138 Course on Computer Concepts (CCC)

08
Digital Financial Tools
and Applications
OTPs minimize the risk of fraudulent
Objective of the Chapter login attempts and thus the risk of stolen
This chapter includes Digital Financial Tools, Card data.
(Credit/Debit), eWallet, PoS, Internet Banking, Online OTP works through randomness algorithms
Bill Payment etc.
that generate a new and random password
each time they are used.

Introduction How to get a One Time Password?

A new era of financial system in India was When an unauthenticated user attempts to
started after independence. In this era, access a system or perform a transaction on a
efforts were made to improve methodology device, an authentication manager on the
and responsibilities of financial system for network server generates a number or shared
financial tools. Financial tools are term used secret, using one time password algorithms.
to describe organizations that deal with the The same number and algorithm are used by
management of money. the security token on the smart card or
Financial tools are generally not limited to device to match and validate the one time
the field of deposit-taking loan and investment password and user.
services, but also present in the fields of Many companies use Short Message Service
insurance, agency services and all forms of (SMS) to provide a temporary passcode via
financial intermediation including the text for a second authentication factor.
distribution of financial products.
QR (Quick Response) Code
OTP (One Time Password) A QR code is a type of two-dimensional bar
OTP is a string of characters or numbers code that is used to provide easy access to
automatically generated to be used for one information through a smartphone. It refers
single login attempt. OTP can be sent to the to the instant access to the information
user’s phone via SMS or push messaging and hidden in the code. QR codes are gaining
is used to protect web based service, private popularity because the technology is open
credentials and data. source i.e available for everyone.
Digital Financial Tools and Applications 139

QR code consists of black squares arranged in Such is not the case with UPI. Here, you can
a square grid on a white background. It can be simply transfer money anytime anywhere
read by an imaging device such as camera, without adding any beneficiary or bank details.
and processed using Reed-Solomon error
correction until the image can be appropriately How to Register for UPI?
interpreted. Steps to registration for UPI are as follows :
1. Download the BHIM (Bharat Interface for
Money) app/ bank’s app/ third party apps.
2. Create your profile by adding details such
as name, password, UPI Pin etc.
3. Link the bank account with the VPA
(Virtual Payment Address) to complete
the registration process.
Types of QR Code
There are two types of QR code as follows :
How to Generate UPI Pin?
● Static QR Code These codes are most
Steps to generate UPI Pin, are as follows :
common type of QR code which are used 1. Select the bank account in the app from
to disseminate information to the general which you want to carry out transactions.
public. They are often displayed in 2. Once you select the bank account, you
advertising materials in the environment, on will be asked to generate your UPI Pin.
television, in newspapers and magazines. 3. An OTP will be sent to your registered
● Dynamic QR Code These codes are
mobile number with the bank account.
sometimes referred to as unique QR codes that 4. Enter this OTP to generate your UPI Pin.
offer more functionality. The owner can edit
5. Create your 6 or 4 digits UPI Pin which
the code at anytime and can target a specific
will be required for making all
individual for personalized marketing.
transactions.
UPI (Unified Payment Interface) Benefits of UPI
UPI is a digital mode that helps you transfer Benefits of UPI for Customers
funds from one bank to another without using ● Transfer can be made instantly by it.
any account number, bank name, account type ● It is easy to use.
and IFSC code. It facilitates users to access ● It requires single click authentication.
multiple bank accounts with a single mobile
application. It combines merchant payments,
● It highly secured as no account detail is
numerous banking features and seamless fund shared.
routing to be accessed from a single place. Benefits of UPI for Banks
It eliminates the need to enter bank details ● It is safe and secure transaction system.
or other sensitive information each time a ● It requires single click with two factors
customer initiates a transaction. authentication.
UPI has been launched by the National ● Use of the existing infrastructure ensures
Payments Corporation of India also known as no additional cost is incurred by the bank.
NPCI. In conjunction with the Reserve Bank of
India and Indian Banks’ Association, NPCI Benefits of UPI for Merchants
has framed this network. It is similar in ● It provides instant receipt of fund.
mechanisms like the RuPay system through ● For this, there is no need for sharing bank
which debit and credit cards function. details.
If you want to transfer funds using Internet ● It is suitable for E-Commerce platforms.
banking then in most cases, the bank takes some ● CoD (Cash on Delivery) collection is made
time to update the new beneficiary details. easy with UPI payment.
140 Course on Computer Concepts (CCC)

