In today’s rapidly evolving financial landscape, where customer expectations are continually shifting, developing credit card stacks requires a strategic approach that places users at the center. Design thinking emerges as a powerful methodology for crafting credit card solutions that not only meet but exceed user expectations. Let’s explore how design thinking principles can be applied to create credit card stacks that resonate with modern consumers, leveraging the elements provided below:

1. Empowering Credit Card Issuance: A Unified Approach with One-Stop TSP Full Stack

A cohesive credit card issuance ecosystem is essential for seamless operations. By adopting a One-Stop Technology Service Provider (TSP) approach, integrating components like switch/processor, CCMS, UPI, ACS for 3DS, NCMC, Bank portal, co-brand portal, and a cardholder Mobile App, financial institutions can streamline processes and enhance user experiences. This consolidation enhances efficiency and provides a unified experience for both customers and financial institutions.

2. Modular Flexibility: Tailoring Solutions to Specific Needs

Every bank has unique requirements when it comes to credit card offerings. Modular flexibility allows banks to cherry-pick modules according to their needs, whether it’s a Rewards Engine, Instalment Plan/EMI module, NPA Management, or the entire stack. This approach ensures that the credit card solution aligns perfectly with the bank’s objectives and target market.

3. Highly Configurable for Diverse Credit Card Programs

Credit card programs cater to different customer segments and needs. They also work with different cobrand partners to power different use cases. A highly configurable credit card stack enables banks to orchestrate diverse programs seamlessly. Whether it’s secured/unsecured, retail/business/corporate, or charge/credit cards, the stack can adapt to different program requirements. This configurability empowers financial institutions to offer tailored solutions that resonate with their target audience.

4. Delivering a Fintech-Like User Experience

In today’s digital era, user experience is paramount. A customer-centric approach to mobile app design and user journey is essential for success. From DIY features to 100% digital onboarding, the mobile app must be intuitive, seamless, and user-friendly. By prioritizing user experience, banks can enhance engagement, loyalty, and satisfaction among their customers, setting themselves apart in a crowded market.

5. Rapid Implementation and Seamless Integration

Time is of the essence in credit card stack deployment. Banks need solutions that offer faster implementation, customization, and integration with minimal manual intervention. A well-designed stack should seamlessly integrate with existing systems like CBS, CRM, IVR, FRM, Collections System, Mobile Banking App, and Net Banking portal. This integration ensures operational efficiency and a cohesive user experience across all channels.

6. Rule-Based Operations: Ensuring Compliance and Personalisation

Compliance and personalization are two cornerstones of credit card operations. Rule-based systems within the credit card stack facilitate validations for regulatory compliance, including co-branding arrangements. Moreover, these systems allow for personalized actions at both aggregate and single-account levels, along with event-based notifications for consent and alerts, ensuring transparency and proactive communication with users.

7. Leveraging ML/AI for Real-Time Actions

Integrating machine learning and artificial intelligence enhances the capabilities of credit card stacks. Real-time actions such as fraud risk management and personalization of rewards/offers become more effective and efficient with ML/AI algorithms. By leveraging data analytics, banks can promptly detect fraudulent activities while delivering targeted offers that resonate with individual users, thereby increasing engagement and satisfaction.

8. Future Compatibility and Innovation

Anticipating future innovations and regulatory changes is crucial in the ever-evolving landscape of finance. A well-designed credit card stack is built from first principles, with scalability and adaptability to accommodate future advancements. For example, customization to support emerging technologies like Credit Line Management on UPI ensures that the stack remains future-proof, enabling banks to stay ahead of the curve while minimising costs.

In conclusion, design thinking offers a holistic approach to credit card stack development, emphasizing user-centricity, innovation, and efficiency. By embracing modular flexibility, configurability, and advanced technologies, financial institutions can create credit card solutions that not only meet the demands of today’s consumers but also adapt seamlessly to upcoming demand.

Authored by Astha Bishnoi, Manager – Partnership & Sales at CARD91

UPI has emerged as India’s preferred payment method, constituting >75%* of the nation’s digital payment by volume. So far, UPI transactions were supported by various funding accounts like savings accounts, overdraft accounts, prepaid wallets, and Rupay Credit Cards. Now, a new addition has entered the UPI ecosystem.

Effective April 6th, 2023, the RBI has authorised Scheduled Commercial Banks to facilitate UPI payments using pre-sanctioned credit lines. According to the circular, “It is now proposed to expand the scope of UPI by enabling transfer to / from pre-sanctioned credit lines at banks, in addition to deposit accounts. In other words, UPI network will facilitate payments financed by credit from banks. This can reduce the cost of such offerings and help in development of unique products for Indian markets.” ** 


Credit Line on UPI gives the retail banking customer access to credit in the most convenient fashion – no long-drawn onboarding process, no learning curve and doesn’t take up space in their wallet. In short, a pre-sanctioned credit line simply works like the extension of an existing banking relationship. Coupled with UPI which is the most accessible, powerful, and easy-to-use payment channel in the country, it provides a seamless and efficient way to perform transactions that is sure to bring more citizens into the fold of credit.

