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DEPARTMENT OF MANAGEMENT
A Detailed Study
On
Date
Place
ACKNOWLEDGEMENT
Lastly I also thank everyone who has been directly and indirectly instrumental in
the completion of my dissertation.
BBA VI SEM
TITLE
A DETAILED STUDY
ON
2. INTRODUCTION
• INTRODUCTION TO PAYMENT
• E-COMMERCE
• CLASSIFICATION OF E-PAYMENT
3. REVIEW OF LITERATURE
5. RESEARCH METHODOLOGY
• RESEARCH DESIGN
• AREA
• POPULATION
• SAMPLE SIZE
• DATA
• TOOLS
6. DATA ANALYSIS
7. CONCLUSION
8. QUESTIONNAIR
9. REFERENCE
Aim and outline
The purpose of this thesis is to introduce current state, the challenges and future
expectations of online payment systems in India. The theoretical background discusses
history of e-commerce, the current situation of e-commerce and the methods of online
payment systems used in e-commerce in India. In the research section, various types of
customer opinions of online payment are studied by using questionnaire survey. This
research is also helpful to test weather online payment is suitable to use or not and its
impact on business and also consumers. In this paper an overview of electronic payment
methods and systems is given. Electronic payment systems can be grouped into three
broad classes: traditional money transactions, digital currency and credit debit payments.
Such payment systems have a number of requirements: e.g. security, acceptability,
convenience ,cost, anonymity, control, traceability and control of encryption methods .
Introduction
The development of technology and technological advancement as made smartphone to
become essential part of daily life of people .Smartphone are used as a source of
communication device, socialized tool, entertainment, internet and even payment tool.
Mobile wallet with the support of mobile technology as allowed the owners of smartphone
to carry out many financial transaction and identification implements .The identification
implements include name, type and other key words which enhances the security for all
the data’s on the mobile wallet and these data’s are encrypted and lost data’s can be
recovered by using a backup option.
The mobile wallet money is used in the various areas of the world business like Banks,
Customers and Companies. The Banks have taken a better position in providing a better
transaction services and payment to the customers requirement .For customers are dragged
by the shopping facilities that is given by mobile wallet and customers are attracted
because of convenience and speedy transaction .In case of companies ,the companies aims
at providing facility of transaction services and payment choice to their clients and the
multiple payment combination facility providing by the company are attached to mobile
wallet service
Introduction to E- Commerce
In the early 1990s the business and consumer world encountered a new way of conducting
trade business, which was named electronic commerce (e-commerce). Over the years
electronic commerce has evolved into a popular and acknowledged way of conducting
business. While researchers are still trying to understand it and gauge its importance and
turnover, e-commerce is changing and growing incredibly quickly, producing such
extraordinary results from both business and customer perspective that its phenomenon
cannot be overlooked by anyone who has ever thought of conducting business, whether in
online or offline environments. With many organisations\and people labouring in the field
of e-commerce it has become very clear that ecommerce is here to stay and organisations
and customers are trying to get maximum benefit from it.
The most popular definition of e-commerce is based on the online perspective of the
conducted business. E-commerce provides the capability of buying and selling products,
information and services on the Internet and other online environments. As for any trading
activity, the issue of safe and reliable money exchange between transacting parties is
essential. In an e-commerce environment, payments take the form of money exchange in
an electronic form, and are therefore called electronic payments. Electronic payments are
an integral part of e-commerce and are one of its most critical aspects Generally defined,
electronic payment is a form of a financial exchange that takes place between the buyer
and seller facilitated by means of electronic communications. An e-commerce electronic
payment is a financial exchange that takes place in an online environment
Electronic payment systems (EPSs) are summoned to facilitate the most important action
after the customer’s decision to pay for a product or service – to deliver payments from
customers to vendors in a most effective, efficient and problem-free way. The role of e-
commerce electronic payment systems is pivotal for future of ecommerce, whose further
growth depends on the timely development of EPSs.
When people or businesses enter into economic transactions, i.e. buy and sell goods and
services, the value thereof needs to be settled. Before the concept of money came in, the
settlement was through exchange of goods and / or services and it was called the barter
system. With the concept of money, the sale and purchase of goods and services are being
effected or settled by payment of money.
The ‘money’ was in early days the precious metals like gold and silver. Later, the
governments issued coins made of these precious metals as money; still later, the paper
money, the currency, became the norm as the money. Thus people settled their economic
transactions by paying in currency notes and coins.
As the banking system evolved, it became easier, safe and even remunerative to keep
one’s money in a bank account and it became still more easier and safe to use ‘transfer of
money in bank accounts’ for making payments for the economic transactions. This was
more so for large value transactions. Actually, it is now used equally for effecting low
value transactions also.
For effecting this transfer of money in bank accounts, a payment instrument was needed to
instruct the bank to effect that transfer. This instrument was the cheque for a very long
period. Thus a system consisting of the cheque as the payment instruments and an
infrastructure around the cheques consisting of the drawee bank, the drawer bank and the
cheque clearing houses came on the scene and were known as the payment systems.