How to Perform a UPI Transaction? Benefits of AEPS

Steps to transfer money using UPI are as The benefits associated with AEPS are :
follows : ● There is no requirement of a signature on

1. Open the UPI based app on your your debit card.

smartphone. ● It is safe and secure payment method.

2. Select the transfer/send money option. ● It is easy to use.

3. Enter the account details/mobile number. ● It increases the reach to rural areas as

4. Enter the amount to be transfer and enter banking executives.

the UPI Pin to confirm the payment. ● With AEPS, the only information required

5. Money will transferred instantly and to initiate a transaction is Aadhaar number

confirmation message is sent to the and biometric information.
user’s mobile number.
How to Use AEPS?
Steps to do bill payment using UPI are as Steps to use AEPS are as follows :
follows :
1. Go to a Micro-ATM or banking
1. Once logged into your UPI based app. correspondent.
2. You will have to add a bill details to 2. Provide Aadhaar number and bank name.
avail the service
3. Choose the type of transaction you want
3. Enter the amount that you have to pay to make.
the bill for.
4. Provide verification through fingerprint/
4. Enter the UPI Pin to make the payment. iris scan.
5. Your payment will be credited to the 5. Collect your receipt.
biller instantly.
USSD (Unstructured Supplementary
AEPS (Aadhaar Enabled Payment Service Data)
System) It is a communication protocol available on
AEPS is a type of payment system that is every GSM enabled mobile device. It is a
based on the Unique Identification Number session based text communication without
and allows Aadhaar Card holders to store and forward mechanism (unlike SMS)
seamlessly make financial transactions that is practical for interactive communication,
through Aadhaar based authentication. such as banking or education.
It helps all individuals carry out financial
USSD messages can have upto 182
transactions on a Micro-ATM. It helps in
alphanumeric characters and the time it
empowering all sections of the society by
takes from a request to a response is 2
making financial and banking services
seconds while it takes 6 seconds for an SMS
available through Aadhaar.
to reach a mobile phone.
This is simple, secure and user-friendly
USSD is characterised by short and combined
platform for financial transactions. This is
alphanumeric (#, 1-9 and *) codes that are
another initiative taken by the National
used by the mobile network. Its good example
Payments Corporation of India (NPCI) to
is to check your mobile prepaid balance or to
encourage cashless transactions in India.
initiate a mobile top-up using a USSD
Services offered by AEPS voucher code.
● Cash deposit and withdrawal To use USSD mobile banking, users will have
● Payment transaction ● Balance enquiry to simply dial * 99 # and use the interactive
● Fund transfer menu. There are many banks in India that
● Obtain a mini statement are currently providing the * 99 # service.
Digital Financial Tools and Applications 141

