3.4 Usage of Wallet 46

3.5 Reasons for choosing the Wallet 47

3.6 Satisfaction Level 48

3.7 Importance Level 49

3.8 Usage of other Wallets 51

3.9 Satisfaction Level compared to other Wallets 52

3.10 Recommendation 53

3.11 Future Usage 54

 EXECUTIVE SUMMARY
It is evident from the recent years that the competition offered by various companies in the non-
banking finance sector are becoming stiffer and stiffer. Big players like UAE Exchange, Thomas
Cook, Lulu Exchange etc. are already present in this sector and they are bringing about drastic
changes in the same to be more competent than the others. They have realised the importance of
customer satisfaction towards the service that they provide and they uses the most modern
technologies to satisfy their customers more. More deepened information technology helped them
to track their potential customers, fulfil their needs in the right time and in the right way and in
maintaining a healthy relationship with them. Customer satisfaction can be better described as a
comparison between post purchase evaluation and pre purchase expectation. The gap between the
potential benefits that the service provide must be way ahead of the costs that will incur to get that
service which includes the opportunity costs also. It is also important to note that a non-banking
finance company is facing competition not only from that sector but also from the banking sector.
Due to the presence of these many competitors and substitutes in the industry the customers are
less loyal to the company and a small mistake from their side may result in a great loss to the
company.
The foreign exchange market in India is growing in a rapid rate even though it is not that developed
compared to the major foreign markets. UAE Exchange is one of the big player in this business
competing with other big giants like Thomas Cook, Western Union, Lulu Exchange etc. UAE
Exchange used a special tactic by diversifying their services to different sectors in order to
withstand this competition. Now they offers a variety of services like tours and travels, gold loan,
Xpress money, Xpay e-payment wallet, insurance services, securities advisory services etc. They
are able to develop a huge network all over India by building a strong brand name, which was a
result of their emphasis on customer satisfaction. Their tagline ‘service is our currency’ itself is
enough to support the above statement. A large number of branches that are present in present in
different locations in the country helped them to achieve the position that they are having now.
The equation is pretty simpler, customer satisfaction will lead to customer loyalty, which in turn
lead to profitability and market share.

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This report mainly emphasis on the description of the company, the various products that are
offered by the company, detailed analysis on various perspectives and finally a research that was
conducted to measure the satisfaction of the merchants towards the e-payment wallet Xpay. From
this, we can understand how satisfied are the merchants towards this new product, what are the
customer preferences, and also the relative standing of the product compared with the competitor
products. These information may help the company to change the existing policies or reframe them
in order to stimulate the demand for the product.

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 SECTION-I

PROFILE STUDY OF THE

ORGANIZATION

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 1. INDUSTRY PROFILE
1.1 INDIAN FINANCIAL SYSTEM

Our financial system essentially comprises of financial markets, financial institutions and
instruments which performs the function of fund transfer from the households (savers) to
business firms (investors). The basic structure of Indian Financial System is shown below:

Figure 1.1 Indian Financial System

Financial Institutions- They facilitates the fund transfer between the financial customers
and individuals by acting as an intermediary of financial markets. In other words, they
profit or on-profit organisations that collect funds from individuals and invest the same in
various securities like shares, bonds, mutual funds etc. They are mainly divided into two
categories banking and non-banking institutions.

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Financial Markets- It is the place where buyers and sellers trade their assets like shares,
bonds and other financial instruments. It is further classified into money market and capital
market. The money market deals with short term debt instruments which will be having a
maturity period of less than a year while the capital market includes long term instruments
whose maturity period is above one year.

Financial Instruments/Assets- They include various assets like cash deposits, shares,
bonds, letter of credit and other financial instruments that provides a legal claim to a person
to pay him a specific amount on a certain future. These instruments are traded in the
financial markets.

Financial Services- They include all the services which deals with design and delivery of
financial assets and advisory services to various individuals or business entities in the areas
of investment, insurance etc. It accelerates the flow of funds between the savers and the
investors.

Financial Regulators- The main financial regulators include Reserve Bank of India (RBI)
in the banking industry, Securities and Exchange Board of India (SEBI) in the securities
market and Insurance Regulatory and Development Authority (IRDA) in the insurance
industry.

Evolution of Indian Financial System

The Indian Financial System has evolved in this form from the traditional barter system.
In the early stages, the barter system was transformed into money lenders, Nidhis, Chit
Funds etc. Later, the concept of cooperatives came into existence with the introduction of
“Cooperative Society Act” in 1904. This resulted in the introduction of cooperative banks
in India. These banks are mainly classified into Scheduled Commercial Banks and
Unscheduled Commercial Banks. The Scheduled Commercial Banks are listed under the
second schedule of “Reserve Bank of India Act”, 1934. Later, during late 1960s and early
1980s some of these banks were nationalised and then the whole banking industries were
opened to all to bring about universal practices to the Indian Financial System.

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 The concept of Chit Funds and Nidhis built a bridge between the traditional practices and
the modern system. Even today chit fund industry is having a greater reach to the public
especially where banks are not having a reach to satisfy their needs. For them, these Chit
Funds and Nidhis are a perfect substitute to the banks and other financial institutions.

Importance of Indian Financial System

Indian Financial System reduces the distance between the savers and investors by
efficiently mobilising funds between these two entities. It plays an important role in
increasing our country’s output by helping corporate customers to expand their
corresponding business. Regulatory bodies like RBI, SEBI etc. protects the investors from
any fraud or malpractices that can occur during financial transactions. It paves the way for
developing a good economy thus the standards in life of people is enhanced. Rural
Development Banks and other cooperatives ensures the development of the weaker
undeveloped section of the country. Financial services like advisory services ensures better
financial decisions which helps corporate customers for their betterment. It also helps in
financial broadening (increasing the participation in financial system) and financial
deepening (increasing financial assets as a percentage of GDP).

1.2 NON-BANKING FINANCIAL COMPANIES

According to the Reserve Bank of India Amendment Act 1997 the Non-Banking Finance
Company was defined as under:-

 A financial institution which is a company,

 A non-banking institution which is a company and whose principal business is to
receiving of deposits under any scheme/arrangement/in any other manner or
lending in any manner and
 Other non-banking institutions/class of institutions as the RBI may specify

NBFCs are financial institutions which forms an integral part of Indian Financial System.
They are conducting businesses similar to that of banks, but they are different from banks
in a number of ways. Their main operations includes acquisition of marketable securities,
leasing hard assets like automobile, insurance, making of loans and advances, hire and

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purchase etc. They differ from a bank in a few ways. First of all, an NBFC cannot accept
demand deposits (deposits which can be withdrawn on a person’s demand. So, they do not
have the right to issue cheques. Also, the deposits carried by them are not insured by the
Deposit Insurance and Credit Guarantee Corporation (DICGC). They are strictly under the
regulations of RBI and SEBI. In other words, we can define an NBFC as a financial
company without a banking license. But all the operations in it are strictly under banking
regulations. They are able to meet the needs of the rural people where the so-called banks
have only a limited reach. Because of their anticipated responses and flexibility, they
provide a better tailor-end service which are faster than the banks.

The growth of NBFCs occurred during the 1980s by taking on the advantage of the
downfall of the banking sector. During that time, the sanction procedures and the entry
barriers were so limited which encouraged a lot of players into this sector. Features like
flexibility, quicker response time, less operating charges etc. provided an upper hand to the
NBFCs over the banking sector. The proliferation further accelerated during the early
1990s.

Types of NBFCs

The different types of NBFCs that are present in our country are as follows:

 Asset Finance Company (AFC) - It is a financial institution whose principal

business is financing of physical assets which mainly supports production such as
lathes, material handling equipment, automobiles etc. For a company to be an AFC,
not less than 60% of their total income must be coming from financing of physical
or real assets.
 Investment Company (IC) – It is a financial institution whose principal business is
the acquisition of marketable securities.
 Loan Company (LC) – It is a financial institution whose principal business is
providing loans or advances to any other activity other than its own.
 Infrastructure Finance Company (IFC) – It is an NBFC which invests not less than
75% of their assets in loans for infrastructure. There are certain other conditions
like a minimum of Rs 300 crore must be present as net owned funds, a minimum

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 credit of A or its equivalent must be present and Capital to Risk Assets Ratio
(CRAR) must be 15%.
 Infrastructure Debt Fund: Non-Banking Finance Company (IDF-NBFC) – Its
principal business is to facilitate the transfer of long term debts to various
infrastructure projects.
 NBFC-Factors – It have its principal business of factoring. Factoring is a kind of
debtor finance where a business sells its invoices or accounts receivables to a third
party (factor) at a certain discount.
 Gold Loan NBFCs – It is one of the fast growing sector in India. About 95% of
gold loan business in India is carried out by three Kerala based companies –
Muthoot Fincorp, Manappuram Finance and Muthoot Finance.
 Residuary Non-Banking Companies (RNBC) – It has its principal business of
deposit acquisition which must not be an Asset Financing, Investment or Loan
Company.
 Micro Finance Institutions (MFI) – It is an institution which offers its services to
low income people. They offer credit for the poor people for whom the banks are
reluctant to give.

