" UNDERSTANDING PAYMENT GATEWAY TRENDS AMONGST YOUTH IN

MUMBAI SPECIAL REFERENCE TO PAYTM "

Bachelor of Management Studies

Semester VI

(2019 – 2020)

Submitted

In Partial Fulfillment of the requirements

For the Award Degree of

Bachelor of Management Studies

By

(Sumit Patil)

(Roll no. 28)

SINHGAD COLLEGE OF COMMERCE

Plot no. 126, Mhada Colony, Chandivali, Mumbai – 400072

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 DECLARATION

I, Nilesh Jain the student of T.Y.B.M.S Semester VI (2019 – 2020) hereby

declare that I have completed the project on " UNDERSTANDING PAYMENT
GATEWAY TRENDS AMONGST YOUTH IN MUMBAI SPECIAL REFERENCE
TO PAYTM ". The information submitted is true and original to the best of my

knowledge.

Sumit Patil

Roll no.28

SINHGAD COLLEGE OF COMMERCE

Plot no. 126, Mhada Colony, Chandivali, Mumbai – 400072

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 CERTIFICATE

This is to certify that Mr. SUMIT PATIL, Roll No: 28 of Third Year B.M.S.,
Semester VI (2019 – 2020) has successfully completed the project on
“UNDERSTANDING PAYMENT GATEWAY TRENDS AMONGST YOUTH IN
MUMBAI SPECIAL REFERENCE TO PAYTM” under the guidance of Prof.

SHIVANI AHLUWALIA.

Course Coordinator

(PROF. SHIVANI AHLUWALUA)

Principal

(PROF. RITIKA HEMDEV)

Project Guide / Internal Examiner

(PROF. SHIVANI AHLUWALIA)

External Examiner

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 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance
to do this project.

I would like to thank my Principal, RITIKA HEMDEV for providing the

necessary facilities required for completion of this project.

 I take this opportunity to thank our Coordinator PROF. SHIVANI

AHLUWALIA, for her moral support and guidance.

 I would also like to express my sincere gratitude towards my project guide

PROF. SHIVANI AHLUWALIA whose guidance and care made the project
successful.

 I would like to thank my College Library, for having provided various

reference books and magazines related to my project.

 Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my Parents and Peers who
supported me throughout my project.

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 SUMMARY

Payment gateway is an e-commerce software that authorizes payments for online merchants,
e-businesses or electronic business, bricks and clicks or traditional brick and mortar
businesses. It seamlessly connects to e-commerce or in-house payment processor for
examples, credit cards processing networks or online banking. The Payment gateways works
with your purchase items from a brick and mortar retailer. So, the main role of a payment
gateway is to authorize transactions between you and your customers. Remember, without a
payment gateway approving the transaction process cannot go move forward and you won't
receive your money.

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 INDEX

SR PG
NO. CONTENT NO.

Objective of the study 07

Chp 1 Introduction 08

1.1 Typical transaction process 08

1.2 Merchant account 11

1.3 Credit card terminal 12

1.4 Automated response unit 12

Chp 2 Payment gateway 13

2.1 List of online payment service providers 13

2.1.1 BHIM 13

2.1.2 Google pay 16

2.1.3 Paytm 18

2.1.4 PhonePe 20

2.2 Payment gateway special reference to Paytm 23

2.3 History of Paytm 25

2.4 E-commerce payment system 26

2.5 Methods of online payment 27

2.6 Micropayment 30

Chp 3 Research methodology 33

Chp 4 Data analysis 34

Conclusion & recommendation

Bibliography

Questionnaire

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 OBJECTIVES OF THE STUDY
One is the ability to access the payments system when and where required.

The challenge for electronic payment systems is to provide solutions that are easy for
both the payer and the recipient.

To understand the concept of electronic payment system and its security services.

To bring out solution in the form of applications to uproot electronic payment.

To understand working of various electronic payments system best based applications.

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INTRODUCTION

A payment gateway is a merchant service provided by an e-commerce application service

provider that authorizes credit card or direct payments processing for e-businesses, online
retailers, bricks and clicks, or traditional brick and mortar. The payment gateway may be
provided by a bank to its customers, but can be provided by a specialised financial service
provider as a separate service, such as a payment service provider.

A payment gateway facilitates a payment transaction by the transfer of information between a

payment portal (such as a website, mobile phone or interactive voice response service) and
the front-end processor or acquiring bank.

TYPICAL TRANSACTION PROCESSES

When a customer orders a product from a payment gateway-enabled merchant, the payment
gateway performs a variety of tasks to process the transaction.