How to Send Money Using USSD *99#? Types of Credit Card

Follow the below steps to send money using There are four main types of credit card as
USSD *99 # are as follows : follows :
1. Dial *99# using registered mobile Reward Credit Card
number with bank account.
This type of credit card earns rewards on
2. The interface will appear and you can purchases. Some cards will pay out at a flat
type 3 letters of your bank short name rate of 1%–2%, while others will give an
or first 4 letters of bank, IFSC or 2 extra bonus in predetermined spending
digits bank numeric code and proceed to categories.
click Send.
3. Now, choose number ‘3’ to send money Low Interest Credit Card
and proceed key in payee/beneficiary These cards are best if you carry some credit
mobile number. card debt month to month. Depending on
your financial situation, you can choose a
4. Proceed to key in the beneficiary/payee card with a reliably low ongoing interest rate
MMID, transaction amount. or one that has no interest for an
5. Key in MPIN and last 4 digits of your introductory period.
bank account number.
Balance Transfer Credit Card
Information/Details Required These cards are meant for those who already
for USSD Fund Transfer have a lot of credit card debt. They allow you
● MMID ● MPIN
to shift your debt from your current card to a
new one and give you a period of 6-21 months
● Registered mobile number
to pay it off interest free. There is usually a
Features of USSD *99# Service one time balance transfer fee, though, of,
upto 5%.
● It is easy to use.
● It is works on all GSM handsets. Secured Credit Card
● It is highly secure interface. This type of card may be a good credit
building option for those with no credit
● It is works without data connection on a
history or poor credit.
basic phone.
Under this secured arrangement, the
Services offered by USSD cardholder agrees to deposit a certain amount
● Change MPIN ● Generate OTP onto the card before they start using it and
● Know MMID ● Funds transfer they can’t charge beyond that amount.
Because this reduces risk for the card issuing
● Balance enquiry ● Mini statement
bank as they can collect an up-front deposit
in case the cardholder can’t repay, secured
Credit Card cards are the easiest to be approved for.
It is a thin rectangular slab of plastic issued
by a financial company, that lets cardholders Debit Card
borrow funds with which to pay for goods and
It is a payment card that deducts money
services. Credit cards impose the condition
directly from a consumer’s account to pay for
that cardholders pay back the borrowed
a purchase. Debit cards eliminate the need to
money plus interest as well as any additional
carry cash to make purchases. In addition,
agreed upon charges.
debit cards, also called check cards, offer the
A credit card owner can borrow money from convenience of credit cards and many of the
the issuer of the credit card and will not have same consumer protections when issued by
to pay interest if the borrowed amount is major payment processors like Visa or
repaid within 30 days. Master Card.
142 Course on Computer Concepts (CCC)

Types of Debit Card Benefits of eWallet

There are following types of debit card as follows : ● It helps to reduce fraud. Mobile Wallets use
Online Debit Card random payment codes that cannot be used
again.
Online debit cards need electronic
authorization, every time a transaction is ● Pay quickly by eWallet. It can save time.
reflected in the user’s account. The ● It can trim wallet contents.
transaction of an online debit card is further ● Cash back or rewards facilities available
secured with a personal identification under eWallet.
number (PIN) verification system for added
safety. The PIN has to be validated during How Mobile Wallets Work?
each and every transaction. Steps showing how work mobile wallet app in
your mobile phone are :
Offline Debit Card
1. Download the Mobile Wallet app (or it may
This generally includes the logos of major
be already built into your mobile device).
cards such as Visa or Master Card. This type
of card requires the cardholder’s signature for 2. Add your credit card or debit card
validation during each and every transaction. information to the Mobile Wallet.
Offline debit cards usually have a daily limit 3. When you check out a participating
restricted to the value of transactions. merchants, access the Mobile Wallet
and choose your card.
Prepaid Debit Card
4. If you’re making an in-store purchase, just
These cards are also referred to as reloadable
hold your mobile device at the terminal.
debit cards. To use this type of debit card, the
user has to pay the entire amount in advance Mobile Wallet Security
and later use the money according to his/her
Before using a Mobile Wallet service, security
discretion.
measures provided by the wallet provides to
help protect card information should be
eWallet checked.
eWallet (Mobile Wallet) is a type of prepaid
account in which a user can store his/her With some mobile wallets your full card
money for any future online transaction. An number is not visible to merchants when you
eWallet is protected with a password. With make a purchase. Some Mobile Wallets also
the help of an eWallet, one can make have a way to disable the service if your card
payments for groceries, online purchases and or mobile device is lost or stolen.
flight tickets among others. An eWallet needs Types of eWallet
to be linked with the individual’s bank
There are various types of eWallet as follows :
account to make payments. The main
objective of eWallet is to make paperless Paytm Wallet
money transaction easier. Paytm is India’s largest mobile commerce
platform launched in 2010. Paytm Wallet,
eWallet Transaction Process because of its amazing marketing and
eWallet do not all have the same transactions operation strategies, has been able to capture
process. The process that each wallet uses, maximum market share of this industry.
depends on the software that makes its function.
The wallet can be used to sent money directly
With some eWallets, you have to insert your to bank accounts as well.
password to confirm a transaction.
Paytm is the first company in India to receive
While other eWallets, may give the user a a license from the Reserve Bank of India
unique identification code for each transaction. (RBI) to start a payment bank.
Digital Financial Tools and Applications 143