For the banks, this presents a new business avenue by unlocking an additional revenue stream with better unit economics, thanks to lower operational overhead. However, for the banks, taking Credit Line on UPI functionality live is not without challenges – the existing Loan Management Systems do not necessarily allow management of Revolving Limit, customising Credit Card Management System to suit the needs of the Credit Line product can be cumbersome and the existing Core Banking System for Overdraft might not be able to handle the required throughput.

This is why banks need a modern, modular, scalable and highly configurable solution that supports a variety of credit line product types. CARD91’s Credit Line Management System offers everything your bank needs to take Credit Line on UPI live for your customers.

Our Credit Line Management System is guided by three principles:

1. Highly Configurability: CARD91’s highly configurable CLMS platform enables issuers to design and customise credit schemes, supporting various product types including interest-free, interest-bearing, fixed-term loans, and revolving credit to cater to diverse target segments.
2. Modularity: Our modular framework empowers issuers to effortlessly customise, expand, and integrate features, ensuring a solution that can evolve with your dynamic business requirements.
3. Regulatorily Compliance: CARD91’s CLMS platform is compliant with the regulator’s guidelines pertaining to digital lending. Our configurable setup makes adapting to new regulations a breeze. 

What’s more?

> Easily integrate with your banking systems: CARD91’s CLMS allows seamless incorporation of Credit Line on UPI workflows into your existing banking processes. This includes easy management of credit lines through your issuer portal and seamless integration of CARD91’s SDKs with your mobile app/net banking.

> Certified for UPI 2.0: Our UPI switch is NPCI-certified for UPI 2.0 and is pre-integrated with CARD91’s credit line management system. If the bank already uses a UPI switch, it can be seamlessly integrated with our CLMS.

This is how your bank can go live with Credit Line on UPI in three simple steps using CARD91’s Credit Line Management System:

1. Create Credit Scheme

Create a credit scheme on the CLMS portal by defining the credit line product type, account type, and associated templates for fees, billing, EMI, etc.

2. Define Pre-sanctioned Credit Limits

Assign pre-sanctioned credit limits for customers via Bulk Upload / APIs and seek consent before the customer can avail the credit line.

3. Allow discovery of credit line accounts via APIs

Our Account Management APIs facilitate comprehensive credit line lifecycle management, encompassing the discovery, activation, and usage of Credit Line on UPI.

In embracing Credit Line on UPI, banks can leverage the transformative shift happening in India’s digital payment landscape. The potential impact this can bring about is three-fold:

1. CL on UPI can open up access to credit in rural India through sachet credit line offerings, thereby creating a new wave of financial inclusion.
2. ETB customers who are non-users of any credit facility, but uses UPI can now be nudged to use Credit Line on UPI, given how simple and effortless the shift is.
3. Through purpose-based lending that Credit Line on UPI offers (powered by CARD91’s CLMS Transaction Control Module), banks can ensure that the credit usage happens for the intended purpose.

By leveraging UPI’s widespread adoption and integrating pre-sanctioned credit lines seamlessly into everyday transactions, banks not only enhance customer convenience but also unlock new avenues for revenue growth.

CARD91’s Credit Line Management System offers a robust framework to Issuer Banks to navigate these complexities brought about in managing Pre-sanctioned Credit Lines as per board policy and empower them to pioneer this next evolution in retail banking.

Sources:

* https://redseer.com/newsletters/trends-reshaping-indias-payment-landscape/

** https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55473 and https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12532&Mode=0

Authored by Praveen Varghese, Product Manager at CARD91

In a world that has moved to the internet and the mobile, data privacy is paramount. This is more evident in financial services. As India embraces digital financial services, the volume of sensitive consumer data has soared. Protecting this data is essential not only for regulatory compliance but also for building and maintaining consumer trust. Robust data privacy practices prevent financial crimes such as identity theft and fraud, ensuring the integrity of financial systems, and the security of customers.

The Significance of Data Privacy in Indian Fintech

The digital transformation of financial services in India has led to an explosion in the amount of sensitive consumer data being collected, processed, and stored. Ensuring the privacy and security of this data is vital for maintaining consumer trust and preventing financial crimes such as identity theft and fraud.

Challenges in Prioritising Data Privacy While Fostering Innovation

Regulatory Compliance: The Digital Personal Data Protection Bill, 2023, aims to provide a robust framework for data protection. Fintech companies must navigate these regulations, requiring significant expertise and resources to ensure compliance without stifling innovation.