1. A customer places an order on website by pressing the 'Submit Order' or equivalent

button, or perhaps enters their card details using an automatic phone answering
service.
2. If the order is via a website, the customer's web browser encrypts the information to
be sent between the browser and the merchant's webserver. In between other methods,
this may be done via SSL (Secure Socket Layer) encryption. The payment gateway
may allow transaction data to be sent directly from the customer's browser to the
gateway, bypassing the merchant's systems. This reduces the merchant's Payment
Card Industry Data Security Standard (PCI DSS) compliance obligations without
redirecting the customer away from the website.
3. The merchant then forwards the transaction details to their payment gateway. This is
another (SSL) encrypted connection to the payment server hosted by the payment
gateway.
4. The payment gateway converts the message from XML to ISO 8583 or a variant
message format (format understood by EFT Switches) and then forwards the
transaction information to the payment processor used by the merchant's acquiring
bank.

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5. The payment processor forwards the transaction information to the card association
(i.e. Visa/MasterCard/American Express). If an American Express or Discover Card
was used, then the card association also acts as the issuing bank and directly provides
a response of approved or declined to the payment gateway. Otherwise [e.g.
MasterCard or Visa card was used], the card association routes the transaction to the
correct card issuing bank.
6. The credit card issuing bank receives the authorization request, verifies the credit or
debit available and then sends a response back to the processor (via the same process
as the request for authorization) with a response code (i.e. approved, denied). In
addition to communicating the fate of the authorization request, the response code is
also used to define the reason why the transaction failed (i.e. insufficient funds, or
bank link not available). Meanwhile, the credit card issuer holds an authorization
associated with that merchant and consumer for the approved amount. This can
impact the consumer's ability to spend further (because it reduces the line of credit
available or it puts a hold on a portion of the funds in a debit account).
7. The processor forwards the authorization response to the payment gateway.
8. The payment gateway receives the response, and forwards it onto the website, or
whatever interface was used to process the payment, where it is interpreted as a
relevant response, then relayed back to the merchant and cardholder. This is known as
the Authorization or "Auth."
9. The entire process typically takes 2–3 seconds.

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 10. The merchant then fulfils the order and the above process can be repeated but this
time to "Clear" the authorization by consummating the transaction. Typically, the
"Clear" is initiated only after the merchant has fulfilled the transaction (I.e. shipped
the order). This results in the issuing bank 'clearing' the 'auth' (I.e. moves auth-hold to
a debit) and prepares them to settle with the merchant acquiring bank.
11. The merchant submits all their approved authorizations, in a "batch" (end of the day),
to their acquiring bank for settlement via its processor. This typically reduces or
"Clears" the corresponding "Auth" if it has not been explicitly "Cleared."
12. The acquiring bank makes the batch settlement request of the credit card issuer.
13. The credit card issuer makes a settlement payment to the acquiring bank (the next day
in most cases).
14. The acquiring bank subsequently deposits the total of the approved funds into the
merchant's nominated account (the same day or next day). This could be an account
with the acquiring bank if the merchant does their banking with the same bank, or an
account with another bank.
15. The entire process from authorization to settlement to funding typically takes 3 days.

Many payment gateways also provide tools to automatically screen orders for fraud and
calculate tax in real time prior to the authorization request being sent to the processor. Tools
to detect fraud include geolocation, velocity pattern analysis, OFAC list lookups, 'black-list'
lookups, delivery address verification, computer finger printing technology, identity
morphing detection, and basic AVS checks.

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MERCHANT ACCOUNT

A merchant account is a type of bank account that allows businesses to accept payments in
multiple ways, typically debit or credit cards. A merchant account is established under an
agreement between an acceptor and a merchant acquiring bank for the settlement of payment
card transactions. In some cases, a payment processor, independent sales organization (ISO),
or member service provider (MSP) is also a party to the merchant agreement. Whether a
merchant enters into a merchant agreement directly with an acquiring bank or through an
aggregator, the agreement contractually binds the merchant to obey the operating regulations
established by the card associations.

METHODS OF PROCCESING CREDIT CARDS

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Today a majority of credit card transactions are sent electronically to merchant processing
banks for authorization, capture and deposit. Various methods exist for presenting a credit
card sale to "the system." In all circumstances either the entire magnetic strip is read by a
swipe through a credit card terminal/reader, a computer chip is read (an "EMV"), or the credit
card information is manually entered into a credit card terminal, a computer or website. The
earliest methods, submitting credit card slips to a merchant processing bank by mail, or by
accessing an Automated Response Unit (ARU) by telephone, are still in use today but have
long been overshadowed by electronic devices. These early methods used two-part forms and
a manual device for mechanically imprinting the embossed card number information onto the
forms.

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CREDIT CARD TERMINAL

A credit card terminal is a stand-alone piece of electronic equipment that allows a merchant
to swipe or key-enter a credit card's information as well as additional information required to
process a credit card transaction. They may be connected to Point of Sale systems and
typically have a keypad and network connection and may have a built-in printer.