Today we can boast of a strong retail payments framework in the country comparable to
that of any advanced country, and perhaps even better than some of them in terms of the
variety and efficiency. Various types of payment instruments exist to meet the
requirements of different users in different circumstances – bank accounts, cheques, debit
and credit cards, prepaid payment instruments, etc. There are various systems to meet the
remittance requirements of users depending upon their time criticality and cost sensitivity
– National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS),
Aadhaar Enabled Payment System (AEPS) and recently Unified Payments Interface UPI .
The need for making bulk and repetitive payments is met by systems such as Electronic
Clearing Service (ECS), National Automated Clearing House (NACH) and Aadhaar
Payment Bridge System (APBS).
For a long time the main payment instrument and payment system that existed in the
country was cheque and cheque clearing systems. Even the cheque clearing systems have
evolved from manual clearing system to MICR (Magnetic Ink Character Recognition)
clearing systems in mid 1980s which brought in great level of automation in cheque
clearing process besides standardising the cheque in terms of its physical dimensions.
After nearly twenty odd years of MICR clearing, the cheque truncation system (CTS) was
introduced first in New Delhi in 2008 and now all the erstwhile 66 MICR centres have
been subsumed into three grid-CTS systems. With this, a very large share of cheque
clearing in the country takes place on T+1 basis as if they were being cleared as ‘local’
cheques. Further, standardisation of cheque features with built-in fraud prevention
measures have also been brought in the form of CTS-2010 cheque standards. Apart from
CTS, there are over 1200 smaller clearing houses mainly catering to local requirements of
clearing small number of cheques and in most of these centres, depending upon the time of
depositing the cheques at the branch for collection, the funds could be realised within the
same day. For a country of our size, this is no mean achievement of having T or T+1
clearing of cheques and that too with certainty as funds are generally released to customers
after the associated ‘return clearing’. Not many countries can boast of this.
Payment instruments and mechanisms have a very long history in India. The earliest
payment instruments known to have been used in India were coins, which were either in
gold, silver and copper. In the Mughal period, Indian has starting use of bills of exchange
in the commercial International Journal of Enterprise Computing and Business Systems
centres. In the Muslim period traders' were use Pay orders it was issued from the Royal
Treasury on one of the District or Provincial treasuries. They were called Barattes and
were akin to present day drafts or cheques. In the in the twelfth century one of the most
important financial instrument were evolved that is Hundi it has continued till today. Till
1835 there were variety of currency systems and coinage in India, but in 1835, the East
India Company introduced the Company's Rupee to bring about uniformity of coinage
over British India. A paper currency system were implemented in 18th century, earliest
issues of paper currency were issued by the Bank of Hindustan, then after issued by the
General Bank in Bengal and Bihar, the Bengal Bank and three Presidency Banks. The
Paper Currency Act of 1861 conferred the monopoly of the Government of India and
presidency banks working in India. After the establishment of the RBI all rights of
currency system has given to the RBI in India.
Traditional money transactions
A letter of credit (LC), also known as a documentary credit or bankers commercial credit,
or letter of undertaking (LoU), is a payment mechanism used in international trade to
provide an economic guarantee from a creditworthy bank to an exporter of goods. Letters
of credit are used extensively in the financing of international trade, where the reliability
of contracting parties cannot be readily and easily determined. Its economic effect is to
introduce a bank as an underwriter, where it assumes the credit risk of the buyer paying
the seller for goods
A debit card (also known as a bank card, plastic card or check card) is a plastic payment
card that can be used instead of cash when making purchases. It is similar to a credit card,
but unlike a credit card, the money is immediately transferred directly from the
cardholder's bank account when performing a transaction.
credit card is a payment card issued to users (cardholders) to enable the cardholder to pay
a merchant for goods and services based on the cardholder's promise to the card issuer to
pay them for the amounts plus the other agreed charges.[1] The card issuer (usually a
bank) creates a revolving account and grants a line of credit to the cardholder, from which
the cardholder can borrow money for payment to a merchant or as a cash advance.
Currently, debit cards are spread widely and deposit transfer via the Internet appears to be
coming soon On-line payment by credit card is already available at many commercial web
sites today.
But these are evolutionary rather than revolutionary changes. What happens behind the
scenes – deposit transfer - remains the same. A problem of these type of transactions is
that the credit card details must be handled confidential. For secure credit card
transactions, a customer’s credit card number is encrypted using public key cryptography,
so that it can only be read by the merchant. The big advantage of this approach is that the
customer does not need to be registered with a network payment service; all that is needed
is a credit card number. However, without registration of customers, the encrypted credit
card transaction does not constitute a signature, anyone with knowledge of the customer’s
credit card number can create an order for payment .Also, because payments processed
using this approach are processed as standard credit card charges, the cost are quite high
so that this method is not suited for payments whose amounts are on the order of cents.
Three factors are stimulating the development of electronic payment systems: reduced
operational and payments processing costs, growing online commerce and decreasing the
costs of technology.. Reduction of costs is one of the major reasons for research and
development of EPSs. The central impetus for ecommerce and e-business is to provide a
more efficient service, primarily in terms of costs. In this light, paying online with
traditional payment systems such as credit cards is rather paradoxical, given that credit
cards are one of the most expensive of all available mainstream payment means for both
end consumers and merchants, defeated perhaps only by paper checks.