Regulations of NBFCs

The major regulatory provisions which are applicable to any NBFC is given below:

 An NBFC should have a minimum net worth of 25 Lakhs which should be achieved
in 3 years or in an extended 3 year period if RBI have given the discretion.
 Atleast 15% of the deposits should be maintained in liquid assets.
 A reserve fund should be created and atleast 20% of the net deposits should be
transferred to it every year.
 RBI will be directing them on the issues of credit, investment, disclosures etc.
 Depositors of these companies are given nomination facilities.
 A minimum credit ratio must be obtained from any one of the three credit rating
agencies.
 They have to maintain a minimum capital adequacy of 8%.

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  They cannot accept deposits from the public.

Type of NBFC Name of the Regulatory Authority

Equipment Leasing Companies [EL] Reserve Bank of India

Hire Purchase Finance Companies [HP] Reserve Bank of India

Loan Companies Reserve Bank of India

Investment Companies Reserve Bank of India

Residuary Non-Banking Companies Reserve Bank of India

Miscellaneous Non-Banking Companies Reserve Bank of India and Registrars of

(Chit Fund) Chits of the concerned States

Mutual Benefit Finance Companies (Nidhis Department of Company Affairs of GOI

and Potential Nidhis)

Micro financial companies Department of Company Affairs of GOI

Housing Finance Companies National Housing Bank

Insurance Companies Insurance Regulatory and Development

Authority

Stock Broking Companies Securities and Exchange Board of India

Merchant Banking Companies Securities and Exchange Board of India

Table 1.1 Type of NBFCs and their Regulatory Bodies

Difference from Banks

A Non-Banking Finance Company is different from banking companies in the following

ways:

 They provide various financial services to people without holding a banking

licence.
 Demand deposits, i.e. deposits that can be withdrawn in a short term notice of a
person is not acceptable for a NBFC.
 They do not have the right to issue cheques to people.

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  Unlike banks, they are not a part of payment and settlement system.
 Deposits in a NBFC are not insured by Deposit Insurance and Credit Guarantee
Corporation (DICGC).
 They need not maintain reserve ratios like Cash Reserve Ratio (CRR) or Statutory
Liquidity Ratio (SLR).
 100% foreign investment is allowed for an NBFC.

It is very much clear that the expansion of any business in the urban areas is not that easy
because most of its potential have already been used. So, the investors will be more
attracted towards the untouched semi-rural and rural areas where most of the big players
do not have a hand. This opportunity will flourish the growth of the NBFCs in these areas
as they are facing only a little competition from the banking sector from these areas. As an
evidence for this attractiveness, we can see that many Foreign Institutional Investors
(“FII”) are setting up their own NBFC’s in India to offer financial assistance to many
investors.

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 2. COMPANY PROFILE
2.1 UAE EXCHANGE GROUP
Founded in 1980, UAE Exchange group is one of the leading power in foreign exchange
services, global remittances and payment solutions in the whole world. It is headquartered
in Abu Dhabi, with its presence in 31 countries across 5 continents operating through some
800 branches. The branch is dominant in the Emirates with 150 branches across the 7
Emirates and 17 branches in the Dubai metro stations. Its customer-centric approach driven
by the process, product and people makes it different from their competitors. The whole
group is supported by more than 9000 professionals spreading across 40 nationalities
render their valuable services to more than 15 million people worldwide. They are having
a strong relationship with 140 global banks making it a globally networked brand. They
have their presence across North America, Europe, Africa, Asia, Middle East and Oceania
regions.

2.2 HISTORY
UAE Exchange Centre LLC is a 9001:2000 certified company which primary focuses on
money transfer and remittance is one of the part of the New Medical Centre (NMC)
group which is one of the biggest fast growing conglomerate in UAE. His Excellency
Abdulla Humaid Al Mazroe (former minister of justice and law in the UAE cabinet) and
Dr B.R Shetty the business magnate laid down the starting stone of this group in 1975 at
Abu Dhabi. This group has a wider area of network across many countries in various
industrial sectors like Information Technology, Gold & Diamond ,jewellery, Engineering
services, Catering and Hospitality, Pharmaceuticals (Manufacturing and Trading) etc.

In 1993 UAE Exchange became a SWIFT member and within the next two years they
have started their operations in Oman and Kuwait launching an express transfer, bank notes
service and gold card services. In 1999, it started their retail business in India, which was
their largest investment outside emirates, growing into 330 branches by 2015. They opened
their offices in UK, Sri Lanka and Bangladesh in the next three years. In 2001 they
launched Xpress Money, an instant money transfer service in the UK. By 2003, they added

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 Australia to its network which made them more global. In 2003, they launched their
services for the corporate sector. In 2004, it introduced a web-based money transfer
process. Between 2005 and 2009 they opened their offices in Hong Kong, Uganda, Jordan,
Canada, New Zealand and China, as well as purchasing Moneydart Global Services in the
United States. It also launched an online money transfer portal, ‘Money2anywhere.com’.
Xpay, the bill payment solution using mobile phone was also brought out in India. In 2009
it became an Authorized Payment Institution (API) with the UK financial regulator
Financial Services Authority, which became the Financial Conduct Authority in 2013.

2.3 OPERATIONS IN INDIA

The UAE Exchange Group entered the Indian markets through Kerala as UAE Exchange
and Financial Services Ltd. in 1999 with 5 branches. It is an incorporated public limited
company from 1995 under the Indian Companies Act 1956. It is also registered as a public
limited non-banking finance company (NBFC) with the Reserve Bank. It is one among the
five AD II category licenced foreign exchange dealer registered with the Reserve Bank of
India, Kochi Regional Office, others being Lulu Forex Private Ltd., Manappuram Finance
Ltd., Muthoot Forex Ltd. and Muthoot Fincorp Ltd. AD II includes the authorised dealers
second category who are authorised by the Reserve Bank to deal with foreign exchange for
specified purposes.

Registered Office

Manipal Centre, Dickenson Road, Bangalore- 560 042, Karnataka

Administrative Office

Airlines Buildings, M G Road, Kochi- 682 011, Kerala

The company is one of the biggest growing financial institution providing a variety of
services including gold loans, foreign exchange services, money transfer, financial
advisory services, travel and ticketing etc. The whole company is widespread all over India
with its 385 operational branches, over 3300 employees and more than 2500 sub-agent
locations. Their freshly updated IT division provides them the floor for developing

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 comprehensive products in domestic as well as international markets. The major milestones
in the history of the company are given below:
1995- Incorporated in India as a public limited company

1999- Indian operations started in Kochi as Head Office and Registered Office in
Bangalore

2001- Added Travel and Ticketing services by becoming an IATA accredited passenger
sales agent

2004- Fourth product, Insurance, initiated in liaison with LIC and United India Assurance
company

2008- RBI elevated to Authorized Dealer II category, thus becoming the first FFMC in
Indian history to get the status

2009- Gold Loan was added to the crate of products

2010- Launched the unique mobile payment service system – Xpay

2.4 VISION, MISSION AND VALUES

Vision Statement

“To be the most admired brand in Money Transfer, Foreign Exchange and payment
solutions”

Mission Statement

“Connecting people and creating progress with the finest of quality”

Core Values

“Integrity, Commitment, Empowerment, Care”

UAE Exchange emphasizes on applying integrity into the work culture so that long lasting
trust is built in the customer’s minds. They works closely with industry regulators to meet
the harsh and rigid compliance standards present in the current unstable environment. They

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 has implanted a profound sense of passion to serve customers with warmth, meet their
needs, which are important to the welfare of our society and creating business relations,
which are essential to the benefit of partners and other associates. They always aimed at
empowering their own customers. Technological enhancements like MyBranch or products
like gocash and Smart Pay are examples of how customer’s money transfer needs and
other financial needs, travel needs etc. have been addressed, giving them an opportunity to
experience another level of customer service altogether. In many ways, UAE Exchange is
a reflection of the communities it serves, maintaining its reputation as the financial brand
with its strongest market relations with the community and the media fraternity. Its team
of over 9,000 professionals, from over 40 nationalities, caters to customers across the
globe. The brand has always striven to give back to the community by being a responsible
corporate citizen through regular Corporate Social Responsibility initiatives.