AUTOMATED RESPONSE UNIT (ARU)

An ARU (also known as a voice authorization, capture and deposit) allows the manual keyed
entry and subsequent authorization of a credit card over a cellular or land-line telephone.
With this method, a merchant typically imprints their customer's card with an imprinter to
create a customer receipt and merchant copy, then process the transaction instantaneously
over the phone.

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PAYMENT GATEWAY

A payment gateway is an e-commerce service that authorizes payments for e-businesses and
online retailers. It is the equivalent of a physical POS (point-of-sale) terminal located in most
retail outlets. A merchant account provider is typically a separate company from the payment
gateway. Some merchant account providers have their own payment gateways but the
majority of companies use 3rd party payment gateways. The gateway usually has 2
components: a) the virtual terminal that can allow for a merchant to securely login and key in
credit card numbers or b) have the website's shopping-cart connect to the gateway via an API
to allow for real time processing from the merchant's website.

LIST OF ONLINE PAYMENT SERVICE PROVIDERS

1. BHIM

BHIM (Bharat Interface for Money) is a

mobile payment App developed by the
National Payments Corporation of India
(NPCI), based on the Unified Payments
Interface (UPI). Named after B. R.
Ambedkar and launched on 30 December
2016, it is intended to facilitate e-payments
directly through banks as part of the 2016
Indian banknote demonetisation and drive
towards cashless transactions.

The app supports all Indian banks which use UPI, which is built over the Immediate Payment
Service (IMPS) infrastructure and allows the user to instantly transfer money between bank
accounts of any two parties. It can be used on all mobile devices.

BENEFITS

BHIM allow users to send or receive money to or from UPI payment addresses, or to non-
UPI based accounts (by scanning a QR code with account number and IFSC code or MMID
(Mobile Money Identifier) Code).

Unlike mobile wallets (Paytm, MobiKwik, mPesa, Airtel Money, etc.) which hold money, the
BHIM app is only a mechanism which transfers money between different bank accounts.

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Transactions on BHIM are nearly instantaneous and can be done 24/7 including weekends
and bank holidays.

BHIM also allows users to check the current balance in their bank accounts and to choose
which account to use for conducting transactions, although only one can be active at any
time.

Users can create their own QR code for a fixed amount of money, which is helpful in
merchant-seller-buyer transactions. Users can also have more than one payment address.

If the 12-digit Aadhaar number is listed as a payment ID, the BHIM app will not require any
biometric authentication or prior registration with the bank or UPI.

Version 1.3 allows users to use mobile numbers from their contact book to send money and
also save payment addresses for future use without needing to type the address again. User
can also check the transaction history, which only shows transactions through BHIM.

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BHIM MOBILE APPLICATION
OVERVIEW

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 2. GOOGLE PAY

Google Pay (stylized as G Pay; formerly Pay

with Google and Android Pay) is a digital
wallet platform and online payment system
developed by Google to power in-app and tap-
to-pay purchases on mobile devices, enabling
users to make payments with Android phones,
tablets or watches.

As of January 8, 2018, the old Android Pay

and Google Wallet have unified into a single
pay system called Google Pay. Android Pay was rebranded and renamed as Google Pay. It
also took over the branding of Google Chrome's autofill feature. Google Pay adopts the
features of both Android Pay and Google Wallet through its in-store, peer-to-peer, and online
payments services.

The rebranded service provided a new API that allows merchants to add the payment service
to websites, apps, Stripe, Braintree, and Google Assistant. The service allows users to use the
payment cards they have on file with Google Play.

The Google Pay app also added support for boarding passes and event tickets in May 2018.

SERVICE

Google Pay uses Near Field Communication (NFC) to transmit card information facilitating
funds transfer to the retailer. It replaces the credit or debit card chip and PIN or magnetic
stripe transaction at point-of-sale terminals by allowing the user to upload these in the Google
Pay wallet. It is similar to contactless payments already used in many countries, with the
addition of two-factor authentication. The service lets Android devices wirelessly
communicate with point of sale systems using a near field communication (NFC) antenna,
host-based card emulation (HCE), and Android's security.

Google Pay takes advantage of physical authentications such as fingerprint ID where

available. On devices without fingerprint ID, Google Pay is activated with a passcode. When
the user makes a payment to a merchant, Google Pay does not send the credit or debit card

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number with the payment. Instead it generates a virtual account number representing the
user's account information. This service keeps customer payment information private,
sending a one-time security code instead of the card or user details.

Google Pay requires that a screen lock be set on the phone. It has no card limit.

GOOGLE PAY MOBILE

APPLICATION OVERVIEW

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 3. PAYTM

Paytm ("Pay-T-M", pronounced

similar to ATM) is an Indian e-
commerce payment system and
financial technology company, based
out of Noida, India.