Lack of usability. Existing payment systems for the Internet require from the end
user to provide a large amount of information, or make payments using complex
elaborated web site interfaces. E.g. credit card payments via a web site are not the
easiest way to pay, as these require entering extensive amounts of personal data and
contact details in a web form.
Lack of security. Existing payment systems for the Internet are an easy target for
stealing money and personal information. Customers have to provide credit card or
payment account details and other personal information online. This data is
sometimes transmitted in an un-secured way. In practice this happens even in spite
of introduction of secure transactions mechanisms, such as Secured Socket Layer.
Providing these details by mail or over the telephone also entails security risks.
Lack of trust. Users tend not to trust existing systems with the long history of
fraud, misuse or low reliability, as well as novel systems without established
positive reputation. In the present situation, money loss by customers is quite
possible when using existing payment systems, such as credit cards, for Internet
payments. Potential customers often mention this risk as the key reason why they
do not trust a payment service and therefore do not make Internet purchases.
Lack of applicability. Not all web sites support a particular payment method, thus
limiting customers’ ability to pay. Credit cards work only with merchants who have
signed-up to the services of the corresponding credit card company, and do not
support direct business-to-business or interpersonal payments.
Lack of eligibility. Not every potential customer with money and intention to pay
can make use of certain payment methods. Not all potential buyers can obtain credit
cards due to credit history limitations, low income or other reasons.
Lack of efficiency. Some payments over the Internet can be too small to be
handled by existing payment systems, because of overheads included in the
processing of payments and transaction. Credit cards are too expensive for effecting
small payments and are unsuited for small transactions. The minimum fixed fee
charged to the retailer for processing a transaction could even surpass the value of
the goods sold.
High usage costs for customers and merchants. Existing payment systems use a rather
expensive infrastructure to facilitate the payment process. Credit cards are very expensive
for end users, not in the least because of the enormous and growing size of fraud, which
amounts to billions dollars per year. This loss is invisibly re-financed by users by the
higher costs of credit card services. In addition, credit card payments are still heavily
paper-dependent. Most credit card bills are sent in a paper form to customers by post, and
the bills are mostly settled by posting paper documents, like checks of giro payments,
which makes the whole cycle rather expensive. As mentioned above, this means that
resources employed in processing of credit cards transactions render them rather
ineffective for small payments, because the high overhead of credit cards.
Classification of E- Payment
Debit Card
The popularity of the debit cards is constantly rising and currently debit cards the most
popular non-cash payments instrument globally (Capgemini and RBS, 2013). In contrast
to credit cards, payments through debit cards are withdrawn directly from the personal
account of the consumer instead of an intermediary account. This makes it difficult for
consumers to handle payment disputes as there funds don't have an extra protection in a
debit account. For debit payments, providing the account number is enough without the
necessity of producing a physical card or card number. The use of debit cards is
particularly high in most countries with a specific user base depending on the conditions
and regulations attached to the issuance of credit cards. However, debit payments may not
popular on merchant websites as debit cards do not cater the demand for payments made
by international customers (Paunov and Vickery, 2006). Since there are lower costs for
using debit cards unlike credit cards this method is suitable for micropayments. In
addition, the overall security of debit card payments is found to be higher than that of
credit card payments with extensive identification requirements demanded by the banks.
Credit Card
The most commonly used online payment mode so far was the use of credit cards.
Initially, the security concerns hindered in the adoption of credit cards for making online
payments but later with the provision of more secure features to protect every transaction
made, customers developed trust on the use of credit cards. Applicability of credit cards is
a strong factor that contributed to its wide use throughout the world. Credit card
companies have established a wide network for their consumers ensuring a huge user base
for a number of different transactions. However, it is considered a less-suitable method for
small businesses and customers that need to make small payments due to high fees for
credit cards. Aggregation or cumulative payment solution can be a way to adapt credit
card payment system for micropayments.
One of the major advantages of credit cards is their easy to use functionality with making
online transactions in no time and from anywhere. These cards are easy to obtain and use
as customers don’t need to purchase any extra software or hardware to work with them.
Cardholder authentication procedure is also simple, with the provision of a name, credit
card number, and expiry date. For the security of consumers' personal information, credit
card companies have developed a number of complementary systems including
MasterCard Secure Code and Verified by Visa. These systems allow users to create a
password and use it when they shop online through their credit cards.
Mobile wallet
In a study regarding consumer adoption of mobile wallets, doan explained that ‘Mobile
wallet is formed when your Smartphone functions as a leather wallet: it can have digital
coupons, digital money (transactions), digital cards, and digital receipts’. Mobile wallet
service allows the user to install an application from online stores in their smartphones and
use them to pay for their online and offline purchases. Using latest technologies that
connect smartphones to the physical world such as NFC (Near Field Communication),
sound waves, and QR codes, cloud-based solutions, mobile wallets are believed to provide
more convenient payment solutions to the customers in future .
