Mar 24, 2017

The day the ATMs across streets said, “No Cash”. The day my bank said I can withdraw only 20,000 rupees from my account in a week, even that 4,000 rupees at a time. The day I had to trade my work hours for simply standing in a long queue to withdraw my money. That’s the day, I thought, I had enough with banks and money!!

Well! I know that I am not alone. The whole of India is trying to go cashless. As demonetization indirectly challenged the traditional way of transacting through cash, the digital economy took a leap of faith. You might have seen local chaiwalas and roadside petty shops using Paytm. This is what exactly cashless economy is all about.

From barter to banking

I guess, in a way, cashless economy has its roots in the barter system. Yes! The ancient system of exchanging goods for goods without any involvement of cash. Over several hundreds of years of the development trade and commerce, and with that the cash economy, banks have become the central players in financial transactions and wealth management. But they needed efficiencies, speed and ease of transactions in an increasingly globalized economy.

Bank account in a card

Thus, came the plastic currency! Banks shrunk their customer’s bank account into a small plastic bank card. Though it is easy to use, it lacks the capability of convenience. What if the ATM runs out of cash or a biometric reader is offline. There can be so many drawbacks with the Bank card that you probably are not aware of, thanks to technology! To overcome such challenges, Internet banking came to the rescue. Ease of use and simplicity, backed by 24X7 availability, changed the way people transact.

Bank moves into your mobile

But it was matter of time before they had to come up with something even more revolutionary. After all the world moved from computers to mobile phone, and banks had to move up the value chain. Thus, came ‘mobile wallets’.

Consider this. There are about 40 mobile wallet apps available in India, and mobile transactions have zoomed from Rs. 10 billion in 2012-13 to Rs. 490 billion in 2015-16. Indeed, Smartphone proved to be mightier than the plastic card.

Now it’s just an app

Even as the country fast forwarded its journey towards a cashless economy, two significant initiatives are helping to make it easier for customers and banks. The Unified Payment Interface (UPI), which can integrate several bank accounts and cards into one app, is enabling a seamless transaction for both sender and receiver. UPI allows the user to make transaction directly from their bank account, just like their Debit/Credit card. At present, there are around 30 banks relying on the UPI platform with their unique app on Play Store and App Store. And UPI, currently, can be regarded as the safest mobile payment system.

The second one is the BHIM – Bharat Interface for Money – app. It is a UPI-based payment app, built over Immediate Payment Service (IMPS) and developed by the National Payments Corporation of India (NPCI) for easy and safe transactions.

UPI is the way to go

Still need reasons on why you should invest in UPI as the basis of your payment gateway integration for your apps. Here you go.

–  UPI changes the smartphone into a virtual wallet, allowing the users to send and receive money across banks using the Aadhaar number. It does not require the user to provide the bank account details in every transaction.

–  As UPI uses Immediate Payment Service (IMPS), it works 24×7.

–  UPI has proved to be a game changer, extending its boundaries to encompass both the private sector and government sector.

Developer’s guide

UPI based apps are quite different from the normal apps. One cannot simply develop and launch an app unless they are partnered with a Payment Service Providers (PSPs) like a Bank, which allows to acquire user information and make payments. To put it simply, it’s the bank, that can provide an app to its customer, not you!

Today, NPCI libraries are made available for all major operating systems like Android, iOS, and Windows. These libraries allow secure capture of credentials like PIN, OTP, and Biometrics, using the PKI (Public Key Infrastructure) encryption. If you want to deep dive into UPI, then check out the procedural guideline of National Payments Corporation of India.

It is now rather clear that going cashless is akin to going digital. “Banking is essentials, Banks are not,” rightly said, Bill Gates.

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