Paytm is available in 11 Indian

languages and offers online use-cases
like mobile recharges, utility bill payments, travel, movies, and events bookings as well as in-
store payments at grocery stores, fruits and vegetable shops, restaurants, parking, tolls,
pharmacies and educational institutions with the Paytm QR code. California based PayPal
had filed a case against Paytm in the Indian trademark office for using a logo similar to its
own on 18 November 2016. As of January 2018, Paytm is valued at $10 billion and it is
planning to launch its initial public offering (IPO) in 2022.

As per the company, over 7 million merchants across India use this QR code to accept
payments directly into their bank account. The company also uses advertisements and paid
promotional content to generate revenues.

PAYTM PAYMENTS BANK

On August 2015, Paytm received a license from Reserve Bank of India to launch the
payments bank.[51] The Paytm Payments Bank is a separate entity in which founder Vijay
Shekhar Sharma will hold 51% share,
One97 Communications holds 39% and
10% will be held by a subsidiary of
One97 and Sharma. The bank was
officially inaugurated in November 2017
by the Indian Finance Minister, Arun
Jaitley. The inauguration ceremony
featured prominent banking personalities

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including former RBI Executive Director PV Bhaskar, Saama Capital Director Ash Lilani
and former Shriram Group Director GS Sundarajan.

It was set to launch over 100,000 banking outlets across India by end of 2018. However, the
bank's branches are yet to touch double digits.

Paytm Payments Bank has appointed veteran banker Satish Kumar Gupta as its new
Managing Director and CEO.

PAYTM MALL

In February 2017, Paytm launched its Paytm Mall app, which allows consumers to shop from
1.4 lakh registered sellers. Paytm Mall is B2C model inspired by model of China's largest
B2C retail platform TMall. For 1.4 lakh sellers registered, products have to pass through
Paytm-certified warehouses and channels to ensure consumer trust. Paytm Mall has set up 17
fulfilment centres across India and partnered with 40+ couriers. Paytm Mall raised $200
million from Alibaba Group and SAIF Partners in March, 2018. In May 2018, it posted a loss

of approximately Rs 1,800 crore with a revenue of Rs 774 crore for financial year 2018.
Additionally, the market share of Paytm Mall dropped to 3 percent in 2018 from 5.6 percent
in 2017.

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 PAYTM MOBILE
APPLICATION OVERVIEW

4. PHONE PE

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PhonePe Private Limited, PhonePe, is an Indian e-commerce payment system and
digital wallet company headquartered in Bangalore, India. It was founded in
December 2015, by Sameer Nigam and Rahul Chari. PhonePe app went live in
August 2016 and was the first payment app built on Unified Payments Interface
(UPI).

The PhonePe app is available in over 11 Indian languages. Using PhonePe, users can
send and receive money, DTH, recharge mobile, data cards, make utility payments,
buy gold and shop online and offline. In addition, PhonePe also allows users to book
Ola rides, pay for Redbus tickets, order food on Freshmenu, eaf, fit and avail Goibibo
Flight and Hotel services through microapps on its platform.

PhonePe is accepted as a payment option across 5 million offline and online merchant
outlets covering food, travel, groceries, movie tickets etc. The app crossed 100 million
user mark in June 2018 and also crossed 5 billion transactions in December 2019.

It is licensed by the Reserve Bank of India for issuance and operation of a Semi
Closed Prepaid Payment system.

LEGAL CHALLENGES
On 14 January 2017, ICICI bank blocked PhonePe transactions, citing the reasons that
it did not meet the NPCI guidelines. Initially, on 19 January 2017, NPCI instructed
ICICI to allow UPI transactions via PhonePe. During this period, Airtel too blocked
PhonePe transactions on its platforms. A day later, on 20 January 2017, NPCI
renounced the previous instructions citing the reason that PhonePe indeed violated the
UPI norms.

After this, PhonePe closed its operations on Flipkart's website, to align itself with the
terms stated in the updated verdict from NPCI. By February, 2017, PhonePe resolved
the issues with ICICI.

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 PHONE PE MOBILE
APPLICATION OVERVIEW

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PAYMENT GATEWAY SPECIAL REFERENCE TO PAYTM
Type of business Private
Type of site Financial service
Online shopping
Payment systems

Available in Multilingual
Founded August 2010; 9 years ago
Headquarters B-121, Sector 5, Noida, Uttar Pradesh, India
Area served Worldwide
Founder(s) Vijay Shekhar Sharma
Key people Vijay Shekhar Sharma (CEO) and
(President)
Ajay Shekhar Sharma (Vice president)

Industry E-commerce Finance

Products Paytm Mall
Paytm Payments Bank
Paytm Money
Gamepad
Paytm Smart Retail

Services Payment systems

digital wallets
mobile payments
banking
online shopping

Launched August 2010; 9 years ago

Awards Outstanding Start-up of the Year Award at
Forbes Leadership Awards 2016

FUNDING AND SHARE HOLDING OF PAYTM

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 Shareholders Shareholding
Promoters: One97 communications Ltd 38.0%
Alibaba Group 42.0%
Softbank 20.0%
Total 100.0%

In October 2011, Sapphire Ventures (fka SAP Ventures) invested $10 million in One97
Communications Ltd.