E-cash
During initial stages of introducing online payment systems, electronic cash systems
proposed in the form of Digi Cash or Cyber Cash. However, these systems were not much
appreciated and disappeared soon. At present, smart card-based systems are more common
in use for the payment of small amounts by many businesses. Smart cards usually rely on
specific hardware and card reader for their use and authentication. In addition to smart
cards, numerous electronic cash systems have also been established such as Virtual BBVA
and Clic-e. These systems work with the use of pre-paid cards or electronic tokens that
represent a certain value and can be exchanged for hard cash .
Further Modes of e-payment in India :-
Money is stored in app via recharge by debit and credit cards or net banking and can be
transferred through the same.
Online wallets are mostly used via internet and through smartphone applications to
transfer money throughout the world.
Consumer wallet limit is INR 20,000 per month or INR 100,000 per month after KYC.
The merchant wallet limit is INR 50,000 per month after self-declaration and INR 100,000
after KYC verification.
Facilitates P2P fund transfers is also one of the major transfer mode.
Likewise, e-payment was seen by as any exchange of an electronic worth of payment from
the buyer to the seller by means of an e-payment channel that permits clients to remotely
access and deal with their financial accounts and exchanges over an electronic system. In
general, an electronic payment system is an arrangement of monetary exchange amongst
purchasers and vendors on online conditions that is helped by a digital financial
instrument, (for example, electronic cheques, encoded credit card numbers, or cash in
digital form) supported by a bank, a mediator, or by a lawful associate telegraph.
However, that technology had not been widely used in the US until the time when their
Automated Clearing House (ACH) was incorporated in 1972. Since that time, the
electronic money turned out to be quite popular. This enabled U.S. commercial banks and
its central treasury came out with an alternative to cheque payment. Credit card industry
can also be traced back to 1914 when department stores, oil companies, Western Union
and hotels started issuing cards to their customers to enable them to pay for goods and
services. After about 40 years of credit card evolution, there have been increasing numbers
of credit card usage as they have become more acceptable by people as a medium of
payment, especially in transportation. Initially, credit cards were all paper based payments,
until in the 1990s when such cards were transformed to electronic completely. Due to the
increasing number of credit card usage, the industry has grown rapidly which led to the
introduction of a debit card too. Debit and credit cards are now used in transaction
payments for all types of purchases or services rendered all over the world.
There are quite a number of e-payment services that have been developed within the
payment system around the globe. These include electronic cheques, e-cash, credit cards
and electronic fund transfers. In general, online payment can be divided into two types:
one in view of the Internet Banking Payment Gateway (IBPG) and one in light of the
outsider payment platform. The first one is a sort of a direct mode of payment, and the
client understands the online payment via an e-business framework which is connected to
the banking framework. On the other hand, the second one involves money exchange from
the account of purchaser to merchant’s account by means of an outsider or third party
payment platform. The IBPG lies amongst the banking process system and the Internet; it
is a system which has been especially made for managing payment and payment
authorization. The IBPG is the link which links the purchaser, vender and the bank. The
online mode of payment which is based on IBPG cannot come into existence without the
payment gateway.. It was emphasized that each type could be assessed through these four
distinct qualities viz.: Technological aspect, Economic aspect, Social aspect and
Institutional and law aspects. In reality, we encounter two uniquely varied kinds of
payment systems.
Digital Payment Delivery Channels
Quick Response Code (QR code) is a 2D matrix barcode that stores encoded
information such as hyperlinks to website pages, app downloads, etc. To decode, users
simply need to scan the QR code image using any device with built-in camera (e.g.
smart phone) and QR code reader application installed.
NFC like smartphones or tablets. Contactless communication allows a user to wave the
smartphone over a NFC compatible PoS device to send information without needing
Near field communication (NFC)
Started as the transfer of airtime or bartering airtime with goods and services peer-to-
peer transfer of money on telecom network is now one of the mainstream mobile
money transfer instruments. This transfer can happen over SMS or use platform based
USSD (Unstructured Supplementary Service Data) and IVR system.
4. Payment through Biometric Authentication
Biometrics of a person is used by service providers to identify and
authenticate based on his/her biometric template that is stored in the device.
In another example of how China is accelerating a cashless economy, Ant
Financial launched the facial recognition payment service in a Hangzhou
branch of KPro, the Chinese version of KFC, making it the world’s first
physical store where customers can use their face to make a payment
Different E- Payment platform available in India
Paytm
PayTM is one of the largest mobile commerce platforms in India, offering its customers a
digital wallet to store money and make quick payments.
Launched in 2010, PayTM works on a semi-closed model and has a mobile market, where
a customer can load money and make payments to merchants who have operational tie-ups
with the company. Apart from making e-commerce transactions, PayTM wallet can also
be used to make bill payments, transfer money and avail services from merchants from
travel, entertainment and retail industry.
Net Banking
Net Banking is a virtual counter of the bank to provide network technology for the
customer to complete some traditional services such as opening an account, inquiries,
transfer, online securities, investments and financial management. By comparison with
traditional bank services, online banking cuts down operating cost. There are no time or
location limits, the bank can offer services anytime and anywhere, even anyhow.