Freecharge Wallet SBI Buddy

This service was launched in September, SBI had launched the Mobile Wallet Buddy
2015 and has ever since introduced many in August 2015, in 13 different languages in
attractive features. This will enable all collaboration with Master Card. It is a digital
customers to send and receive funds through platform by which customers can simply send
the UPI system. Freecharge UPI will allow or ask money from any of their contacts even
users to initiate fund transfers instantly on a if they do not have an SBI account.
24/7 basis on all 365 days in a year, including
PayZapp
bank holidays.
PayZapp offered by HDFC bank is an ideal
Mobikwik mobile payment wallet. With PayZapp, you
It is a digital wallet that can be used for a can shop on your mobile at partner apps, bus
number of online payments including and movie tickets, groceries, book flight
transferring money, accepting payments, tickets and hotels, pay bills and recharge
mobile recharge, payment of utility bills, such your mobile.
as electricity, DTH, online shopping etc. With the HDFC PayZapp eWallet app,
Mobikwik has received an approval from the customers do not need to depend on card
Reserve Bank of India (RBI) and has tied up based transactions and can enjoy secure and
with a number of retails and online convenient payments.
merchants in the country.
PhonePe Wallet
Oxigen Mobile Wallet It provides an online payment system based
It is a digital wallet service through which an Unified Payments Interface (UPI), which
users can avail all the services offered by is a new process in electronic funds transfer
Oxigen. It is an application based service that launched by National Payments Corporation
can be used on all types of smartphones such of India (NPCI).
as Android, Windows and IOs. Oxigen wallet Using PhonePe, users can send and receive
is a semi-closed wallet as per RBI guidelines. money, recharge mobile, data cards, buy gold
You can transfer funds from your wallet to and shop online and offline.
your bank account.
Airtel Money PoS (Point of Sale)
Airtel money is the Mobile Wallet from the The Point of Sale (PoS) or Point of Purchase
successful and popular telecom company (PoP) is the time and place where a retail
Airtel. It allows you to use your smartphone transaction is completed.
as an electronic wallet to make and receive At the Point of Sale, the merchant would
payments. Originally launched in 2012, this calculate the amount owed by the customers
app offers customers with an efficient and indicate the amount. He may prepare an
alternative to cash transactions. invoice for the customer (which may be a
cash register printout), and indicate the
Citrus Wallet options for the customer to make payment.
It is an app that lets you send money to and PoS is also the point at which a customer
receive from anyone who has a phone number makes a payment to the merchant in
or E-mail. It lets your transfer money to exchange for goods or after provision of a
friends, colleagues and family members service.
within seconds.
The PoS transaction is completed by online
You can split canteen, movie, travel and payment gateways. The online payments are
party bills with ease. You can even see all enabled through own payment gateways or
your past transactions and keep a track of third party service providers called
your spending patterns. intermediaries.
144 Course on Computer Concepts (CCC)

PoS System Requirements Internet Banking Access

● PC or Laptop with standard human In this banking, customers access his/her
interface devices account from a browser that runs internet
— Keyboard banking programs resident on the bank’s
— Mouse World Wide Web (WWW) server.
— Monitor It provides an array of services including
● Browser: Current version functional budgeting and forecasting tools,
financial planning capabilities, investment
● USB port (for barcode scanner) analysis tools, loan calculators and equity
● LPT or USB port (for printer) trading platforms.
Types of PoS System Online accounts are easy to arrange and
They are generally classified into three require lesser information than a traditional
types as : bank account. Internet provides a variety of
attractive possibilities for remote account
Mobile PoS access, including
It is also known as mPoS that uses an ● World wide connectivity.