In March 2015, Paytm received its huge stake from Chinese e-commerce company Alibaba
Group based in Hangzhou, China, after Ant Financial Services Group, an Alibaba Group
affiliate, took 40% stock in Paytm as part of a strategic agreement. Soon after, it received
backing from Ratan Tata, the MD of Tata Sons.

In August 2016, Paytm raised funding from Mountain Capital, one of Taiwan-based
MediaTek's investment funds at a valuation of over $5 billion.

In May 2017, Paytm received its biggest round of stake by a single investor – SoftBank
which also has a large stake in Alibaba, thus bringing the company's valuation to an
estimated $10 billion. In August 2018, Berkshire Hathaway invested $356 million for 3%-
4% stake in Paytm, although Berkshire Hathaway confirmed that Warren Buffett was not
involved in the transaction.

On November 25 2019, Paytm raised $1 billion in a funding round led by US asset manager
T Rowe Price along with existing investors Ant Financial and SoftBank Vision Fund.

HISTORY OF PAYTM

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Paytm was founded in August 2010 with an initial investment of $2 million by its founder
Vijay Shekhar Sharma in Noida, a region adjacent to India's capital New Delhi. It started off
as a prepaid mobile and DTH recharge platform, and later added data card, post-paid mobile
and landline bill payments in 2013.

By January 2014, the company launched the Paytm Wallet, and the Indian Railways and Uber
added it as a payment option. It launched into e-commerce with online deals and bus
ticketing. In 2015, it unveiled more use-cases like education fees, metro recharges, electricity,
gas, and water bill payments. It also started powering the payment gateway for Indian
Railways.

In 2016, Paytm launched movies, events and amusement parks ticketing as well as flight
ticket bookings and Paytm QR. Later that year, it launched rail bookings and gift cards.

Paytm's registered user base grew from 11.8 million in August 2014 to 104 million in August
2015. Its travel business crossed $500 million in annualised GMV run rate, while booking 2
million tickets per month.

In 2017, Paytm became India's first payment app to cross over 100 million app downloads.
The same year, it launched Paytm Gold, a product that allowed users to buy as little as ₹1 of
pure gold online. It also launched Paytm Payments Bank and ‘Inbox’, a messaging platform
with in-chat payments among other products. By 2018, it started allowing merchants to
accept Paytm, UPI and card payments directly into their bank accounts at 0% charge. It also
launched the ‘Paytm for Business’ app which is now called Business with Paytm App,
allowing merchants to track their payments and day-to-day settlements instantly. This led its
merchant base to grow to more than 7 million by March 2018.

The company launched two new wealth management products - Paytm Gold Savings Plan
and Gold Gifting to simplify long-term savings. It launched into gaming and investments,
partnering with AGTech to launch a mobile game platform Gamepad, and setting up Paytm
Money with an investment of ₹9 crore to bring investment and wealth management products
for Indians.

In May 2019, Paytm partnered with Citibank to launch credit cards

SPONSORSHIP

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In July 2015, One97 Communications, the firm that owns the brand Paytm, acquired the title
sponsorship rights for India's domestic and international cricket matches at home for a period
of four years starting in August 2015. The rights include sponsor branding of series with the
title sponsor logo, designation as the title sponsor of the series, visibility at the stadium, and
broadcast sponsorship rights. This also includes all BCCI domestic (Ranji Trophy, Duleep
Trophy, etc.) matches in India.

Previously, Paytm had acquired sponsorship rights during the 8th season of Indian Premier
League. It has also served as an associate sponsor on Sony TV network (which has the
telecast rights for IPL) and was the official partner of the IPL team Mumbai Indians. In
March 2018, Paytm became the Umpire Partner of the IPL for five years.

CONTROVERSIES

On May 2018, the Indian investigative news agency Cobra post released a video of an
undercover reporter meeting with Paytm’s vice president, Ajay Shekhar Sharma who is
brother of Vijay Shekhar Sharma. During the meeting, he reportedly said the company
provided the Indian government with the personal data of Paytm users in the Indian state of
Jammu and Kashmir by violating user's privacy and policies. This went viral through internet,
throughout the day. Later, Buzzfeed reported that, Sharma has close ties with India's ruling
party Bhartiya Janata Party. Meanwhile in response, the company tweeted that, it never
shared user's data with third parties in which it again denied the contents of the video and
stated that it never received requests from law enforcement on twitter. Paytm also stated that
any person claiming otherwise “is not aware of the policy and is not authorised to speak on
behalf of the company”.