Furthermore, net bank provides a variety of personalized services, such as insurances,
securities and other financial products.
PayPal
PayPal allows any business or individual with an email address to transfer money online in
a more secure, convenient and efficient way. The network is based on the existing bank
account and the credit card to create a real-time payment solution.
PayPal is the most popular third-party online payment system in the world. It has 8 million
transactions every day and has over 137 million PayPal accounts in 193 markets and
includes 26 currencies that it can transfer all over the world.
Google Wallet
Mobikwick
MobiKwik is an Indian company founded in 2009 that provides a mobile phone based
payment system and digital wallet. Customers add money to an online wallet that can be
used for payments..
Freecharge
With 20 millions of registered users this mobile wallet successfully providing the mobile
payment solution in India. Freecharge endowed in 2010 by Kunal Shah and Sandeep
Tandon, headquartered in Mumbai. The current CEO of the MobiKwik is Jason Kothari.
This e-wallet becomes the most popular app among youth, which allows you to make
prepaid, post-paid, DTH, bill payment and more in few clicks. Freecharge added one
unique feature in the app from where you can donate money to the registered NGO’s. Rest
features are similar to other m-wallets apps like add money using net banking, credit card,
debit card, etc. and make payment instantly sitting at home.
JioMoney
Reliance Jio is one of the most popular and trending telecom company in India. Introduce
by the wealthiest businessman of India – Mukesh Ambani. With a lot of customer
response Reliance, Jio shook the other big telecom companies of India ( Airtel, Idea,
Vodafone & more). It becomes the largest internet service provider company in India with
subscribers (6 million plus). Jio always cares about their users and provides best offers and
discounts every time.
This mobile wallet introduced by State Bank of India to make their user’s mobile
transaction instantly. Now users can make payment to other users or bank accounts by
adding money to their wallets using debit/credit card or net banking. Book online tickets,
send money to your family and friends with few clicks. This wallet app is available in 13
languages and allows to set reminders for money transfer, dues, etc. Download the
application from the app store to experience a new way of making payment.
Airtel Money
With the Airtel Money app, users can easily recharge prepaid accounts or pay postpaid
bills. You can also shop online if your digital wallet has cash loaded in it. It’s also
extremely safe as every transaction or payment you make requires a secret 4-digit mPin.
HDFC PayZapp
HDFC PayZapp, making digital payment in India simplified with one click payments, is
one of the top online wallets in India. Users can easily compare flight and hotel tickets and
even buy music or pay bills with the app. Simple connect your debit/credit card once and
forget to worry about making payments.
Ola Money
Ola Money, launched in 2015, is a digital wallet in India offered by Ola. While it’s
majorly being used to make payments for Ola cab rides, making cashless traveling a
dream come true, it can also be used to buy groceries or flight tickets and much more.
BHIM
BHIM or Bharat Interface for Money, is a complete payment solution app that works on
the Unified Payments Interface (UPI) system. BHIM is a digital payment method that
allows users to make various transactions such as sending and requesting money with a
Virtual Payment Address (VPA) on a real-time basis. Money can be sent and received
instantly on all 365 days in a year on a 24/7 basis. The service can also be used on bank
holidays. There is no need to provide bank account details such as account number or
IFSC code, all transactions can be carried out using only a VPA. Customers can directly
pay users using their VPA or scan and pay using the QR code option in the BHIM app.
The app is available in 13 languages and 12 local languages including Hindi, Tamil,
Telugu, Malayalam, Bengali, Odia, Marathi, among other languages. You can pay any of
your friends or relatives using their UPI ID directly and also shop online and pay by using
the ‘Pay by UPI/BHIM’ option. Many merchant outlets also accept the BHIM QR or UPI
QR code.
Oxigen
Oxigen, a FinTech company founded in July 2004, is one of the major providers of digital
payment in India. Along with making online purchases and paying bills, you can also send
gift cards to your dear ones.
Payumoney
PayUmoney, a part of PayU India, is a free payment gateway solution for merchants to
collect payments from customers via debit/credit cards or net banking, and more. They
also offer SMS and email invoicing for merchants that do not have a website.
Mobile-Wallet And their user base in India
Future Of E-Payment
According to MEF’s third annual Global Mobile Money report 2017, e-commerce and
mobile banking continue to grow with 69% of mobile users carrying out their banking
activity via mobile devices . The report conducted a study of 15,000 mobile users across
15 different countries of the world. The report defined the term Mobile Money for the
services including in-store payments, carrier billing, online payments, peer-to-peer
payments, and payments via mobile wallets. Growing use of mobile payment methods also
encouraged developed markets to install device penetration system and infrastructure that
should support mobile transactions in-store. In addition, contactless payment methods are
also becoming popular with their wearable technology that offers fast, easy, and a secure
way to pay at various places. The wearable payment technology includes smart watches,
rings, wrist bands, and a number of Android or iOS smartphones applications. GSMA
State of the Industry report for 2013 has also displayed some statistics that shade some
light on the future of mobile payments. According to this report, ‘By the mid-2013, there
were over 203 million registered mobile money accounts across the globe with mobile
money outlets outnumbering bank branches in over 80% of markets worldwide’ (Oracle,
2014). The rate of mobile payment transactions is increasing remarkably worldwide and
their value is predicted to rise from US$ 12.8 billion (estimated in 2012) to US$ 90 billion
by2015. These statistics clearly show that we have a cashless future ahead with more
secure and convenient options for making payments via smartphones and tablets.