2.5 ORGANIZATIONAL STRUCTURE

Figure 2.1 Organization Structure

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 UAE Exchange Group follows a tall hierarchy. As the company is present across many
countries and have a wide network through a number of branches, this hierarchical
structure is best suited. The decisions that are taken by the officials present at the bottom
of the structure need to be quick. So, there is decentralization of power and authority. The
span of management control normally ranges from 8-12. The whole organization is divided
into different departments based on function as well as on different services that are
rendered. The organization is also a little formalized. In, all the branches works for six days
a week with Sunday as holiday.

Branch Structure

BRANCH HEAD

ASSISTANT BRANCH HEAD

SENIOR OFFICER

OFFICER

STAFF STAFF STAFF STAFF

SUB STAFF SUB STAFF

Figure2.2 Branch Structure

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 Each branch is managed by a branch head to whom all other officials have to report.
Assistant branch head comes immediately after the branch head. All the officers underneath
are experts in all the services rendered by the branch even though they are divided on the
basis of these services.

2.6 MAJOR BUSINESS ACTIVITIES

The major business activities performed by the organisation involves:

MONEY TRANSFER

UAE Exchange and Financial Services Ltd. acts as a paying agent for many money transfer
services like ‘Xpress Money’ of UAE Exchange Centre LLC., Abu Dhabi, ‘MoneyGram’
of MoneyGram Payment System Inc., USA., Western Union, Nepal Remit etc. Xpress
money is a leading money transfer service spread across 140 countries with more than
170,000 agents across the world.’money2anywhere.com’ is the online money transfer
facility provided by the company which allows the transfer of money from bank account,
credit card or debit card to the beneficiary accounts. The various steps involved in the
money transfer are

I. Identification of the customer- The confirmation of the identity of the customer is

done with the help of a photo identity card or document. The customer must bring
the original documents for the staff to check its genuineness. All details are cross-
checked with the information given by the customer. The customer, staff concerned
and cashier should sign to execute any transaction.
II. Registration of customer- Regular customers are identified and registered with a
unique number in the form of a Customer Reference Card. All transactions of this
customer are linked to this number. A customer at any time can access the history
of all transactions that is done by him.
III. Filling of transaction form- Individual customers must fill a prescribed form
(Receive Form for Money Gram, Receive Now Form for Xpress Money). For one
time customers, it is compulsory to attach a copy of ID proof with it. The form
should be signed by the customer in the presence of a designated staff.

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For large value transactions, a customer whether regular or one-time should declare the
purpose of those transactions and the details of the sender. Maximum allowed amount for
a single transfer is 2500USD. Maximum number of transactions a person can receive is
fixed at twelve per year. Purpose of remittance have to be domestic or family related.
Commercial and charitable donations are not allowed. The maximum amount a person can
collect as cash in a day is Rs 50,000, any payment above this amount is issued as a cheque.

FOREIGN EXCHANGE

Exchange is one of the financial institutions approved by the Reserve Bank of India as an
authorised dealer in the second category (AD II) to conduct foreign exchange services.
They are having the number one position as the largest money changer in terms of both
network and volumes. Major money exchanging activities engaged by the company
includes:

I. Buying and selling of foreign currency bank notes.

II. Issuance and encashment of major traveller cheques- A traveller cheque is a
medium of exchange instead of currencies. They are used by people who visit
foreign countries as many business accept this instead of currencies. UAE
Exchange issues and encash major traveller cheques like American Express in US
Dollar, GB Pound, Euro, Japanese Yen, Australian Dollar and Canadian Dollar.
III. International Debit Cards/ World Currency Cards- Company has tie-ups with
AXIS Bank and IDBI Bank for the promotion of these cards.
IV. Saudi Riyal ‘SAR’ Drafts- ‘SAR’ Drafts are issued for the Hajj pilgrims in
association with UAE Exchange Centre LLC, Abu Dhabi, which is done under the
special consent of Reserve Bank of India.
V. Sending money abroad- They have tie-ups with Thomas Cook, ING Vyasa Bank
and HDFC Bank to handle the international transfer of money. Swift Transfer is
one of the way to electronically transfer money abroad in a quick, easier and secure
manner with zero possibility of theft and loss. The amount will be credited within
48 hours. Foreign Currency Demand Draft (FCDD) is another way used. Here,
customer can deposit FCDD at banks present abroad and get it cleared in all major
currencies. This option is ideal for education, employment, immigration purposes.

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For the purchase or encashment of foreign currencies, photocopies of identification
documents is to be kept on record for all transactions above 200 USD or its equivalent. For
transactions below this amount, this is not compulsory but full details must be maintained
with the encashment certificate. A Currency Declaration Form (CDF) should be there
where the amount of forex have to be entered.

For the sale of currencies, personal application and identification should be made. For
identification purpose, passport must be submitted. Payments above Rs 50,000 is accepted
only in cheques or demand draft.

TRAVEL AND TICKETING

The travel and ticketing operations of the company commenced its operations from 2001.
It is accredited by International Air Transport Association (IATA), Canada as an approved
Passenger Sales Agent. They provide all services associated with travel which involves
providing domestic and international air tickets, assistance for emigration clearance,
certificate attestation, visa application, passport application and allied services.
International and domestic hotel reservations and various tour packages are also provided
by them. They have their own travel portal ‘www.uaeexchangetravel.com’. Their service
is recognised by the Ministry of Tourism (MOT).

XPRESS LOAN

UAE Exchange have been providing gold loan as a service to their loyal customers from
2008. They the raised this as one of their main products. Besides these, they provide loans
against shares, vehicles etc. They are provided subject to the guidelines prescribed by
Reserve Bank of India. A prescribed proforma of application is filled by the applicant
which includes all details like name, address, amount of loan, period of loan, list of
documents, collateral security details, declaration statement etc. The processing will be
over within 15 days from the date of application. Whether it is approved or rejected, the
company will give the reasons for the same.

The rate of interest varies with the cost of fund. Depending on the risk associated, the rate
of interest also varies. The rate is fixed by an internal committee who analyse the prevailing

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market conditions. Rs 250 or 1% of the loan whichever is higher is charged as the loan
processing charge.

INSURANCE

Insurance is another important service is offered by the UAE Exchange. They provide three
main types of insurance which are health insurance, travel insurance and motor insurance.

Health insurance is offered by the company in association with Star Health and Allied
Insurance Company. They are offering family health insurance for the entire family
covering all members against various illness and diseases, senior citizen insurance which
insures senior citizens who are in need of emergency money as they are more prone to
illness and individual health insurance against death, accidents, other medical emergencies
etc.

Travel insurance is available for individuals, families, students, senior citizens covering
travel related contingencies. They ensures financial recovery due to any changes in travel.
For frequent fliers, multi trip travel insurance is also there. They insure baggage and
passport too.

Motor insurance includes car insurance, two wheeler insurance and commercial vehicle
insurance against accidents or other minor collisions. Under the provisions of Motor
Vehicles Act 1988, all vehicles must be insured which makes the service more convenient.

XPAY

Xpay is a digital wallet developed by UAE Exchange and they are promoting it since 2010.
The services provided by the wallet includes domestic money transfer, mobile/ DTH
recharge, utility bill payments, foreign exchange, loan portfolio, tour packages etc. Now
they have developed a merchant version of this wallet which allows the transfer of funds
directly to the merchant’s bank account. Registration is mandatory for availing Xpay
services. Filled in Xpay application form shall be submitted at the nearest branch of the
company for registration. However, for doing transactions above Rs 10,000, customer must
compulsorily submit necessary KYC documents with the company. For merchant
registration required details includes bank details and requisite ID proof.

19
 INVESTMENT ADVISORY SERVICES

UAE Exchange guide their customers to invest wisely and reach their specific financial
goals even in the turbulent market situations. Various services associated with this
includes- Online & Offline Share Trading, Demat account, Mutual Funds, Gold ETFs,
Currency Derivatives, Pan Cards. ‘www.uaeexchange-etrade.com’ is the portal for this
service.

2.7 FUNCTIONAL DEPARTMENTS

Accounts Department

This department handles all the payments and receipts made by the organization. It also
manages the accounts which include the accounts of money transfer. It also handles various
expenses and monitoring the asset of the organization.

Finance Department

Funding operations, funding control etc. are taken care of by the finance department. At
the end of the financial year the preparation of balance sheet to ascertain the profit and tax
done by this department.