E-COMMERCE PAYMENT SYSTEM

An e-commerce payment system (or an electronic payment system) facilitates the acceptance
of electronic payment for online transactions. Also known as a subcomponent of Electronic
Data Interchange (EDI), e-commerce payment systems have become increasingly popular
due to the widespread use of the internet-based shopping and banking.

Credit cards remain the most common forms of payment for e-commerce transactions. As of
2008, in North America almost 90% of online retail transactions were made with this
payment type. It is difficult for an online retailer to operate without supporting credit and
debit cards due to their widespread use. Online merchants must comply with stringent rules

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stipulated by the credit and debit card issuers (e.g. Visa and MasterCard) in accordance with
bank and financial regulation in the countries where the debit/credit service conducts
business. [better source needed]

For the vast majority of payment systems accessible on the public Internet, baseline
authentication (of the financial institution on the receiving end), data integrity, and
confidentiality of the electronic information exchanged over the public network involves
obtaining a certificate from an authorized certification authority (CA) who provides public-
key infrastructure (PKI). Even with transport layer security (TLS) in place to safeguard the
portion of the transaction conducted over public networks—especially with payment systems
—the customer-facing website itself must be coded with great care, so as not to leak
credentials and expose customers to subsequent identity theft.

METHODS OF ONLINE PAYMENT

Credit cards constitute a popular method of online payment but can be expensive for the
merchant to accept because of transaction fees primarily. Debit cards constitute an excellent
alternative with similar security but usually much cheaper charges. Besides card-based
payments, alternative payment methods have emerged and sometimes even claimed market
leadership.

BANK PAYMENTS

This is a system that does not involve any sort of physical card. It is used by customers who
have accounts enabled with Internet banking. Instead of entering card details on the
purchaser's site, in this system the payment gateway allows one to specify which bank they
wish to pay from. Then the user is redirected to the bank's website, where one can
authenticate oneself and then approve the payment. Typically, there will also be some form of
two-factor authentication.

It is typically seen as being safer than using credit cards, as it is much more difficult for
hackers to gain login credentials compared to credit card numbers. For many eCommerce
merchants, offering an option for customers to pay with the cash in their bank account
reduces cart abandonment as it enables a way to complete a transaction without credit cards.

MOBILE MONEY WALLETS

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In developing countries many people don't have access to banking facilities, especially in tier
II and tier III cities. Taking the example of India, there are more mobile phone users than
there are people with active bank accounts. Telecom operators, in such locations, have started
offering mobile money wallets which allow adding funds easily through their existing mobile
subscription number, by visiting physical recharge points close to their homes and offices and
converting their cash into mobile wallet currency. This can be used for online transaction and
eCommerce purchases.

DIGITAL CURRENCY

Digital currency (digital money, electronic money or electronic currency) is a type of

currency available in digital form (in contrast to physical, such as banknotes and coins). It
exhibits properties similar to physical currencies, but can allow for instantaneous transactions
and borderless transfer-of-ownership. Examples include virtual currencies, cryptocurrencies,
and central bank digital currency. These currencies may be used to buy physical goods and
services, but may also be restricted to certain communities such as for use inside an online
game.

Digital currency is a money balance recorded

electronically on a stored-value card or other
devices. Another form of electronic money is
network money, allowing the transfer of
value on computer networks, particularly the
Internet. Electronic money is also a claim on
a private bank or other financial institution
such as bank deposits.

Digital money can either be centralized, where there is a central point of control over the
money supply, or decentralized, where the control over the money supply can come from
various sources.

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COMPARISONS

Digital versus virtual currency

According to the European Central Bank's 2015 "Virtual currency schemes – a further
analysis" report, virtual currency is a digital representation of value, not issued by a central
bank, credit institution or e-money institution, which, in some circumstances, can be used as
an alternative to money. In the previous report of October 2012, the virtual currency was
defined as a type of unregulated, digital money, which is issued and usually controlled by its
developers, and used and accepted among the members of a specific virtual community.

According to the Bank for International Settlements' November 2015 "Digital currencies"
report, it is an asset represented in digital form and having some monetary characteristics.
Digital currency can be denominated to a sovereign currency and issued by the issuer
responsible to redeem digital money for cash. In that case, digital currency represents
electronic money (e-money). Digital currency denominated in its own units of value or with
decentralized or automatic issuance will be considered as a virtual currency.

As such, bitcoin is a digital currency but also a type of virtual currency. Bitcoin and its
alternatives are based on cryptographic algorithms, so these kinds of virtual currencies are
also called cryptocurrencies.

Digital versus traditional currency

Most of the traditional money supply is bank money held on computers. This is also
considered digital currency. One could argue that our increasingly cashless society means
that all currencies are becoming digital, but they are not presented to us as such.

