7/20/2023

iNTRODUCTION TO

DIGITAL PAYMENTS
Session 10
Prof Sanjiva S Dubey

Overview of Digital Payments

Digital payments refer to electronic transactions conducted using various technologies
such as mobile devices, online platforms, and electronic wallets. They have revolutionized
the way we pay for goods and services, offering convenience, security, and efficiency.

Mobile Payments Digital Wallets Credit and QR Code Payments

Debit Cards

Contactless Payments Bank Transfers Cryptocurrencies

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Traditional Payment Methods

Traditional payment methods, such as cash and checks, have been the
primary means of transaction for centuries. However, they often involve
physical exchange and can be time-consuming and prone to fraud. The rise
of digital payments has addressed these challenges.

The Need for Digital Payments

Digital payments have revolutionized the way we transact and conduct
financial transactions. It offer several advantages. They provide
convenience, allowing users to make transactions anytime and
anywhere. They enhance security through encryption and
authentication measures. They also enable quick and seamless
transactions, reducing the need for physical currency.

Convenience and
01 Accessibility here
04 Financial Inclusion

Globalization
02 05 Cost and Efficiency
and E-commerce

Security and Fraud Innovation and Technological

03 Prevention 06 Advancements

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Wallet Gateway providers Billing payment

Issuers Banks

Growth of Digital Payments in India

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Evolution of Digital Payments

Over the years, digital payments have evolved
significantly. From the introduction of credit
and debit cards to the emergence of online
banking, mobile payments, and
cryptocurrencies, each advancement has
reshaped the payments landscape and
consumer behavior.

Digital payments have had a profound impact on

Impact on Business businesses. They enable companies to expand their

customer base globally, streamline payment processes,
reduce costs associated with cash handling, and enhance
customer satisfaction

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Security and Fraud Prevention

While digital payments offer convenience, security considerations are

crucial. Users must be aware of potential risks such as data breaches,
phishing attacks, and identity theft.

• Employing strong authentication measures and keeping software up

to date is essential.

• Encryption technologies, tokenization, and two-factor authentication

enhance security and reduce the risk of fraud.

• Compared to traditional payment methods, digital payments provide

better protection against unauthorized access and counterfeit
transactions.

Future Trends in Digital Payments

The digital payments landscape continues

to evolve. Emerging technologies like
biometric authentication, artificial
intelligence, and Internet of Things (IoT)
integration are expected to shape the future
of payments, providing even more secure
and frictionless experiences.

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Regulatory Framework
Governments and regulatory bodies are adapting to the digital
payments ecosystem by implementing policies and regulations to
ensure consumer protection, prevent money laundering, and
foster innovation. Compliance with these regulations is crucial for
payment service providers.

Challenges and Opportunities

Digital payments bring both challenges and opportunities.

Some challenges include: Opportunities include:

Need for interoperability

Innovation

Addressing the unbanked Financial inclusion

population

Ensuring cybersecurity. economic growth

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Consumer Adoption and Behavior

Understanding consumer adoption and behavior is crucial for businesses in the digital payments
space.

• Factors like demographics, preferences, and trust

levels
• Aligning digital payment offerings with consumer
preferences
• Establishing trust through security measures, data
protection policies, and authentication protocols
• Analyzing consumer feedback and conducting user
experience research
• Continuously evaluating and adapting digital payment
strategies based on consumer insights

Collaboration and Partnerships

Collaboration between financial

institutions, fintech startups, technology
companies, and regulatory bodies is vital
for driving the growth and development
of digital payments. Partnerships can
foster innovation, improve
infrastructure, and address industry
challenges collectively.

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What’s India Stack?

India Stack is a set of open APIs that aims to unlock the economic primitives of identity,
payments, and data at the population scale. India Stack is based into four-layered architecture
as explained in the India Stack portal.

• Presenceless Layer: This is a unique digital biometric

identity with open API access, which includes the Aadhaar
card and Mobile Aadhaar.

• Cashless Layer: It refers to the electronic interoperable

payment network comprising IMPS, AEPS, APB and UPI.

• Paperless Layer: This refers to Aadhaar e-KYC, e-Sign, and

the Digital Locker.

• Consent Layer: The Consent Layer is a modern privacy data-

sharing framework with an open personal data store.

Revolutionizing Society and Governance: India Stack

Introduction:
Micro-entrepreneurs: Toll Gates:

• Transformation from cash to digital

payments in India • Transition from cash to • FASTag enables seamless
digital payments payments

• Impact on Society and Governance

• Access to formal financial • Reduced fuel costs,
processes and products pollution, and improved
• Overview of India Stack and its
customer experience
Components

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India as the Fastest-Growing Digital Economy

• India's emergence as the world's fastest-growing
digital economy

• Cutting-edge technologies, including AI-driven

solutions, for further development

• The movement is IndiaStack, a collection of software

utilities available as an API that helps institutions in
India build a digital experience for the billion-plus
people who inhabit it.

• IndiaStack is the platform that promises to easily

scale products and services that are in need of
monetary and identity transactions. A modern
transaction and settlement infra for a modern India.

Temples Embracing Digital Payments

Kedarnath Temple, Hanuman temple,

Jagannath Temple, Puri
Uttarakhand Noida

• Shrinking cash usage in temples

• Digital methods for donations, darshan booking, and accommodation
• POS machines replacing traditional 'hundis' for donations

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Future of India Stack

• Fostering innovation through public-private

partnerships
• Supportive government policies for the digital public
good
• Introduction of ONDC for inclusive commerce
• Interest from other countries to implement similar
stacks

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