Purchase Department

This department handles all the purchase operations, printing and stationary, stock
maintenance, interior design etc. taken care of.

Internal Audit DepartmentAudit inspection in the organization is handled by this

department. They plays an important role in mitigating various operating risks associated
with the company.

Human Resource Department

HR department deals with the recruitment process, training and development process and
have the authority in leave and transfer process. It also deals in bank operation and
employee emoluments.

20
 Forex Department

Forex department deals with the purchase, sale and remittance of currencies.

Travel and ticketing Department

This department deals with all international and domestic travel operations. This
department also taken care of other travel services.

Allied products Department

This department deals with allied products like general insurance, tours and gold loan.

Business Development Department

This department deals with all marketing, corporate sales and customer care functions.

2.8 ORGANISATIONAL POLICIES

CSR ACTIVITIES

In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013. As
per the CSR provisions of the new Act, the Company is required to set-up a CSR committee
consisting of their board members, including at least one independent director. The Act
encourages companies to spend at least 2% of their average net profits in the previous three
years on CSR activities.

The Company is committed to promote environmental care, increase understanding of

environmental issues and take steps for the betterment of the same for future generations
to come. UAE Exchange performs various initiatives as good corporate citizen to fulfil the
responsibilities to the society where they operate.

Some such initiatives include:

• Promoting Child Education: Majority of India still lives in villages and quality and access
to education is the major concern in local schools. The Company however does its part in
promoting child education and whenever a new branch is opened, the Company contributes
for the education of 5 students by giving cash gift of Rs.5000 per student, to local

21
government school during the inaugural function. Further, the Company also does the best
at making available books and stationary for deserving school children at rural and poverty
stricken pockets in the country. Further, the Company arranges health camps and medical
check-up facilities for children as an effort at ensuring health and hygiene in their lifestyle.

• Go Green - Tree Planting: As a part of the Go-Green policy and as an attempt for
protection of flora, the Company encourages tree planting by distributing seeds and
saplings among the guests during any branch inauguration or customer meetings. The
Company also maintains the public park in front of its Head Office at Kochi. Further, each
branch proposes to take the initiative of planting Tree saplings at public utility places,
Government Schools, Government Office premises, Parks etc. at a fixed budget every year.

• Environment: UAE Exchange partners with local campaigners and movements in

promoting different environmental initiatives like ‘Save Tree’, ‘Save Tiger’, and the
‘World Environment Day’ and so on. We are also quite passionate about our consistent
efforts in liaison with the National Safety Council in ensuring Road and Traffic safety as
well as ‘Pollution Free’ campaigns. We also do our best at promoting cleanliness and
maintenance of our public places throughout the country.

VIGIL MECHANISM

The vigil mechanism extends to anyone who has and reports inside information of illegal
activities occurring in an organisation. It can be employees or directors, who somehow
become aware of illegal activities taking place in a business either through witnessing the
behaviour or being told about it. All secured disclosures under this mechanism will be
recorded and thoroughly investigated with utmost confidentiality. The suspected and the
related people will be informed and enquire, and the Vigil Officer along with the
recommendations will report his findings to the Managing Director who shall decide upon
further actions within 15 days of receipt of report.

RISK MANAGEMENT POLICY

The company has a systematic Risk Management process and policy to identify, measure
and mitigate the risks and also timely reporting of the same. The company has adopted the

22
following measures concerning the development and implementation of a Risk
Management Policy after identifying the following elements of risks which in the opinion
of the Board effects the business of the Company from time to time.

Credit Risk- It happens when the promised cash flows from customer is defaulted. Strong
NPA (Non-Performing Asset) monitoring and collection strategy is being followed to
reduce the risk and possible losses in this area. Proper screening of customers before
providing credit is also employed.

Interest Rate Risk- This arises mainly from the changes in yield curve, credit spreads and
volatility in interest rates. Management of interest rate risk in the company is achieved by
linking the lending cost to the borrowing cost and spread so that the company does not lose
on adverse interest movements.

Operational Risk- It is the risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events. The company’s operational risks
are characterised by internal controls and internal audit procedures. As a part of the control
system, there are a series of checks and balances including operating manuals, well defined
appraisal methods as well as ‘know your customer’ compliance procedures to mitigate the
operational risks.

Liquidity Risk- This involves the risk that happens when there is a sudden and unexpected
increase in liability withdrawals for the products of the company such as money gram,
loans and forex. To mitigate the liquidity risk, the management continuously evaluate the
liquidity position, maturity profiles of assets and liabilities, Asset-Liability maturity gaps
and the backups available to plug in such gaps.

Forex Risk- It is the risk that arises as a result of adverse exchange rate movements and
their volatility. Currency risk is the possibility that exchange rate changes will alter the
expected amount of principal and return of the lending or investment. By setting
appropriate limits-open position and gaps, stop-loss limits etc. forex risk can be managed.
The company attempts to mitigate the currency risk by way of hedging the forex position
by entering into forwards contracts with banks.

23
HR POLICIES

Hiring of Employees

In order to prevent criminals taking up employment through back door entry, necessary
screening of employees are done at the time of recruitment. Only those with good
background are employed. To ensure that the employed personnel are of very high integrity
and standard, we call for references from people of high standing in the society and police
verifications are also obtained, wherever necessary. Job rotation and relocation of the staff
is done from time to time so that one does not become indispensable or use his position to
aid/abet in money laundering for, both the product and the position being sensitive. Campus
recruitments are also used sometimes.

Training of employees

The employees handling the business shall have full knowledge of the product as well as
its procedure/rules & regulations thereof so that handling of customers and putting through
transactions becomes much easier. Necessary class room/on the desk/job training besides
theoretical training shall be provided to the employees at all levels. Necessary reading
material in the form of Manuals/Book of Instructions relating to various products such as
Money Changing/Money Transfer etc. have been made available to the employees both in
soft copy and hard copy form to enable them to read, understand and update their
knowledge. Further, the employees shall be given refresher training from time to time so
as to update them with the changes in the rules and regulations. The faculty members of
our training Division also include outside Guest faculty besides well trained and
experienced staff from our own organisation. The trainings are also held at various
locations so as to have a conductive atmosphere of learning. The effectiveness of the
training provided and the level of knowledge gained by the employees are gauged by
conducting online exams at various levels from time to time.

24
Performance Appraisal

The performance appraisal is formally evaluated based on the target that is fixed to most
of the officials and based on the total performance in their sector. Each month the best
performers in each division and the best performing branch is identified and rewarded. All
these information are published in the company’s monthly magazine ‘Xpressions’. A fixed
salary is there for all the employees with some bonus given on the basis of their
performance.

25
 3. ORGANISATION ANALYSIS
A detailed analysis of the organisation in different perspectives is given below:

3.1 FINANCIAL ANALYSIS

Business Turnover and Profit/Loss Details:

As of 31 March (Rs.) 2016 2015

Total Revenue 2,10,59,90,292 2,12,87,28,539

Operating profit 2,42,70,625 19,15,83,587

Net Income 97,00,229 12,31,69,958

Table 3.1 Business Turnover and Profit/Loss

Dividend
The board of directors has not recommended any dividend for the financial year 2015-16.
Capital Structure Analysis

As of March 31 2016 2015

( Rs )

Equity 1,56,18,59,029 1,55,21,58,800

Debt 35,56,67,887 25,29,38,443

Debt-Equity Ratio 0.228 0.163

Total Capital 1,917,526,916 1,805,097,243

Debt-Capital Ratio 0.185 0.140

Table 3.2 Capital Structure

26
It is evident from the table that the debt-equity ratio is more in 2016 than in 2015. So, the
company has increased their debt funding in the financial year 2015-16. This gave them
more financial leverage. Also, the use of debt funding is very low in the capital structure.
This is clearer from the values of debt-equity ratios which are comparatively low. This kind
of capital structure is the best for a financial company because increase in debt fund may
result in a change in risk perception of the shareholders.

Activity Ratios:
a) Total Asset Turnover Ratio:
It means the amount of sales generated for every dollar's worth of assets. It is calculated by
dividing sales by assets. Calculated as:
Total asset Turnover ratio = Total Revenue/Total Assets
Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue
- the higher the number the better. It also indicates pricing strategy: companies with low
profit margins tend to have high asset turnover, while those with high profit margins have
low asset turnover.

Year Revenue (Rs.) Total Asset Total Asset turnover Ratio

(Rs.)