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LAW

Since 2001, the European Union has implemented the E-Money Directive "on the taking up,
pursuit and prudential supervision of the business of electronic money institutions" last
amended in 2009. Doubts on the real nature of EU electronic money have arisen, since calls
have been made in connection with the 2007 EU Payment Services Directive in favour of
merging payment institutions and electronic money institutions. Such a merger could mean
that electronic money is of the same nature as bank money or scriptural money.

In the United States, electronic money is governed by Article 4A of the Uniform Commercial
Code for wholesale transactions and the Electronic Fund Transfer Act for consumer
transactions. Provider's responsibility and consumer's liability are regulated under Regulation
E.

MICROPAYMENT

A micropayment is a financial
transaction involving a very small sum
of money and usually one that occurs
online. A number of micropayment
systems were proposed and developed
in the mid-to-late 1990s, all of which
were ultimately unsuccessful. A second
generation of micropayment systems
emerged in the 2010s.

While micropayments were originally envisioned to involve very small sums of money,
practical systems to allow transactions of less than US$1 have seen little success. One
problem that has prevented the emergence of micropayment systems is a need to keep costs
for individual transactions low, which is impractical when transacting such small sums even
if the transaction fee is just a few cents.

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DEFINITION

There are a number of different definitions of what constitutes a micropayment. PayPal

defines a micropayment as a transaction of less than £5 while Visa defines it as a transaction
under 20 Australian dollars.

Early research and systems

In the late 1990s, established companies like IBM and Compaq had microtransaction
divisions, and research on micropayments and micropayment standards was performed at
Carnegie Mellon and by the World Wide Web Consortium.

IBM Micro Payments

IBM's Micro Payments was established c. 1999, and were it to have become operational
would have "allowed vendors and merchants to sell content, information, and services over
the Internet for amounts as low as one cent".

iPIN

An early attempt at making micropayments work, iPIN was a 1998 venture-capital-funded

start-up that provided services that allowed purchasers to add incremental micropayment
charges to their existing bill for Internet services. Debuting in 1999, its service was never
widely adopted.

Millicent

Millicent, originally a project of Digital Equipment Corporation, was a micropayment system

that was to support transactions from as small as 1/10 of a cent up to $5.00. It grew out of
The Millicent Protocol for Inexpensive Electronic Commerce, which was presented at the
1995 World Wide Web Conference in Boston, but the project became associated with
Compaq after that company purchased Digital Equipment Corporation. The payment system
employed symmetric cryptography.

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NetBill
The NetBill electronic commerce project at Carnegie Mellon university researched
distributed transaction processing systems and developed protocols and software to support
payment for goods and services over the Internet. It featured pre-paid accounts from which
micropayment charges could be drawn. NetBill was initially absorbed by CyberCash in 1997
and ultimately taken over by PayPal.

RECENT SYSTEMS
Current systems either allow many micropayments but charge the user's phone bill one lump
sum or use funded wallets.
Flattr
Flattr is a micropayment system (more specifically, a microdonation system) which launched
in August 2010. Actual bank transactions and overhead costs are involved only on funds
withdrawn from the recipient's accounts.
Jamatto
Jamatto is a micro-payments and micro subscriptions system that allows websites and
publishers to accept payments as small as 1c by modifying just their HTML source code
Jamatto is in use by newspapers across three continents.
M-Coin
A service provided by TIMWE; M-Coin allows users to make micropayments on the Internet.
The user's phone bill is then charged by the mobile network operator.
PayPal
PayPal Micro Payments is a micropayment system that charges payments to user's
account and allows transactions of less than US$12 to take place. As of 2013, the service is
offered in selected currencies only. The PayPal charge for a micropayment from a U.S.
account is a flat five cents per transaction plus five percent of the transaction (as compared
with PayPal's normal 2.9% and 30 cents for larger sums).

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 RESEARCH METHODOLOGY

Research Design - Exploratory research design selected for the research.

Research Approach- Respondents were approached personally with well prepared and
systematically designed questionnaire. The questionnaire is prepared on the
basis the objective of the study. Direct contact is used for the study i.e.
Contacting employees directly for collecting data.

Sample size- 30 plus respondents were considered from the research area.

Sampling Area- Mhada colony.

Sampling Design- stratified Random sampling is used.

Collection of data- The data collected is secondary data and primary data through
personal interviews.

Research instruments- A systematic designed questionnaire consisting of open and close ended
questions, multiple choice questions are used it only consists of relevant
questions pertaining to the study.

Statistical Tools- Pie diagram.

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 DATA ANALYSIS
GENDER OF RESPONDENT

GENDER Percentage
Male 75%
Female 25%
Transgender 0%

As per the survey the majority of the data collected is from the male
respondents. The male respondents are 75% and female respondents are 25%.

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AGE GROUP OF RESPONDENTS

Age group Percentage

15-25 85%
26-36 12.05%
37-47 2.05%
47 & Above 0.00%

As per the research majority of the respondent are in the age between 15-25
years so the data collected is from the youth respondents.