Where mobile payment systems have brought new opportunities for merchants and
customers, they have also exposed them to new risks regarding privacy and security
issues. According to a report on mobile payments, careful planning is required to make
security an intrinsic element of online payment methods in future.
The future of mobile payments can be secured by using the latest technology in order to
overcome practical and analytical challenges faced by this industry. Radio barcodes
technology is believed to be a revolutionary addition to mobile payment systems. These
radio bar-codes send out radio signals that can be used to locate the position of things they
are embedded on. With the use of radio barcodes, the mobile payment market can enjoy a
promising future by providing enhanced security and convenience to its consumers. Radio
bar-codes technology could enable the sales personal to read the numbers and expiry date
on consumers' credit cards as they walk by. With enhancing the security protocols and
using the latest technology like radio bar-codes, mobile payment service providers can
create a system that is not only scalable at greater levels but is also most convenient to use
for the consumers.
The shift to digital payments has also been boosted by the rapid expansion of the Unified
Payments Interface (UPI). National Payments Corporation of India (NPCI), which
manages the platform, has recorded 482 million UPI transactions in October 2018 as
against 0.2 million in November 2016.
SOCIAL IMPACT
The banning of Rs.500 and Rs. 1000 notes was released suddenly and the worst affected
was the common man. The social impact was drastic with marriages facing severe issues
with cash transactions. People conducting marriages must produce the marriage invitation
to withdraw 2, 50,000 and above. This has caused great difficulty among the public.
The impact on the health care sector was huge with hospitals refusing to accept the old
currency. The common man faced severe issues transacting in the hospitals with old
currencies and several cases of death had been registered for not attending the patients due
to demonetization Salaried employees faced the issue on the opening day of the month
with their salaries credited in the bank account but they were able to withdraw only 2,000
rupees from the ATM machines. Many salaried people have gone to the bank branch to
withdraw their full salary amount with loss of pay. Social problems in the form of road
blockades and quarrels arouse with people waiting in long queues before the banks and
ATM machines. People become restless spending an entire day to withdraw money.
Several deaths have been registered as a result of waiting in long queue. Pensioners are
worst affected with no special provisions made for senior citizens in banks.
ECONOMIC IMPACT
Demonetization is viewed as a measure of sterilizing the money. RBI plays the pivotal
role in this demonetization drive. All the banking experts welcome this demonetization
measure. Considering the banking sector, both public and private sector banks are facing
the severe issue of Non-Performing Assets (NPA) or Bad loans to the tune of 10 lakhs
crore including the stressed assets according to RBI sources. This demonetization measure
will help banks to recover some bad loans and improve their financial position.
Considering the entire economy of India as a whole, demonetization will make most of the
transactions to be done through the formal banking sector. This will increase the
transparency with people and corporate paying tax properly. Income Tax department has
reported that only 4 percent of the individuals pay income tax while this figure has to be
increased to 28 percent. The demonetization will help achieve this target of the Income tax
department. When black money within India gets curbed, it will result in the overall
economic development of the nation.
The Digital India is a flagship program by the Government of India with a vision to
transform India into a digital society and knowledge economy. ―Faceless, Paperless,
Cashless‖ is one of professed role of Digital India. India continues to be driven by the use
of cash; less than 5% of payments happen electronically, however the finance minister, in
the budget speech, spoke about the idea of making India a cashless society, with the aim of
mopping black money. Even the RBI has also recently announced a document —
“Payments and Settlement Systems in India: Vision 2018” —with a plan to encourage
electronic payments and to make India to move towards a cashless economy in the
medium and long term.
REVIEW OF LETERATURE
NATIONAL PAYMENT CORPORATION OF INDIA (NPCI)
Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not
for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now
Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire
Banking system in India for physical as well as electronic payment and settlement
systems. The Company is focused on bringing innovations in the retail payment systems
through the use of technology for achieving greater efficiency in operations and widening
the reach of payment systems.
The ten core promoter banks are State Bank of India, Punjab National Bank, Canara Bank,
Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank
N. A. and HSBC. In 2016 the shareholding was broad-based to 56 member banks to
include more banks representing all sectors.
The Unified Payment Interface offers an architecture and a set of standard API
specifications to facilitate online payments. It aims to simplify and provide a single
interface across all NPCI systems besides creating interoperability and superior customer
experience.
It is a system which is designed to transfer the money between two parties in a simple,
secure and convenient ‘single interface’. It enables the user to receive and send the money
using smart phones through a ‘single identifier’ which can be a virtual address like Aadhar
number, email id etc. It prevents the user from entering the bank details or other sensitive
information again and again whenever you initiate a transaction.