Data Security: With rising cyber threats, fintech firms must prioritise data security. Implementing advanced security measures like encryption, multi-factor authentication, and regular security audits is crucial to protect consumer data from breaches.

Transparency and Consent: Consumers are increasingly concerned about data usage. Fintech companies must ensure transparency in their practices and obtain explicit consent from users for utilising their personal information for various analysis, which can be challenging in a rapidly evolving industry.

Balancing Personalisation and Privacy: Personalisation enhances user experiences but requires access to detailed consumer data. Fintech companies must balance data utilisation for personalisation with respecting consumer privacy, ensuring that customer data is protected at all times.

Strategies for Prioritising Data Privacy at CARD91

1. Embedding Privacy into Product Development: CARD91 integrates data privacy considerations from the initial design phase of all products and services, ensuring inherent protection of consumer data.
2. Advanced Security Technologies: CARD91 deploys cutting-edge security technologies, including AI for threat detection and end-to-end encryption, to safeguard consumer data from cyber threats and breaches.
3. Regular Privacy Audits and Assessments: Frequent privacy audits and assessments help CARD91 evaluate and enhance the effectiveness of its data protection measures, identifying and addressing potential vulnerabilities promptly.
4. Employee Training and Awareness Programs: Ongoing training and awareness programs for employees foster a culture of privacy awareness, ensuring all staff members understand their role in protecting consumer data.
5. Consumer Education and Transparency: CARD91 prioritises transparency by clearly communicating its data privacy practices to consumers and providing educational resources to help them understand their rights and protection measures.
6. Robust Incident Response Plan: A comprehensive incident response plan enables swift and effective action in the event of a data breach, minimising its impact on consumers.

By focusing on these key strategies, CARD91 ensures that data privacy remains a top priority while fostering innovation in the Indian fintech market. This approach not only complies with regulatory requirements but also builds lasting trust with customers, driving long-term success.

The Role of Government and Regulatory Bodies

The Indian government and regulatory bodies, such as the Reserve Bank of India (RBI), play a pivotal role in shaping the data privacy landscape. Initiatives like the RBI’s data localisation mandate and the forthcoming Digital Personal Data Protection Bill emphasise the importance of protecting consumer data. The establishment of the Data Protection Authority (DPA) will further strengthen the regulatory framework, ensuring compliance and safeguarding consumer interests.

Conclusion

As India’s fintech sector grows, giving importance to data privacy while fostering innovation is critical. At CARD91, we are dedicated to protecting consumer data through privacy-centric practices and robust security measures, ensuring the safety and trust of our customers.

In an era where data is the new currency, excelling in data privacy is not just a legal obligation but a strategic advantage. Fintech companies that prioritise data privacy will build lasting relationships with their customers, driving long-term success in the dynamic Indian fintech landscape.

At CARD91, we are committed to creating a secure and innovative environment for financial technology in India, ensuring a sustainable and trustworthy future for the industry.

Authored by Astha Bishnoi, Manager – Partnership & Sales at CARD91

As India advances in its digital transformation journey, the payments landscape is rapidly evolving. Over the past decade, driven by smartphones and government initiatives like Digital India, the financial ecosystem has seen significant shifts. One of the most notable changes is the increasing adoption of contactless payments, especially in credit card transactions. Unified Payments Interface (UPI), mobile wallets, and contactless payments are at the forefront of this revolution.

Contactless payment methods such as tapping cards at POS terminals (up to ₹5000), National Common Mobility Cards (NCMC) for transit, and mobile wallets like Google Pay and Apple Pay have made transactions faster and more convenient. Globally, this trend is gaining traction across sectors like retail and public transport, further enhancing the payment experience.

The Benefits of Contactless Payments

1. Speed and Convenience: Faster transaction times improve the shopping experience, especially in busy cities.
2. Enhanced Security: Each transaction uses encrypted, unique codes to reduce fraud risk.
3. Hygiene and Safety: Less physical contact promotes hygiene, particularly important post-pandemic.
4. Mobile Wallet Integration: Contactless cards easily integrate with mobile wallets, adding flexibility to payments.

Adoption in India

In cities like Mumbai, Delhi, and Bengaluru, contactless payments are gaining momentum, with retailers and public transportation adopting NFC-enabled terminals. While rural uptake is slower, government-led digital literacy and financial inclusion initiatives are helping drive adoption in underserved areas.

Safety and Security Perceptions

The Reserve Bank of India (RBI) has implemented guidelines to enhance contactless payment security, such as setting transaction limits and mandating two-factor authentication for higher amounts. Financial institutions and payment providers are actively educating consumers on encryption and tokenization to ensure their financial data is secure. Additionally, advancements like biometric authentication and dynamic CVV codes further bolster the security of these transactions.