2016 2,10,59,90,292 6,25,25,02,992 0.336

2015 2,12,87,28,539 6,90,01,59,645 0.308

Table 3.3 Asset Turnover

b) Equity Turnover Ratio:
An Equity Turnover ratio calculated as total revenue divided by shareholders' equity.
Equity turnover is a measure on how well a company is using the corporation’s
investment equity to generate corporate revenue, and to make the corporation more
profitable.
When compared over a period of time, equity turnover will reveal the extent a
corporation will grow without any additional capital investments.

27
In most cases corporations with high profit margins have a low equity turnover, and
companies with a low profit margin have a higher equity turnover.
Calculated as, Equity Turnover Ratio = Total Revenue/Shareholder’s Equity
Year Revenue (Rs) Equity (Rs) Equity Turnover Ratio

2016 2,10,59,90,292 1,56,18,59,029 1.34

2015 2,12,87,28,539 1,55,21,58,800 1.37

Table 3.4 Equity Turnover

Profitability Ratios:
Profitability Ratios show how successful a company is in terms of generating returns or
profits on the Investment that it has made in the business, i.e., the Profitability ratios speak
about the profitability of the company. The higher these ratios the better it is for the
company.

a) Operating Profit Margin Ratio:

A ratio used to measure a company's pricing strategy and operating efficiency.
Operating margin is a measurement of what proportion of a company's revenue is left
over after paying for variable costs of production such as wages, raw materials, etc. A
healthy operating margin is required for a company to be able to pay for its fixed costs,
such as interest on debt.

Calculated as Operating Profit Margin = Operating Income/Revenue

28
 Year EBIT (Rs) Revenues (Rs) Operating Profit
Margin (%)

2016 2,42,70,625 2,10,59,90,292 1.15

2015 19,15,83,587 2,12,87,28,539 8.99

Table 3.5 Operating Profit Margin

b) Net Profit Margin Ratio:

A ratio of profitability calculated as net income divided by revenues, or net profits

divided by sales. It measures how much out of every dollar of sales a company actually
keeps in earnings. Profit margin is very useful when comparing companies in similar
industries. A higher profit margin indicates a more profitable company that has better
control over its costs compared to its competitors.
Calculated as Net Profit Margin = Net Income/Revenue

Year Net income (Rs) Revenues (Rs) Net Profit Margin

(%)

2016 97,00,229 2,10,59,90,292 0.46

2015 12,31,69,958 2,12,87,28,539 5.78

Table 3.6 Net Profit Margin

29
Product Contribution

Product Contribution
2%

7%
14%
44%

33%

Loan Money Changing Travel Money Tranfer Others

Figure 3.1 Product Contribution

Of the total revenue generated in the financial year 2015-16, it is interesting to see that
more contribution is from the loan side than foreign exchange even though UAE Exchange
is more famous for its foreign exchange services. These two contributes for more than 75%
of the total revenue.

Revenue Analysis

Revenue (Rs. in millions)

2208
2122 2128 2106

1875

2012 2013 2014 2015 2016

Figure 3.2 Revenue

30
From the above bar chart, it is evident that there is a slight decrease in the total revenue
form 2013-14 to 2015-16. The revenue generated in the financial year 2015-16 is 2106
million Rs.

Earnings per Share (EPS)

Year Net Profit (Rs) Weighted average EPS

number of equity
shares

2016 97,00,229 6,20,00,000 0.16

2015 12,31,69,958 5,84,63,372 2.11

Table 3.7 Earnings per Share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding
share of common stock. Earnings per share serves as an indicator of a company's
profitability. It can be calculated as:

EPS = (Net Income – Preferred dividends)/ Weighted average number of

outstanding equity shares

The earnings per share has decreased from 2.11 in 2015 to 0.16 in 2016. The face value of
each share is Rs 10.

Return on Investment (ROI)

Year Net Profit (Rs) Invested Capital ROI (%)

2016 97,00,229 1,917,526,916 0.51

2015 12,31,69,958 1,805,097,243 6.82

Table 3.8 Return on Investment (ROI)

Return on investment (ROI) measures the gain or loss generated on an investment relative
to the amount of money invested. ROI is usually expressed as a percentage and is typically

31
 used for personal financial decisions, to compare a company's profitability or to compare
the efficiency of different investments. The return on investment formula is:

ROI = (Net Profit / Cost of Investment) x 100

The return on investment value has shown a marginal decrease in its value from 6.82% to
0.51% which shows the decrease in profit making of the company.

3.2 SWOT ANALYSIS

STRENGTHS WEAKNESSES
 Worldwide network  Undiversified business
 Personalized customer care  Credit and Liquidity risks
 Fully automated operations
 Skilled workforce
 Goodwill
OPPORTUNITIES THREATS
 Global markets  Competitors
 New markets  Substitutes
 Growth rates and profitability  Government regulations
 Exchange rate risk, interest rate risk

Table 3.9 SWOT Analysis

Strengths

The company have debt in their capital structure, this will gave them an advantage of
financial leverage. It also has a wide area of network in and out of the country. They are
having tie-ups with their own competitors like Thomas Cook and many banks. They are
giving more personalised care to their customers and thus have goodwill among people.
Presence of skilled workforce are adding more strength to them.

32
 Weakness

Even though, they are offering a number of services, their main income come from loans
and money transfer. They must emphasis on other business to diversify the portfolio to
minimise the risks. Also, the company is prone to many risks like liquidity risk, credit risk
etc. which can affect their profitability.

Opportunities

Today, UAE Exchange Group is present more than 30 countries. Still, South America is
untouched. They can go more global which can result in a growth in their global market
share and profitability. With their goodwill, they can go for new businesses also.

Threats

UAE Exchange is present in a very competitive sector. Competitors like Western Union,
Thomas Cook etc. are a threat for them for sure. Even for their new product Xpay, Paytm
is a big rivalry. Banking sectors are also a threat as it is one of the closest substitute.
Government regulations in the future can also be problem. Changing interest rates is yet
another issue which can affect profitability.

3.3 PORTERS FIVE FORCE MODEL

Competitive Rivalry  Finance industry is highly competitive. Lulu

Exchange, Western Union, Thomas Cook
etc. are very strong competitors
 Company’s other products like Xpay is also
facing stiff competition from Paytm, MyJio
etc.

Threat of new entrants  Threat of new entrants is comparatively low

because of requirements of government
license and other regulations.

33

Threat of substitute products
Bargaining power of suppliers
Bargaining power of customers
Table 3.10 Porter’s Five Forces
34
 Presence of big giants already in the market
makes others hesitant to enter the market
 Banking sector is perfect substitute in this
industry. But the threat raised by banks is
medium. This is because banking process
involves so much delay and also there are
still many rural areas where bank never
reached.
 Suppliers are the banks that provide loans to
the company. Of these seven, South Indian
Bank is providing more (more than 80 crore
Rs as of March 31, 2016), IDBI Bank
provides more than 55 crore, Federal Bank
40 crore, Indian Overseas Bank 41 crore.
 They can seek loan from other banks if they
want, so supplier bargaining power is low.
 Customer bargaining power is very low
both in the retail and wholesale business.
 They are setting clear cut rates to which not
much negotiation happens. They are having
tie-ups with a number of banks and other
NBFCs and their Xpress Money service is
used by them to transfer money. Their
global presence gave them this advantage.
 SECTION -II
PROBLEM CENTRED STUDY

35
 MERCHANT SATISFACTION TOWARDS
THE DIGITAL WALLET ‘XPAY’
CHAPTER 1- PROBLEM FORMULATION

1.1 BACKGROUND STUDY

With the introduction of digital wallets in early 90’s pioneered by Sam Pitroda with the
vision, underlying the needs of the customers-an easy to use interface, ability to securely
transact in the virtual and real world, in came app-based wallets such as Paytm, Mobikwik,
Freecharge etc., which has become extremely convenient for a person to make cashless
transactions. Mobile wallet is equivalent to physical wallet, it provides a platform for the
user to keep money in it as that of a bank account i.e. the user needs to make an account
with a mobile wallet provider, money can be loaded to the M-wallet account using a debit
card, credit card, bank account etc.

The advantage of completing an online transaction through mobile wallet is, it does not
charge any amount of money on every transaction and saves the customer from the hassle
of entering card details and pin number for each and every transaction. It is easy and
convenient for the users, as the user needs to sign in the account and make payment. On
the other hand it focuses on online merchants and offline merchant’s i.e. the M-wallet
provider’s act as an intermediary between the merchants and the wallet users. Traditionally,
banks were never interested in small transactions but with the increasing number of M-
wallet providers, banks were petrified that their relationship with customer will be upstaged
by them, so they launched their own digital wallets (payzapp and pockets) by HDFC bank
& ICICI bank.