Kotak Mahindra said it will charge Rs 2.50 for every transaction worth Rs 1,000 or less
while the same would be Rs 5 for transactions of more than Rs 1,000Unified Payments
Interface (UPI), which has been leading the digital payments push since demonetisation,
will no longer be free to use for peer-to-peer (P2P) transactions as Kotak Mahindra Bank
has become the first lender to charge beyond a monthly limit of 30 transactions from May.
• As the apex financial and regulatory institution in the country it is compulsory for the
RBI to ensure that the payments system in the country is as technologically advanced as
possible and in view of this aim, the RBI has taken several initiatives to strengthen the e
payments system in India and encourage people to adopt it.
• The Payment and Settlement Systems Act, 2007 was a major step in this direction. It
enables the RBI to “regulate, supervise and lay down policies involving payment and
settlement space in India.” Apart from some basic instructions to banks as to the personal
and confidential nature of customer payments, supervising the timely payment and
settlement of all transactions, the RBI has actively encouraged all banks and consumers to
embrace e-payments. in pursuit of the above-mentioned goal the RBI has granted NBFC’s
(Non-Banking Financial Companies) the permission to issue co branded credit cards
forming partnerships with commercial banks.
• The Kisan Credit Card Scheme was launched by NABARD in order to meet the credit
needs of farmers, so that they can be free of paper money hassles and use only plastic
money.
• A domestic card scheme known as Rupay has recently been started by the National
Payments Corporation of India (NPCI),promoted by RBI and Indian Banks Association
(IBA), inspired by Union pay in China, which will be promoting the use of cards i.e.
“plastic money”. Initially functioning as an NPO, Rupay will focus on potential customers
from rural and semi-urban areas of India. Rupay will have a much wider coverage than
Visa, MasterCard or American Express cards which have always been used for card-based
settlements.
• However, the Indian banking system suffers from some defects due to certain
sociocultural factors which hampers the spread of the e-payments culture even though
there are many effective electronic payment channels and systems in place. Despite the
infrastructure being there nearly 63% of all payments are still made in cash. A relatively
small percentage of the population pays their bills electronically and most of that
population is from urban India-the metropolitans. Also in some cases the transaction is
done partially online and partially “offline”. The main reason for this apathy switch to e-
payments comes from lack of awareness of the customer despite various efforts by the
Government.
OBJECTIVES AND HYPOTHESIS
OBJECTIVES OF STUDY
This study is based on primary data collected from 100 respondents in in Christian
Eminent College.. A well-structured questionnaire was designed to collect the information
from the respondents the questionnaire was designed to study modes of e-payment and its
impact on youth. The responses have been collected by means of face-to-face interviews
by authors.
To determine the current state of research on e-payment systems and their future
directions, the study employs a meta-analysis technique of research. In statistics, meta-
analysis refers to statistical analysis of large collection of analysed results from individual
studies with the aim of integrating such findings. In other words, meta-analysis simply
means analysis of analyses.
Population
Population is chosen with view to conduct genuine research which is based on diversified
Responses and results should be adequate and conclusion can be drawn.
Sample Size
The method of sampling used was non-probability. This method is best suited to
qualitative research and entails gradually selecting appropriate participants in order to
have specific content. Sample size is of 100 students who are chosen randomly from 300
students.
The selection of participants was crucial to the findings as there was needed scope for
generic characteristics but also contrasting views, this is shown by Kuzel (1992) & Mays
and Pope (1995) who state “The goal of qualitative sampling is not to produce a
representative sample, but is to reflect diversity” (cited in; Barbour, 2008 p. 53). Using the
purposive sampling method is a strategic way to establish similarities between the research
questions and sampling, this provided evidence that the participants would have relevance
to the research.
The sample of participants chosen for the conduction of primary research involved
management student of Christian Eminent College, the selection of the participants was a
result of following the set techniques discussed above. The focus groups were equally split
by gender; all participants had age ranges between Population.
DATA Collection
Data is based on both primary and secondary sources on primary findings and field
operations which are helpful in conclusion. Data is randomly collected from different
respondent who are chosen in organised way for questionnaire.
Secondary sources are also used for pre demonetization phase which is collected from
internet. In order to study the impact of digitalization secondary data from different
research papers, reports & government data has been studied and analysed.
Research tools
The study is secondary based in analytical in nature. Statistical and mathematical tools
such as simple growth rate, percentages and averages are used.
And to study the primary data we use ms excel and statistical tools.
DATA ANALYSIS AND
INTERPRETATION
DATA CHART AND INTERPRETATION
Answer
Particular Answer
Female
30% Male 70
Female 30
Male
70% Total 100
Answer
Particular Answer
job
20%
student 80
job 20
student
80% Total 100
Interpretation :- Majority of population is students i.e., 80% and students are adopting all the digital changes .
Table 3: showing percentage of respondents aware of Online shopping and
E-transactions
Yes 82 82%
No 18 18%
Awareness of E-Payment
Yes No
18%
82%
Interpretation: The above analysis shows that majority i.e. 82% of the respondents are
aware of online shopping facility and 18% are not aware of the same.