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DO YOU USE ANY APPLICATION FOR ONLINE PAYMENT?

Use of application for online payment Percentage

Yes 90%
No 2.05%
Maybe 7.05%

As per the research majority of the respondents uses online payment gateways
and trust it more in today’s time.

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IF "YES", THEN WHICH ONE?

Which application mostly use for Percentage

online payment
Paytm 37.05%
Google Pay 42.05%
Phone pe 15%
None of the above 2.05%
Payzapp 2.05%

As per the research majority of the respondent uses google pay and after that
majority of people uses Paytm. As google pay is directly connected to bank
accounts its easy for the users to have transaction.

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WHERE DID YOU GET INFORMATION ABOUT E-WALLETS?

Influencer Percentage
Social media 45%
Friends 42.05%
Television 12.05%

As per the research majority of the respondents got to know about the online
payment gateway from social media and then from friends.

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DO YOU PREFER E-WALLET FOR FINANCIAL TRANSACTIONS?

Knowledgeable Percentage
Yes 92.05%
No 0%
Maybe 7.05%

As per the research, majority of the respondents prefer to use online payment
gateway as it is a fastest way of paying for anything from anywhere.

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IF ''YES'', THEN WHY?

Knowledgeable Percentage
Time saving 57.05%
Ease of use 27.05%
Security 15%

As per the research majority of the respondents use online payment gateway
because it is more of time saving.

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WHAT IS YOUR PURPOSE OF USING E-WALLET?

Purpose of using E-wallet Percentage

Money transfer 45%
Recharge 5%
Utility & bill payment 2.05%
All of the above 47.05%

As per the research majority of the respondents use online payment gateways to
do all of the above given tasks like money transferring, paying for recharge and
other works.

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WHAT YOU KEEP IN MIND WHEN YOU USE E-WALLET?

Knowledgeable Percentage
Available discount 17.05%
Premium offers 25%
Cash back 57.05%

As per the research majority of the respondents uses payment gateways as it

gives cashback offers on using it.

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DO YOU BELIEVE YOUR TRANSACTION ARE SECURED?

Knowledgeable Percentage
Strongly agree 95%
Strongly disagree 5%

As per the research majority of the respondents strongly agree that the payment
done using online payment gateway are secured.

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DOES USING E-WALLET PROMOTES CASHLESS PAYMENT TO THE
NEXT LEVEL?

Knowledgeable Percentage
Yes, off course 65%
No 0%
Maybe 35%

As per the research majority of the respondents agrees that e-wallets promotes
cashless transactions.

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HOW DO YOU RATE THE E-WALLET SERVICE THAT YOU HAVE
USED?

Use Percentage
Very satisfied 42.05%
Satisfied 50%
Neutral 7.05%
Unsatisfied 0%

As per the research majority of the respondents are satisfied using online
payment gateways.

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ARE THERE ANY OBSTACLES WHEN YOU USE E-WALLET?

User face obstacles Percentage

Yes 30%
No 45%
Maybe 25%

As per the research majority of the respondents don’t face any problems while
using online payment gateways.

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IF “YES”, THEN WHAT ARE THE OBSTACLES YOU FACE WHILE
USING OF E-WALLET?

Types of obstacles Percentage

Security of mobile payment 76.02%
Too time consumption to set up 0%
Involves danger of losing money 14.03%
Cannot be used for international
transportation 9.05%

As per the research majority of the respondents the problems the users have to
face is the security problems of mobile payments.

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 CONCLUSION & RECOMMENDATION
Paytm supports their customers to transfer their payments with the usage of their mobile
phones in the easiest way. Paytm has to work upon the Payment gateway to improve the
transaction efficiency as 70% people faced problem with payment gateway. Only 5% people
claim to have got assistance every time they had a failure so the service could be improved to
cater the needs of maximum customers.

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 BIBLIOGRAPHY

Websites & books:

1. www.paymentgateway.com
2. Integrated marketing communication book
3. Business research method book
4. www.investopdeia.com
5. www.razorpay.com

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 Questionnaire on payment gateway (Paytm)

Q01. Name of the respondent

Q02. Gender of the respondent

Q03. Age of the respondent

Q04. Do you use any application for online payment?

Q05. If "yes", then which one?

Q06. Where did you get information about E-WALLETS?

Q07. Do you prefer E-WALLET for financial transaction?

Q08. If ''yes'', then why?

Q09. What is your purpose of using E-WALLET?

Q10. What you keep in mind when you use E-WALLET?

Q11. Do you believe your transaction are secured?

Q12. Does using E-WALLET promotes cashless payment to the next level?

Q13. How do you rate the E-WALLET service that you have used?

Q14. Are there any obstacles when you use E-WALLET?

Q15. If “yes”, then what are the obstacles you face while using of E-WALLET?

51