The Future Outlook

1. Widespread Adoption: Contactless payments will continue to grow in popularity across both urban and rural areas.
2. Security Innovation: New technologies and stricter regulations will strengthen the safety of these transactions.
3. Integration with Emerging Tech: Contactless payments will merge with technologies like blockchain and IoT, enhancing their functionality.
4. Sustainability: The industry is adopting eco-friendly practices, from digital receipts to green card materials.
5. Credit Line on UPI: An emerging trend is the integration of credit lines with UPI, allowing users to make UPI transactions using a pre-approved credit line without needing a physical card. CARD91’s Credit Line Management System enables banks to manage these credit lines effectively, leading the next wave in digital banking.

Conclusion

Contactless payments are set to shape the future of credit card transactions in India. Their advantages—speed, convenience, and security—are well-suited to the needs of modern consumers. As the digital payments ecosystem evolves, embracing contactless methods will contribute to a safer and more efficient financial landscape, making the future of credit card transactions both seamless and secure.

The Unified Payments Interface (UPI) has transformed India’s digital payments landscape, and the introduction of Credit Line on UPI brings an exciting opportunity for banks to offer credit directly through UPI apps. This feature allows customers to access pre-approved credit seamlessly for their transactions. As per the Reserve Bank of India (RBI) guidelines, only Scheduled Commercial Banks (SCBs), excluding Regional Rural Banks (RRBs), are permitted to issue credit lines via UPI. Moreover, banks must adhere to responsible lending practices, ensure data security, and maintain transparent communication with customers. This blog explores the strategic advantages and challenges for banks in implementing Credit Line on UPI.

Amit Shah, Chief Business Officer of CARD91, emphasised the significance of this development:

“The rise in Credit Line on UPI reflects a shift in consumer preference for flexible and instant credit solutions. With CARD91’s robust Credit Line Management System, we are empowering banks and fintechs to offer secure, scalable, and efficient credit access to their customers.”

What is Credit Line on UPI?

Credit Line on UPI allows customers to access a pre-approved credit limit directly through UPI apps, offering the convenience of a digital credit card. With this feature, users can simply “scan and pay” without needing a physical card, and complete online checkouts instantly without waiting for an OTP. This streamlines the payment process, enabling quick and hassle-free transactions while making credit more accessible and efficient for users.

A.G Ramakrishna, Chief Product Officer at CARD91, remarked on the potential of this innovation:

“UPI has already redefined how India transacts, and adding credit lines to this system creates endless possibilities. Consumers can now enjoy instant credit for transactions, and financial institutions can offer new products tailored to user needs. CARD91’s platform is designed to support this growing demand seamlessly.”

Key Features

Credit Line on UPI is integrated into UPI apps, giving users immediate access to pre-approved credit without requiring additional applications or cards. The system supports flexible repayment options, including pay-later models and EMIs, offering a user-friendly, fast, and secure experience. Credit limits are personalised to match each user’s financial profile, making the service highly adaptable to diverse customer needs.

Benefits for Banks

1. Attract New Customers: Digital-first customers seeking fast, convenient credit access are more likely to engage with banks offering Credit Line on UPI.
2. New Revenue Streams: Interchange, Interest, fees, and other charges associated with the credit line present new revenue opportunities for banks.
3. Increased Customer Engagement: Offering credit through UPI encourages frequent use, boosting customer engagement and loyalty.
4. Data-Driven Credit Decisions: UPI transaction data enables banks to make better, data-informed credit assessments.
5. Operational Efficiency: The digital nature of the service reduces manual processes, lowering operational costs.

Challenges for Banks

a. Credit Risk Management: Banks need robust systems to conduct real-time credit checks and prevent fraud.

b. Regulatory Compliance: Strict adherence to RBI guidelines on responsible lending and transparent customer communication is essential.

c. Technology Integration: Banks may require technology upgrades to integrate credit lines smoothly into UPI systems.

d. Customer Education: It’s important to educate users about responsible credit usage and repayment practices to ensure adoption and sustainability.

Strategic Importance for Issuer Banks

Credit Line on UPI is a strategic opportunity for banks to target the growing digital-first customer segment that values speed and convenience. By offering this service, banks can differentiate themselves from competitors and position themselves as leaders in digital financial innovation. Additionally, Credit Line on UPI aligns with financial inclusion goals by providing easy access to credit for underserved populations. As UPI continues to evolve, banks that offer Credit Line on UPI will be well-placed to lead in the future of digital financial services, adapting to changing consumer behaviors and market trends.

Conclusion

Credit Line on UPI offers banks an opportunity to provide fast, seamless, and fully digital credit access to their customers. By ensuring compliance with RBI regulations and focusing on responsible lending, banks can unlock new revenue streams and enhance customer satisfaction.