Table-4: Table showing preference of the consumer for online payment
applications for buying products:
Particular No. of respondent %Percentage
Paytm 46 46%
Phone pe 12 12%
Google Pay 10 10%
Amazon pay 8 8%
Freecharge 5 5%
Pay-zapp 2 2%
BHIM 7 7%
Sbi-Buddy 4 4%
Other 6 6%
Total 100 100%
Other
6%
No. of respondent
Sbi-Buddy
4%
BHIM
Pay-zapp
7%
2%
Freecharge
5% Paytm
46%
Amazon pay
8%
Google Pay
10% Phone pe
12%
0%
6%
13%
8%
7%
14%
9%
43%
Interpretation: The analysis shows that 13% consumers preferred to use credit card for
the purchase of products from online shopping websites, 14 % consumers preferred to use
debit card, 9 % people used net banking for , 43% people used cash on delivery option ,
8% consumers used paytm wallet, 7% people used EMI for the payment, , 6 %
respondents used gift card option as a mode of payment.
Table-7 Table showing preferred mode of payment normally used by the customer
for buying products through online shopping. (after demonetization).
Credit Card 9 9%
Debit Card 43 43%
Net Banking 10 10%
Cash on 2 2%
Delivery
Paytm wallet 24 24%
EMI 7 7%
Gift Card 5 5%
Total 100 100%
No.of Respondents
Credit Card Debit Card Net Banking Cash on Delivery Paytm wallet EMI Gift Card
5% 9%
7%
24%
43%
2% 10%
Interpretation
1: Majority of the respondents agree that mobile wallet/digital payment provides
benefits to individual for purchase of products, improve the quality of decision, helpful
in buying products as compared to traditional methods, they offer a wide range of
banking services and payment options. They also agree that interaction with mobile
wallet is helpful and that they trust the service providers.
It is clear that mobile wallet will alter the other modes of online payment in future.
The users of mobile wallet are much satisfied on its usage.
Factors like brand loyalty, convenience of shopping plays an important role in
adoption of mobile wallet.
Security and safety of funds plays a challenging factor for the users
The cashless transaction activity had a great step to enhance the transparent economic
development, empower the financial inclusion and integrates the parallel economy with
main stream. In present scenario the country needs to move away from traditional cash
based transaction towards a cashless or digital payment system. Therefore the following
suggestions will help to
Improve cashless transaction among the consumers.
The Government of India along with banks should be organize intensive awareness
program about the benefits and need of cashless transaction or digital payments to students
of colleges, higher educational intuitions.
The banks should organize camp at village to educate the people about digital payment
system.
The Government of India and Telecom ministry should make necessary step to enhance
broadband speed and wide coverage of internet to all areas.
The government should continue and give some incentive benefits to those who are using
regular digital payments because it will motivate not only the regular user but also new
user.
CONCLUSION
CONCLUSION
Technology has arguably made our lives easier. One of the technological innovations in
banking ,finance and commerce is the Electronic Payments. Electronic Payments (e-
payments) refers to the technological breakthrough that enables us to perform financial
transactions electronically, thus avoiding long lines and other hassles. Electronic Payments
provides greater freedom to individuals in paying their taxes, licenses, fees, fines and
purchases at unconventional locations and at whichever time of the day, 365 days of the
year. After analysis and comparison of various modes of electronic payment systems, it is
revealed that it is quite difficult, if not impossible, to suggest that which payment system
is best. Some systems are quite similar, and differ only in some minor details. Thus there
are number of factors which affect the usage of e-commerce payment systems. Among all
these user base is most important. Added to this, success of e-commerce payment systems
also depends on consumer preferences, ease of use, cost, industry agreement,
authorization, security, authentication, non-refutability, accessibility and reliability and
anonymity and public policy. The Reliable and Cashless payment system offers immunity
against theft of paper and e-money, and adopting e-payment solutions or systems for
different reasons. In addition to cost reduction, reference was made to a number of other
benefits, including improved customer service, improved working capital, increased
operational efficiencies and cycle times, processing efficiencies and enhanced compliance
to organizational policies and procedures .This opportunities e-payment operation
increases different levels of risks for marketing. More than ten Years of Internet marketing
research have yielded a set of important findings. Based on our review of these findings, it
is clear that the Internet is playing a more and more important role in the field of e-
payment .peoples are becoming aware of the need to measure the collaborative effects of
e-payment The study reveals that the peoples were not aware and educated. They have not
any knowledge of e-payment. The study is based on survey .The respondent have to
answer the questions on their own. Some people satisfy with our views. But some peoples
are not satisfies with us. This study states that Online e-payment provides greater reach to
customers. Feedback can be obtained easily as internet is virtual in nature. Customer
loyalty can be gain. Personal attention can be given by bank to customer also quality
service can be served.
We came to know various strengths of e-payment System such as quality customer
service, greater reach, time saving customer loyalty, easy access to information, 24 hours
access, reduce paper work ,no need to carry cash easy online applications etc.
QUESTIONNAIR
QUESTIONNAIRE
Name:-
Gender: - Male Female
Occupation:- b Student Job Business Others
http://cashlessindia.gov.in.
http://www.npci.org.in/incentivizing digital payments.
http://cashlessindia.gov.in
http://www.npci.org.in/incentivizing digital payments.