electronic device such as smartphone, tablet ● Availability of enquiry and transaction

or another mobile device as a terminal at service around the clock.
which you can attach a credit card reader.
● Easy access to transaction data, both recent
mPoS systems are used to process payments
and historical.
and may have other capabilities such as
● Direct customer control of international
inventory management.
movement of fund without intermediation
Terminal PoS of financial institution.
It is a software/hardware based system that
carries add-on peripherals such as barcode
scanners, credit card readers, receipt printers Password Security
and cash drawers.
Password security is must for Internet
Cloud PoS banking. After receiving password, do
It is an online or web based PoS which can change it and memorise it otherwise
be easily used with your existing hardware account may be misused by someone.
such as a computer, tablet and printer.
A cloud PoS system is installed in data
centers that are maintained by the PoS NEFT
vendor. (National Electronic Funds Transfer)
It is a nation wide system that facilitates
Internet Banking individuals, firms and corporates to
Internet banking allows the user to conduct electronically transfer funds from any bank
financial transactions via the internet. It is branch to any individual, firm or corporate
also known as online banking or web banking. having an account with any other bank
An Internet bank will offer customers just branch in the country.
about every service that is traditionally This retail funds transfer system started in
available through a local branch. November, 2005.
Through Internet banking, basic banking Such individuals who do not have a bank
transactions such as paying bills and account (walk-in customers) can also deposit
transferring funds between accounts can cash at the NEFT enabled branches with
easily be performed by the consumers. instructions to transfer funds using NEFT.
Digital Financial Tools and Applications 145

Pre-requisites for Originating to 6 PM for customer transactions and 7 AM

a NEFT Transaction to 7:45 PM for interbank transactions.
Following are the pre-requisites for putting IMPS (Immediate Payment Service)
through a fund transfer transaction using
IMPS is an instant interbank electronic fund
NEFT :
transfer service through mobile phones. The
● Originating and destination bank branches
major feature of IMPS is that it is available
must be part of the NEFT network. at all times for usage. It transfer funds
● Beneficiary name, account number, account
instantly and is a great banking platform in
type, name and IFSC of the beneficiary case of emergencies. Its service is available
bank branch, all the details of the 24×7, throughout the year including sundays
beneficiary, should be available with and any bank holidays.
remitter.
National Payments Corporation of India
● Some banks provide the facility to
(NPCI) is responsible for managing the IMPS
automatically pop-up the IFSC details for fund transfer mechanism.
net banking customers with destination
bank and branch. This mechanism is regulated by Reserve
Bank of India. One can define IMPS as an
Limits of the Fund Transfer by NEFT immediate, interbank real time fund transfer
There is no maximum limit of fund transfer mechanism enabled through electronic
through the NEFT. There is no minimum means.
limit of fund transfer also through the
NEFT. You can transfer any amount. The
Limits of the Fund Transfer by IMPS
timing of NEFT is from 8 AM to 7 PM Transaction charges of this platform are also
(Working days). very nominal and the transfer limit is also
considerable, approximately ` 2 lakhs per
RTGS (Real Time Gross Settlement) day.
RTGS system is a fund transfer mechanism
that transfer of money from one bank to Online Bill Payment
another on a ‘real time’ and on ‘gross basis’. Online bill payment system is an internet
Settlement in ‘real time’ means payment based method of processing economic
transaction is not subject to any waiting transactions. It allows a vendor to accept
period. The transactions are settled as soon payments over the web or over other internet
as they are processed. ‘Gross settlement’ connections such as direct database
means the transaction is settled on one to one connections between retail stores and their
basis without bunching with any other suppliers.
transactions. Online payment systems typically are run by
The RTGS system is primarily meant for third party corporations, such as PayPal,
large value transactions. This is the fastest Google, Click2Pay, etc.
possible money transfer system through the Online bill pay helps you organize bills and
banking channel. keep track of due dates. You can easily see
where your money is going, so you can make
Limits of the Fund Transfer by RTGS sure you have enough funds available to
There is a minimum limit of ` 2 lakhs for cover each payment. You receive and pay
RTGS transactions and there is no maximum your bills all through your bank-one list, in
limit as such. Timing of RTGS is from 7 AM one place.