CARD91’s Credit Line Management System (CLMS) is designed to support banks in launching and managing Credit Line on UPI. With its highly configurable, modular framework, banks can design tailored credit schemes, adapt to evolving business needs, and remain fully compliant with RBI guidelines. CARD91‘s platform ensures secure, scalable, and efficient management of credit services, empowering banks to meet the growing demand for instant credit access.

By adopting Credit Line on UPI, issuer banks can drive growth, foster deeper customer relationships, and stay at the forefront of digital payments innovation. With CARD91’s CLMS, banks have all the tools necessary to efficiently implement this transformative service, positioning themselves as leaders in the evolving digital financial ecosystem.

Authored by Astha Bishnoi, Manager – Partnership & Sales at CARD91

Fintech being a leading light of the startup ecosystem over the years, has played crucial roles in development of the financial services industry. Strong ecosystem level changes are opening up opportunities for new business models. Introduction of blockchain technology in this evolving sector has a considerable impact and advantage.

Blockchain technology is a “chain of blocks” where each block holds timestamped digital data and it’s own previous blocks’ unique identity. The unique features of blockchain have potential to benefit the financial sector significantly.

In this blog we will cover following topics:

• What is Blockchain?
• How Blockchain is transforming the financial ecosystem
• Fintech and Blockchain-Use Cases
• Future of Blockchain in Finance

What is Blockchain technology and its features?

Blockchain is a decentralized database management system. The name signifies itself, a series of blocks containing transaction data, a hash identity, and node details are connected to form a chain. Blockchain is distributed ledger technology (DLT) which allows data to be stored globally on thousands of servers.

Below are the key features of Blockchain for its deeper understanding:

• Security and Transparency

Financial services all across the world are still centralized and multi-folded. Financial data is mostly stored in centralized databases, and it has to go through multiple intermediaries like front-back offices etc which results in lack of transparency across the system, wherein safety being solely dependent on intermediaries and their level of security.

This lack of transparency within the system fosters security threats or data breaches across the organization.

With the introduction of blockchain technology, transparency and security can be ensured simultaneously. Its distributed consensus based architecture facilitates the security towards data breaches, security threats etc. 

• Privacy

Blockchain system provides operable keys-a public one and a private key. Public key is available to all users in the network. However, the private key is only accessible to the stakeholders of the transaction. This enables transparency wherein the transaction will be visible to all users in the network with public key whereas the stakeholders and the transaction details will only be visible to those who have access to the private key. This process enables transparency within the system while securing the confidential information of the stakeholders.

How does Blockchain work?

Blockchain records validate and store the data in its database. So, it leverages to validate a transaction happening across the network. Each block in the block chain contains follow information

• A hash pointer (link to previous block)
• A timestamp
• Transaction data

Future of Blockchain in Fintech Technology

Andy Martin, a world-class blockchain expert, recently forecasted market changes based on the token economics forced by blockchain and described what exactly it provides:

“Decentralized communities provide certainty of identity, “who am I dealing with”, the certainty of provenance, “what am I buying” and smart contracts give certainty of execution, “if I do this, then I get paid” in these new marketplaces.”

Let’s understand better how Fintech and Blockchain can be chained together to build a FinBlock ecosystem.

Blockchain in the fintech industry can provide us a more seamless and effective way to banking, built around concepts of equity and decentralization. Blockchain-based fintech enables seamless transfer of funds, top of the line security and transparent financial tracking.

Reduced Costs and Transactions in Minutes

With blockchain integration in fintech applications, sending money, regardless of the amount, is much faster. Blockchain-based transactions occur in real time, so the recipient will not have to wait for days or weeks to get the money.

In addition to this, fintech applications powered by blockchain technology can drastically reduce the transaction costs enabling direct, P2P transactions that eliminate any middleman, meaning all unnecessary expenses and fees.

Use Cases of Blockchain in Fintech

Some use cases of blockchain in fintech services are: Cross Border Payments, Lending Platforms, Credit Score, Invoice Management and Billing Solution, Fund Investment, Government Expenses, Financial Record Keeping, Stock Exchange and Initial Public Offering

Let’s discuss Cross Border Payments and Lending Platforms use case in details:

Cross-Border Payments

Banks always charge an additional fee for every transfer or payments across borders, which in a way becomes expensive and slow. 

E.g If you want to transfer money from India to the USA, the transfer goes through one or more financial institutions before it reaches the receiver.

Introduction of Blockchain allows individuals to send and receive money with minimum interference of different intermediaries, which enhances the payment settlement quickly and efficiently.

Lending Platforms

When it comes to lending, one is required to establish trust and make a transaction happen. However, with blockchain technology in fintech, borrowers can directly deal with the lenders on the rate of interest, installments, and duration of the transaction with the help of immutable smart contracts.

Conclusion:

Blockchain in financial services can offer multiple benefits, which can help transform the finance industry. According to KPMG, “blockchain can reduce errors by up to 95%, increase efficiency by 40% and reduce capital consumption by up to 75%”. Blockchain in finance is an exciting concept with the potential to transform the finance industry.