36
 Debit
Physical card,credit Virtual
M-wallet
money card, Bank money
account

Figure 1.1 Transformation of Payments

RBI has been playing a pivotal role in the promotion of electronification of payments in
the country. It has classified M-wallets into four types:

RBI

OPEN SEMI-OPEN SEMI-CLOSED CLOSED

WALLETS WALLETS WALLET WALLET

Figure 1.2 Classification of Wallets

 OPEN WALLETS are the ones that allow the users to buy goods & services, withdraw
cash at ATMs or bank & transfer funds.( e.g. : ICIC’s pocket)

 SEMI- OPEN WALLETS allows the users to buy goods & services at wallet
accepting merchant locations (point of sale terminals). They do not permit cash
withdrawal or redemption by the holder. (e.g.: Airtel money)
 SEMI-CLOSED WALLETS allows the users to buy goods & services at listed
merchants & perform financial services at listed locations, therefore one can use to pay
for wide range of services. These are much more flexible than fully closed wallets.
They do not permit cash withdrawal or redemption by the users (e.g.: paytm, mobikwik
etc. The money put into wallet can be used for various purposes such as tickets, prepaid
recharges, DTH, money transfer etc.).
 CLOSED WALLETS are issued by business establishments for use at their respective
establishment only. These instruments do not permit cash withdrawal or redemption.(

37
 e.g. Ola has a closed wallet for taxis, and the money put into the service can only be
used to pay for those taxis).
RBI GUIDELINES FOR PREPAID PAYMENT INSTRUMENTS (PPI)

 Banks and Non-Banking Financial Companies which comply with the Capital
Adequacy requirements prescribed by Reserve Bank of India from time-to-time,
shall be permitted to issue pre-paid payment instruments.
 All other persons, seeking authorization henceforth, shall have a minimum paid-up
capital of Rs. 500 lakh and minimum positive net worth of Rs. 100 lakh at all the
times.
 Only companies incorporated in India will be eligible to apply for authorization.
 The guidelines on Know Your Customer/Anti-Money Laundering/Combating
Financing of Terrorism guidelines issued by the Reserve Bank of India to banks,
from time to time, shall apply mutatis mutandis to all the persons issuing pre-paid
payment instruments.
 The maximum value of any pre-paid payment instruments shall not exceed Rs.
1,00,000.
 All persons authorized / approved to issue pre-paid payment instruments are
permitted to co-brand such instruments with the name/logos of financial institution
/ Government Organization etc. for whose customers/beneficiaries such co-branded
instruments are issued. The name of the issuer shall be visible prominently on the
payment instrument. NBFCs/Other persons desirous of issuing such co-branded
prepaid instruments may seek one time approval from Reserve Bank of India.

ADVANTAGES OF MOBILE WALLET SERVICES

 One’s wallet can be snatched, misplaced or pick pocketed, but mobile wallet cannot
be, though there is a chance of someone stealing one’s a mobile.
 If the bill is of Rs 199/- or Rs 235/-, one will not have to run around asking for
change. It allows paying on a single tap.

38
  One need not fill in card numbers and passwords every time, they can link their
credit cards, debit cards and bank accounts and pay immediately without any hassle
to enter the details each time.
 When one makes a payment through a debit card or credit card, one is disclosing
their confidential bank data on the merchant’s site or establishment, it can lead to
unwanted security issues but by using M-wallet, one can restrict the exposure of
confidential data.
 Massive rewards in the forms of discounts & cash backs.

DISADVANTAGES OF MOBILE WALLET SERVICES

 Only with a smart phone & speedy internet connection one can use such services.
 More than the connectivity, security is a major issue.
 Dismal battery back-up of smart phones one can never be sure whether the phone
will be alive even for that one tap payment.

Xpay is a digital wallet developed by the UAE Exchange and they are promoting it since
2010. Recently they have developed a merchant version of this wallet. In this version, daily
business collection of a merchant will be credited to his bank account on the next day if
the amount due is Rs.1000 or above or else as per merchant’s request. Merchant may view
their last five transactions in the Balance Report in this wallet. The wallet is present both
in mobile and desktop versions. All interested shops and service establishments can tie-up
with issuer for Xpay. Merchant will have to register by submitting the required details and
requisite ID copy. After checking these documents, a merchant code, a QR code and a Bar
code will be issued to the merchant for effecting transactions. Customers through their
customer version of the wallet can pay their bills to merchants through the codes provided
and also with the linked mobile number of the merchant. Mobile/ DTH recharge facility is
also available in the merchant version. Some other features like online shopping, uber
service, forex service etc. which are present in the customer version is not there for
merchants. The transaction charge that is charged against merchants is 0.25% of the
transacted amount and the transfer to the bank account occurs in an over-night basis.

39
 FEATURES OF THE WALLET

Unique to Xpay Absent in Xpay but Present in most wallets

present in most wallets including Xpay

 Direct linking with  Load money from  Mobile/DTH

the bank account credit/debit cards. recharge
(in the merchant  Utility bill  Utility bill
version). payments (in the payments (in the
 Call nearby Xpay merchant version). customer version).
enabled merchants  Transaction reports
(in the customer  Uber services
version).
 Foreign exchange,
money transfer,
travel and tourism
assistance services
(in the customer
version).
 Online shopping
of flowers, gifts
and cakes.
Table 1.1 Features of Wallets

1.2 PROBLEM STATEMENT

Even though, the company had launched this wallet in 2010. It was only used within the
organisation for their regular customer. They have raised this wallet as one of their main
products very recently. So, with big players like Paytm already in the market, they are a
late entrant. Moreover, telecom operators like Jio, Airtel etc., mobile makers like Samsung
and various other banks have already introduced their own applications. Even Government
of India have launched the BHIM application which is a great threat to all. Samsung, Jio
etc. have their own power to make their customers to use the application. For example, Jio

40
 sim activation needs the installation of myJio applications. UAE Exchange do not have this
power to make the customers use their wallet service. With the presence of this many
alternatives merchants are reluctant to use every application. So to be that one or two
application that a merchant uses, it has to be the best one. Swiping machines are also raising
a threat by acting as one of the close substitutes.

Another important problem regarding this wallet is the non-popularity of the same. Mobile
wallets like Paytm, SamsungPay, Airtel money etc. are all having proper promotions
through advertisements and are known by people. This may make the merchant reluctant
to accept this wallet.

1.3 RELEVANCE OF THE STUDY

For a competitive world where the customers are not at all loyal to any product, customer
satisfaction is the key word. Maintaining a positive customer relationship is the only way
to achieve customer retention especially in a sector where a number of alternatives are
available.

A totally satisfied customer contributes 2.6 times more profit to your company than a
somewhat satisfied customer.

A totally satisfied customer contributes 17 times more profit to your business than a
dissatisfied customer.
A totally dissatisfied customer decreases profit to your business 18 times more than a
totally satisfied customer contributes to a company.
For UAE Exchange, Xpay is one of their emerging products. For any product, in the
introduction and initial growth stages of the life cycle proper care must be provided. If it
does not satisfy the needs of a customer or if it does not find the real needs of the customer,
it will be a failure for sure. For Xpay’s merchant version, merchants are the customers. It
is more difficult to satisfy a merchant than an ordinary customer. So it is very important
for the company to identify where all the wallet needs improvement, what all features have
to be added and how they have to position and promote this into the minds of the merchants.

41
CHAPTER II – RESEARCH PROCESS

2.1 OBJECTIVES OF THE STUDY

The objectives of this problem centred study are:
 To measure merchant satisfaction towards the wallet.
 To find out what all features are important for the merchant in a digital wallet.
 To identify the relative standing of this wallet compared to its competitors.
 To draw conclusions to improve the quality of this wallet and thereby improving
merchant satisfaction.

2.2 RESEARCH DESIGN

Descriptive research design was adopted to conduct the research based on merchant
satisfaction.

2.3 SAMPLING DESIGN

A sample of 50 merchants were taken to conduct the study on merchant satisfaction. One
of the non-probability sampling method, convenience sampling is used to select the
samples. Each of the elements in the sample is using the wallet for at least one month. All
the sample elements are from Thiruvalla region itself.

2.4 TOOLS FOR DATA COLLECTION

A standard questionnaire is prepared and the responses from each merchant is recorded.
This questionnaire has both multiple choice and descriptive type of questions to add strong
recommendations on the study. Data is also collected from the merchant’s responses and
comments about the wallet or similar products or what they are expecting at the time of
introduction to the application or the follow-ups that is necessary to make a merchant one
of the registered customers.

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2.5 METHOD OF STUDY
Xpay is completely a new wallet which the merchants do not even heard about. First of all,
this wallet is introduced among merchants in the Thiruvalla region. The various features,
terms and conditions etc. are conveyed to the merchant and they were registered with the
Xpay merchant account. The wallet is installed from the link sent through Whatsapp or
directly through Playstore. They were allowed to use this wallet for at least a month and
then using standard questionnaire prepared their satisfaction level is measured.

2.6 TOOLS FOR DATA ANALYSIS

Statistical tools like percentage and charts like bar diagrams and pie charts were used to
analyse the collected data. Pareto Analysis is also done to identify the major causes of
dissatisfaction towards the wallet.

2.7 SCOPE OF STUDY

 The area of study is limited to Thiruvalla region in the Pathanamthitta district, Kerala.
 This is a realistic source collected directly from the merchants.

2.8 LIMITATIONS OF STUDY

Ever research is done under some constraints and this is no exception. Limitations of this
study are as follows:

 The sample size is only of 50 merchants because of the limitations in the number of
merchants using this wallet
 These responses are from the merchants in a particular region.
 The merchants are having an experience of one month with the wallet.
 There can be some biasness from the respondent side which cannot be ruled out
completely.

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CHAPTER III- PRESENTATION AND ANALYSIS OF DATA

TYPE OF BUSINESS

Type of Business No of Merchants

Cloth Shop 11
Mobile Shop 10
Bakers 4
Duty Paid Shop 3
Others 22
Table 3.1 Type of Business

Interpretation
Out of the 50 merchants, 11 are having cloth shops and 10 are having mobile shops. There
are a number of merchants who are doing other kind of business like internet café, studio,
travels, bakers etc. So these information are not from a particular sector of merchants.

AGE PROFILE

AGE PROFILE
21-30
22% 41-50
28%

Above 50
12%

31-40
38%

Figure 3.1 Age Profile

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Interpretation
It is evident that the majority the merchants who tried this wallet are in the age limits of
31-40. Merchants with age over 50 are not that attracted towards this wallet

GENDER PROFILE

Gender
60

50

40

30

20

10

0
Female Male

Figure 3.2 Gender Profile

Interpretation
Majority of the merchants in the study are males with only 2 female merchants out of 50
merchants.

EDUCATIONAL QUALIFICATION

Educational Qualification

Post Graduate and above

Graduate

Higher Secondary

High School

Below High School

0 5 10 15 20 25

Figure 3.3 Education Qualification

45
Interpretation
The merchants taken in the sample belongs to different educational backgrounds. So the
conclusions that we get will be unbiased with respect to this aspect. Majority of the
merchants are graduates.

USAGE OF WALLET

USAGE OF WALLET

Rarely (14)

Very Rarely
(36)

Figure 3.4 Usage of Wallet

Interpretation
It is evident from the responses from the merchants that the usage of this wallet is very
low. Majority of the merchants they are using this wallet very rarely. There is not even a
single response from the merchants showing at least a medium usage of this wallet.

46
REASONS FOR CHOOSING THE WALLET

REASONS FOR CHOOSING THE WALLET

25

20

15

10

0
Brand name direct linking to bank For the sake of trying Lower transaction
account rates

Figure 3.5 Reasons for choosing this Wallet

Interpretation
More than 20 merchants have opted for this wallet for just trying. Registering in this wallet
is an easy task and there are no installation fees or hidden charges involved. So the
merchants were pretty confident in trying this wallet. Some merchants were attracted to the
lower transaction fees that were offered by the wallet. The transaction fees is very much
low compared to that of swiping machines. Also for swiping machines, the merchants have
to pay some rent even if there is no transaction. The direct linking to the merchant bank
account is another reason the merchants opt for this wallet. Unlike Paytm, they don’t have
to periodically transfer them. All amounts above Rs. 1000 will be directly transferred to
merchant’s registered bank account. Even some merchants are attracted towards the brand
name that UAE Exchange holds. It is interesting to note that none of the merchants have
chosen the option ‘innovative features’ which means that the features offered by the wallet
is not sufficient to attract the merchants.

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SATISFACTION AND IMPORTANCE OF VARIOUS ATTRIBUTES

Satisfaction Level

Figure 3.6 Satisfaction Level

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Importance Level

Figure 3.7 Importance Level

Interpretation
Overall Quality- This attribute is found to be extremely important for the merchants. More
than 30 merchants responded that it is important. And none of the merchants responded
that it is unimportant. But the merchants are not that satisfied with the wallet with respect
to this attribute. This evident from the 23 responses from the merchants that they are
dissatisfied with this attribute. Many have a neutral response also.
Speed of transactions- This aspect is also found to be very important from the responses of
the merchants. The merchants are also pretty much satisfied with the same. Some
merchants also responded in a neutral way.

49
Transaction charges- This is one of those attributes which is found to be extremely
important for the merchants. Almost all the merchants responded that this attribute is
important and extremely important. The merchants are pretty much satisfied with this
aspect even though some merchants responded that they are not that satisfied or have a
neutral response.
Features- This attributes is important for the merchants because majority responded
showing its importance. But some merchants are not giving that importance to this attribute
even though they are smaller in number. The merchants are extremely dissatisfied with
respect to this aspect. This is evident from the fact that none of the merchants opted this
wallet because of its innovative features as discussed earlier.
Simplicity- The merchants are having a mixed response with respect to this attribute. Some
merchants are much familiar with these kinds of wallets so they are not giving that
importance to simplicity. But for other merchants this aspect is also important. The
merchants are having a neutral response with respect to this attributes yet the number of
merchants who are satisfied are more than those who are unsatisfied.
Reliability- Most of the merchants thinks that this attribute is important to them. None of
them responded in a dissatisfied way. But the merchant’s response shows that the wallet is
unreliable. They respond either neutrally or negatively.
Security- This attribute is without any doubt very important for the merchants. As the
wallet is direct linked to their bank account they are very much concerned about the
security that the wallet provides. The satisfaction level of the merchants is neutral. Some
merchants who are using these kinds of wallets are not that concerned about security, so
they respond positively, but others respond negatively.

50
USAGE OF OTHER WALLETS OR SIMILAR SERVICES

USAGE OF OTHER WALLETS OR SIMILAR SERVICES

50
45
40
35
30
25
20
15
10
5
0
No Yes

Figure 3.8 Usage of other Wallets

Interpretation
Out of the 50 merchants in the sample, 44 of them are already using other wallets or similar
services like Swiping machine. So, they are having an experience even before they choose
this wallet. Of these 44 merchants, 41 of them are already using Paytm wallet, 23 are using
swiping machine facility, 8 merchants are using other wallets like mpaisa, SamsungPay
etc. along with Paytm or Swiping machine.

51
SATISFACTION LEVEL COMPARED TO OTHER WALLETS AND SERVICES

SATISFACTION LEVEL

Neutral

Extremely Dissatisfied

Dissatisfied

0 2 4 6 8 10 12 14 16 18 20

Figure 3.9 Satisfaction Level compared to other Wallets

Interpretation
The merchants are really dissatisfied with the performance of the wallet. 36 out of the 50
merchants responded that they are extremely dissatisfied or dissatisfied and 14 of the
merchants showed a neutral response. The main reason that the merchants are raising for
this dissatisfaction is that the wallet cannot accept cards from the customers. Presence of
only few features compared to other wallets is another issue. There are some other
responses which shows the non-popularity of the wallet also. Some merchants even
compared the wallet with Paytm and responded that the features and offers that this wallet
provide is very limited.

52
RECOMMENDATION TO OTHER MERCHANTS

RECOMMENDATION

Probably will not

Not sure

Definitely will not

0 5 10 15 20 25

Figure 3.10 Recommendation

Interpretation
22 merchants responded that they will not recommend this wallet to other merchants. 20
thinks that they probably will not recommend. 8 merchants are not sure about this. The
merchants who responded they definitely will not recommend this wallet to other
merchants thinks that this wallet is a waste of time and there is no use. Some of them raised
the issue with this. Some merchants are ready to recommend if necessary changes are made
so they responded that they are not sure.

53
FUTURE USAGE

FUTURE USAGE

Probably will not

Not sure

Definitely will not

0 2 4 6 8 10 12 14 16 18 20

Figure 3.11 Future Usage

Interpretation
31 out of 50 merchants responded that they will not use this wallet in the future. Out of
that, 16 merchants responded that they definitely will not use. They are thinking that there
are so many better alternatives than this wallet. They again raised the various limitations
about the wallet as reasons. 19 merchants responded they are not sure about this. These
merchants are willing to use this wallet if necessary changes according to them are made.