Blockchain can help different financial institutions and government entities to improve trust, bring transparency and cut down costs. 

What is open banking? 

Open banking is nothing but a payment system that works on an application programming interface (API).  Let’s understand it better with the help of an example.

In India, how long does it take to open a new bank account? How many times do you need to verify your documents? If you want to apply for a loan, how much time does it take to get it approved?

I am sure you all can relate to how much effort it takes to complete each task mentioned above. If you talk about applying for a loan, let alone from a different financial organization, you need your bank account details, a good credit score, and a valid KYC document to even be approved.

With the introduction of open banking in India, everything will be possible within a few minutes and with a few clicks.

Open Banking and its status in India

Open Banking in India is still in a nascent stage and awaits a mass adoption wave. The reason behind this could be that the traditional Indian banking systems are extremely manual and system-based. Currently, even the adoption of net banking is not ubiquitous. The system focuses more on security and privacy, thereby compromising its efficiency. However, open banking has lots to offer when compared to traditional banking systems.

Is India ready for open banking? Prima facie the thought seems like a no-brainer. It is possible, as today we make payments using our phones for everything, be it an electricity bill or grocery bills, you name it! And you are doing it via phone.  A final noteworthy feature of India’s approach to open banking is that the perimeter of data subjects is broader than in most other jurisdictions.

Many open banking approaches are focused on consumer data and access to financial services. But India’s approach extends this to include small businesses also, who can be a part of this payment ecosystem and add one more layer to the data stack and have the access to improved financial services and their offerings

The progression of India with open banking principles can only be achieved through interoperability and data sharing in the financial sector. If you bring banks and non-banks together under the same infrastructure or common ecosystem, this architecture will facilitate financial inclusion, as can be seen by the increase in a high volume of low-value payment transactions, which further leads to digital transformation and development.

Open banking adoption accelerates or not?

In my opinion, the banking system has been transforming with each passing day. From an individual standing in long queues to just open an account in one tap, we have evolved. Whether it is physical banking or digital banking, individuals choose convenience and variety. 

There are many successful open banking stories. M-Pesa in Kenya, Alipay in China, and Paytm in India- their adoption indicates that there had been a certain digital drift that led to the success of these platforms. This indicates that traditional banks should change the way they have traditionally approached customers and should adapt to the new world of open banking. Digital banking or open banking systems can give them access to innovative ways of implementing digital technologies within the system, which in the future will help them to provide personalized customer services which will help them in retaining their market share and reduce capital on research and development of services.

How secure or safe is my data?

Every new technology in the market comes with new risks and uncertainties. However, with open banking platforms, they have the potential to rewrite the relations between a bank and its customers. When we talk about a consumer, a consumer is someone who prefers convenience packaged with security and safety. So, open banking will enhance or enable the management of money more securely, more convenient, and customer-focused.

At last, I would like to conclude that with every step in the future or tomorrow something or the other is changing. Change is inevitable, and it comes with a mixed bag of offerings. Here, in the case of open banking in India, the future is going to be collaborative and interconnected.

Ever wondered what happens in the background when you say my card has a“Tap & Pay” feature? 

It’s because of a technology called NFC or Near Field Communication.

NFC or Near Field Communication is a contactless communication technology based on a radio frequency (RF) field using a base frequency of 13.56 MHz NFC technology is perfectly designed to exchange data between two devices through a simple touch gesture. 

NFC is a form of communication between two devices, which makes transferring data more secure, convenient, and easy.

How does it work?

NFC works just like Bluetooth and Wi-Fi, NFC works on the principle of sending information over radio waves. With the introduction of NFC, a user can share data, make payment without any manual hassle has turned out to be more important than any other technology in recent times, particularly in terms of mobile payments with simple operation. 

• With the mobile based payment app on your phone, you will just need to Tap the phone on the POS machine and a connection will be established utilising the NFC feature which is secured with password authentication or scanning your finger which makes it more secure. 
• Further, the transaction is then approved by a different chip called the SE (secure element), which transfers the transaction for approval back to the NFC modem. 

Currently, in India NFC-embedded cards are in the market with the imposed limits on the transaction sizes that it can process for NFC based card transactions.

With the introduction of NFC compatible smartphones like Samsung’s Galaxy Series, Google’s Nexus Series, and the iPhone in India we are stepping into a more cashless payment’s era. 

Is NFC Payments secure or not?

Are NFC payments secure or not? Most of you were wondering the same. However, the answer is NFC based payments are secure and safe. 

 For e.g A consumer who is interested in making payment via NFC based mobile application, due to the imposed limits on the transaction size on consumers cards the data cannot be stored in any of businesses NFC based terminals. In Addition to this, for instance, if a business’s NFC enabled terminal had been compromised but still the customer’s card details cannot be accessed. Likewise, tokenization makes NFC based payments so secure that there’s no decipherable information to steal from NFC terminal.

With the introduction of a process called tokenization, both NFC enabled merchants and the customers can feel reassured that contactless payments will provide end to end data security. For customers, card numbers are never stored in the application or anywhere in the operating system but in fact they are replaced with “token”. Furthermore, two-factor authentication like Face ID, passcode or touch ID within our smartphones enable a second layer of encryption and makes it more secure and safe for payments. On the merchant side NFC terminals and readers also use tokenization technology to encrypt sensitive information.

Contactless payments and its evolution in India

India’s journey towards a cashless economy can be judged by the impact of demonetization (2016) and COVID-19. Back in 2016, the government announced demonetization to convert India from cash-based economy to cashless economy. India had shown a gradual progress with the digitisation followed by ATM, credit and debit card, digital wallet, prepaid cards, recharge vouchers etc. payment solution helped India to build a cashless economy.

On 24 May 2021 – NPCI (National Payments Corporation of India) partnered with Turkey’s global payment solutions company PayCore as one of the certified partners for RuPay SoftPOS to drive cashless payments across the country. RuPay SoftPOS allows retailers to easily accept payments from contactless cards, mobile wallets, and wearables using only their phones. With the usage of RuPay SoftPOS, millions of merchants can now transform their NFC smartphones into POS machines to accept contactless payments. 

Under this association, NPCI mentioned that they have authorised the SoftPOS solution developed by PayCOre for RuPay. This solution can be integrated into bank or aggregator acquiring systems to enable acquiring of RuPay using mobile phones enabled with NFC capability. 

“With PayCore’s SoftPOS solution, which enables smartphones and tablets to be used as POS terminals without any additional devices, investment costs required by banks to reach out to over 63 million micro-, small-and medium-sized businesses will significantly reduce, said Ali Kancha, chief executive of PayCore”.

According to Nalin Bansal, “chief of fintech’s, corporates and new initiative at NPCI, the launch of RuPay SoftPOS is aimed at supporting small merchants which form the backbone of our Indian Economy and is one of many in the series of launches starting with its open-loop transit program.”

With the introduction of eye-popping innovations and technologies like UPI (scan & pay), FASTags, NFC payments, interoperability etc it certainly holds a promising future in India. In addition to these NPCI initiatives to introduce SoftPOS to support small merchants and provide one step towards a cashless economy. Recently, Google Pay is offering the NFC feature for android phones that support NFC to make payments at NFC based terminals. 

Apart from the list of Pros and Cons of NFC as a technology in the payment sector. One of the major challenges I came across is the  transaction limit of Rs 5000 set by RBI for NFC payments. However,  in the future it will prove to be a big step towards a cashless economy where NFC based terminals or POS will provide seamless payment experience to the end user and the receiver.

Over the past decade, technology has shown tremendous impact in many industries. With the change of customer behaviour and the emergence of regulatory compliances, the landscape of the financial industry is changing. Customers are demanding a multi- and cross-channel experience, which is real-time as well as available round the clock. Thus, Banks are changing their approach from traditional product-centric to a customer-centric approach. This has resulted in banks looking for new age solutions to redefine customer experience. Earlier if a customer wanted to send money abroad, then they might have to go to the bank or financial institution branch and it took 2-3 days to get funds credited to the receiver’s account but now money can be transferred at any time by just a few clicks using a mobile phone.

Consumer’s appetite has been ever increasing for high-end digital experiences including seamless and easy accessibility of all financial products at their fingertips. Responding to these demands, Fintechs are building revolutionary financial products and experiences by using APIs to quickly deploy a suite of advanced financial services and products.

What is an API and how does it work?

API stands for an Application Programming Interface. It’s a digital interface which acts as an intermediary to allow two different systems to talk to each other. 

A very prominent example of API usage which most of us have seen on many websites nowadays – “log-in using Google/Facebook/Twitter”. With just one click we automatically login on to the website or app but have you ever wondered how it works

It looks very easy and simple for users. Every time the application loads, it uses the API to check whether the user is already logged in using any social media platform. If not, when the user clicks the “Log-in Using google” button, a pop-up opens where the user is asked for confirmation to log in with the selected google profile. After the confirmation, the API interacts with the google system and provides the application with identification information to provide auto-login.

Digitalisation has fastened the transformation of the banking industry globally in the last few years. APIs are playing a very important role in the field of payments, Peer to peer management, Insurance, trading and many more. Fintech APIs are creating financial products and services faster and in more cost-effective than ever before. Now Banks, financial institutions and merchants can easily connect with third-party service providers and expand their products and services very quickly. Online shopping of groceries and household goods is a new trend all over the world, merchants are providing seamless payment experience with various payment methods to customers. Customers can easily transfer funds, make purchases, buy insurance, take loans and perform personal banking tasks on the go.