OTHER COMMENTS AND EXPERIENCES SHARED BY MERCHANTS

Many merchants are raising recommendations to add the provision to accept money from
cards which is present in Paytm. Some of them are raising the issues of security and
recommended to add more features which includes the sign out options. Some responds
that the wallet is not popular and is unknown to all, so more promotions to it must be done.
Some added necessary customisation options must be there to make it attractable. Some
even recommended for more offers especially in mobile recharges.

54
CHAPTER IV- FINDINGS, SUGGESTIONS AND CONCLUSION

4.1 FINDINGS

 The sample includes different types of merchants but mobile related shops are very
much attracted towards these kinds of wallets which is evident from their number.
 Majority of the merchants are males.
 There are merchants from different age groups but merchants above 50 years of age are
not that attracted towards this wallet.
 The merchants are from different educational backgrounds and all of them have a
descent representation in the sample.
 The usage of this wallet is found to be very low in the shops.
 The main reason for the merchants to choose this wallet is for the sake of trying. Some
of them are attracted towards the smaller transaction charges that the wallet offers. It is
important to note that no one has responded that they choose the wallet because of its
innovative features. Direct linking facility with the merchant bank account is
appreciated by some.
 Regarding different attributes associated with the wallet, the merchants are pretty
satisfied with the speed of the transactions and the transaction charges. But they are
extremely dissatisfied with the features that the wallet provides. They think that the
wallet is unreliable and the overall quality of the wallet is low. Some merchants are
also concerned with the security of the wallet.
 Most of the merchants are using other wallets or similar services. Paytm is found to be
the most used wallet by the merchants. Many are using swiping machines also. Few
merchants are using other wallets like Airtel money, SamsungPay etc. but all of them
are using Paytm along with it.
 Merchants think that all the attributes that were measured are important to a wallet. For
them, transaction charges and innovative features are extremely important than other
attributes.

55
  Overall, the merchants are extremely dissatisfied with the wallet. They want an option
to accept the card payments from the customers which the wallet is not offering. They
are not satisfied with the features that the wallet provides them.
 They think that the wallet is unpopular so there is no reason to keep the wallet with
them because the customers do not have this wallet with them so cannot accept money
in this way.
 Most of the merchants responded that they will not recommend this wallet to other
merchants and they will not use this in the future. They found that other alternatives
are much better than this wallet.
 Many merchants thinks that signing out facility is essential to the wallet to make it more
secure.

4.2 RECOMMENDATIONS

 The main issue the merchants are raising is the inability of the wallet to accept card
payments. Paytm has the option to accept card payments which shows the necessity.
Even Xpay’s customer version have the option ‘Load Money’ where money can be
loaded into the wallet from credit cards, debit cards or net banking. This option must
be added to the wallet so that more merchants will be attracted towards this wallet. The
normal swiping machine charges are 1.25% for debit cards and 2% for credit cards.
There is also a monthly charge for these machines. Xpay’s transaction charges is only
0.25 % of the transacted amount. Thus, if this option is added to the merchant wallet it
will be having an upper hand over swiping machines and there are chances of switcher
of merchants using swiping machine to this wallet.
 The next main issue that the merchants raise against the wallet is the non-popularity of
it. This wallet can only be used if the customers have the customer version. But most
people have not even heard of this wallet. So, proper promotional activities must be
done to gain popularity. Prime time advertisements or other way of promotions can be
done. Paytm promotes their wallet by giving cashback offers in association with other
brands. They are also giving other offers especially for mobile recharges. Following
these kinds of promotional activities will help to gain popularity for sure. Cash back
offers can be given to individuals if anyone installs the wallet from the link that he sent.

56
  The merchants are also concerned with the security that the wallet provides. It is better
to use a sign in and out option to the wallet so that the merchant feels more secure. The
wallet should also bring in more customisation to the wallet so that the merchants feels
it more pleasing.
 Absence of features is yet another problem. Bringing in innovative features is the
solution to this problem. Like customer version, there must be room for utility bill
payments like electricity bill payment or gas bill payment which can attract merchants.
An option to pay money to suppliers or other people can be added to increase the
functional aspect of the wallet.

4.3 CONCLUSION
UAE Exchange has shown its potential and ability in all fields of its business including
money transfer, money exchange, loans etc. But for them, Xpay is a new product. This
project attempts to study the merchant satisfaction towards this digital wallet. Satisfaction
of the customer is the key to success for any product. Especially in today’s competitive
world where there is no such thing called brand loyalty, the term satisfaction is very
important. It is more important to retain the existing customers than attracting new
customers. So these studies contribute a lot to the company by providing necessary
information on how satisfied the merchants really are, and what all things have to be
improved etc.
Xpay is a very late entrant to the digital wallet market. There are a lot of competitors
involved in this sector including Paytm, various bank wallets and also several other wallets
owned by various mobile operators. For Paytm, it is their only product and they have to
concentrate only on the betterment of the same. But for UAE Exchange, Xpay is not their
core product. They have to give attention to their other products too. So they must be very
cautious with the steps that they take in this matter. The wallet must be that competent
among the other wallets to be the one that a customer uses. It have to deliver something
extra than that a normal wallet do.

57
BIBLIOGRAPHY

Books
 Cooper, D. R., Schindler, P. S., & Sun, J. (2006). Business research methods (Vol. 9). New
York: McGraw-Hill Irwin.
 Kotler, P. (2009). Marketing management: A south Asian perspective. Pearson Education
India.
Journals
 Shah, A. (2012). Market research on factors affecting customer satisfaction in retail
banking in Vadodara, Gujarat, western India. Journal of Management CH Institute of
Management & Commerce, 3(1), 23-34.
URLs
https://www.uaeexchane.com/uae-exchange/history
https://www.uaeexchane.com/uae-exchange/forex
https://www.uaeexchane.com/uae-exchange/tavel-tours
https://www.uaeexchane.com/uae-exchange/remittance-retail
https://www.icsi.edu/portals/70/NBFC22MAR.pdf
Reference Documents
 UAE Exchange Annual Report 2015-16.
 Master Circular – Policy Guidelines on Issuance and Operation of Pre-paid Payment
Instruments in India, Reserve Bank of India, July 01, 2014.

58
ANNEXURE

Questionnaire:

Respected Sir/ Madam,

I am Kevin Mani, student of Rajagiri Centre for Business Studies, Cochin,
Kerala. As a part of my curriculum, I am doing a project on “A STUDY ON MERCHANT
SATISFACTION TOWARDS THE E-PAYMENT WALLET XPAY OF UAE EXCHANGE
IN THIRUVALLA REGION”. Please answer the questions given below by marking a tick at the
concern cell and give your response and help me out in carrying the study.

1 Name:

2 Shop’s Name:

3 Type of Business:

4 Age:
Below 20 21- 30 31- 40 41-50

Above 50

5 Gender:
Male Female Others

6 Educational Qualification

Below High School High School Higher Secondary

Graduate Post Graduate

7 How often do you use this wallet?

Very Rarely Rarely Sometimes Often

Most Often

59
8 What caused you to choose this wallet?

For the sake of trying

Lower transaction rates

Innovative features

Brand name

Others, please specify _______________________________

9 How satisfied are you on these attributes?

Extremely Dissatisfied Neutral Satisfied Extremely

Dissatisfied Satisfied

Overall
Quality

Speed of
transactions

Transaction
Charges

Features

Simplicity

Reliability

Security

60
10 How important are these attributes?

Extremely Unimportant Neutral Important Extremely

Unimportant Important

Overall
Quality

Speed of
transactions

Transaction
Charges

Features

Simplicity

Reliability

Security

11 Are you using any other wallets or similar services?

Yes No

If yes, which all?

__________________________________________________________________

12 How satisfied are you compared to the services provided by other wallets and similar services?

Extremely Dissatisfied Dissatisfied Neutral

Satisfied Extremely Satisfied

Reasons for your response

________________________________________________________________________

________________________________________________________________________

61
13 Would you recommend this wallet to other merchants?

Definitely will Probably will Not sure

Probably will not Definitely will not

Reasons for your response

________________________________________________________________________

________________________________________________________________________

14 How likely are you to continue to use this service?

Definitely will Probably will Not sure

Probably will not Definitely will not

Reasons for your response

________________________________________________________________________

________________________________________________________________________

If you would like to share any additional comments or experiences about the wallet, please
enter them below.

________________________________________________________________________

________________________________________________________________________

62