In short, APIs have transformed Financial institutions and Banks as a platform that offer customer-centric products and fill the gaps of legacy banking practices.

Fintech APIs provide access to data among the parties involved in financial transactions, including banks, third-party providers, websites and consumers.

Nowadays a new concept of Open APIs is on the rise. Open APIs allows third-party service providers to access the data and services of an organization in a controlled environment. It provides opportunities to create new products and adds new functionality to its core offering. 

Benefits of Fintech APIs 

• Real-Time Access: APIs have achieved real-time money transfer globally with minimal effort and are available to customers 24/7. APIs are changing how we interact with the world, and all these actions happen in real-time.

• Revenue Opportunity: Earlier banks were quite secretive about their client information due to security concerns. With APIs, the financial institutions can provide easy accessibility of big data which can help them in creating highly personalized financial services and enhance the decision capabilities of the business. 

• Cost-effectiveness: Instead of spending high cost in developing the system from scratch, the financial institutions can use these Fintech APIs and significantly reduce development costs.

• Accelerated time to market: By using fintech APIs Financial institutions can spend more time and resources to focus on innovation instead of repetitive development tasks. Create fully functional digital services within days instead of months.

To compete with the currency digitalisation banks and financial institutions need to transform their existing core banking services using Fintech APIs. Fintech APIs help in bridging the existing legacy gap between the financial institutions and customer’s requirements. Features and functions from legacy applications can be easily pulled out and combined into processes that authorised users and other applications can access from anywhere, anytime.

In today’s tech savvy world, customers want everything at the right time in the right quantity with minimal efforts and a seamless experience. Every Service provider is trying to provide financial products at the fingertip of the customer. This is a game changing opportunity for fintech to offer the unique, agile and ease to use next generation technology. 

Embedded finance is a buzz in the fintech industry and is growing at a tremendous rate. Covid-19 pandemic has accelerated the customer base and their engagements on these platforms.

What is Embedded Finance?

Embedded finance is a seamless integration of financial services with non-banking solutions. Customers can access financial products and services through mobile apps. Embedded finance can help businesses gain customer loyalty, increase customer base, better product offerings and more revenue opportunities. For Instance, Ola cabs is offering cab rides embedded with financing solutions such as wallet services (post-paid or limit based).

Embedded finance is also known as embedded banking. To provide financial services to customers. Businesses need to start exploring the opportunities of enabling embedded finance through a partner ecosystem which will significantly reduce their time of market time as well as low cost. 

In this customer centric world, embedded finance can provide significant advantages to businesses over their competitors. Previously, there was a gap between consumer requirements and the service offered by the seller. Embedded finance understands the gap and eliminates the need for a third party between consumer and seller. It is transforming the financial services distribution model and creating a revenue opportunity for businesses. 

Here are a few major manifestations of Embedded Finance:

Embedded Payments

Embedded payment means providing integrated services of payment processing within the app or platform itself. For e.g. Post-paid wallets or Payment Infrastructure offered by Ola or Amazon. While booking a cab from the Ola app, customers can easily make the payments by Ola wallet without the worries of carrying change to pay cab drivers on completion of ride.

Embedded Lending

Embedding credit offerings within the customer journey of non-financial digital apps or platforms. For Example, customers can now purchase any home appliance from the mobile app and convert the payments into easy EMI options on the same app.

Embedded Insurance

Embedded Insurance means bundling of Insurance along with the purchase of the products and services. Platforms partner with external Insurance companies to offer embedded insurance services for their customers. Online vehicle selling platforms, also enables customers to buy Car Insurance products while purchasing the vehicle.

Embedded Investment

Platforms integrate with the brokerage firm to offer investment services to their customers on their platform. Platform uses APIs of the brokerage firms for offering microservice ranging from opening an account, funding, trading, portfolio management, and market data.

Key players and their role in Embedded Finance Ecosystem

There are three main players working in the embedded finance ecosystem to offer better services and create new revenue opportunities.

Digital Platform

Customer facing digital platforms like mobile apps or desktop platforms who have a better understanding of customer needs.

Financial Institutions

Financial Institution like Bank, NBFC who provides financial services and manage all regulatory and compliance.

Embedded Finance Infrastructure Company

Fintech companies which act as a bridge between Digital platform and financial institution to offer end to end APIs, SDKs or software solutions thus enabling the embedded finance in the digital platform. With this, customers can enjoy the financial service within the same platform.

In India, UPI has transformed the payments landscape and made it simple for technology companies to become payment providers. To compete with the fast-changing digital world and rising demand for embedded finance, financial institutions are increasingly offering banking as a service (BaaS)—bundled offerings, often white-labelled or co-branded services, that nonbanks can use to serve their customers.