Cash Is The King – The importance of cash as an asset remains undeniable and is likely to persist indefinitely. This article is centered on two recent developments within the mobile payments sector. The Reserve Bank of India made a revolutionary attempt to suppress cash payments through the adoption and promotion of mobile payment technologies. Additionally, the issuance of banking licenses to non-bank entities has gained attention as another significant development in the Indian banking sector.
“Cash – Cash is still a king & will remain always”.
Cash Payments Time then & Now
The present era has undergone significant transformations, ushering in an array of potential opportunities. In recent years, there has been a significant transformation in the landscape of financial payments in many developing nations. Currently, India has assumed the responsibility of revolutionizing the payment landscape via various efforts. Within these various endeavors, non-banking individuals are granted banking tickets as a means of initiating a transition from a traditional banking framework towards an alternative model dominated by mobile network operator (MNO) or mobile financial services provider (MFS) entities.
The proposed alterations aim to advance economic inclusivity among the marginalized populace of India. Moreover, this initiative will facilitate efficacy within the payment sector. Consequently, banking institutions are expected to encounter substantial challenges in their efforts to compete with mobile network operators (MNOs) and mobile financial services (MFS) providers. From a market perspective, the use of cash as the predominant mode of payment in India adds an element of risk. Merchants and business proprietors assert their stance by affixing decals at their payment counters that bear the phrase, “Even God Pays Cash Here.”
The current financial condition appears to be critical, as we were apprised of the recent bankruptcy of a banking institution mere days ago. It is widely acknowledged that the value of investments is subject to fluctuations and may experience a decline; furthermore, predicting the exact timing of such changes remains uncertain.
In light of governments’ recognition of the potential of digital currencies to shape the future of monetary exchange and the proliferation of global cryptocurrency exchanges, it would require a daring individual to place their bets on the eventual disappearance of blockchain-based digital currencies. The Ministry of Innovation in India is currently active and prepared for implementation.
New Payment Banks and Accessibility
The presence of easy access is a fundamental element in the success of any service. The availability of banking services plays a crucial role in the functioning of informal institutions that offer financial services to people within the community. Historically, banks have relied on an extensive network of physical banking facilities that bear their exclusive branding. The banking hall has been equipped with appropriate personnel and security measures.
India is on the brink of experiencing a plethora of exhilarating developments in various aspects of life, including personal, professional, and daily routines. The abundance of choices provided by the RBI for private sector players in India is intriguing. The dilemma faced by retailers, merchants, and businesses of all sizes is how to manage the sudden influx of digital currencies. The process of shifting from dealing with paper money to digital data may not be smooth.
Can we interpret digital transformation as a constant increase in data accumulation? The payments industry and financial technologists are increasingly interested in big data, which may leave some feeling confused. Business analysts and strategists suggest taking the time to fully comprehend the architecture of these new systems in order to truly appreciate the evolution.
New Architecture of Payments
Understanding the architectural components and subtleties would also help to choose and apply the proper technology for specific use cases. Payment methods or acceptance methods are in transformation mode. Payments are getting intelligent, so subscribers Payment intelligence in my odyssey over the past few years has brought some life-changing experiences in payments and the literature of innovations. This area has helped me become a better FinTech intelligence professional.
My goal here is not to share only literature or my own assumptions with the conclusion. As that might look unfair in the absence of logic, but also use the opportunity to put some sanity into the labyrinth of open-source systems.
Payment Licenses – A revolutionary Step
When was the last time the Indian payment market under the banking or non-banking domain did something for the first time? I guess I can’t remember the answer. Now, after this wonderful step from the RBI of issuing payment bank licenses to non-banking companies (yes, many more are coming in soon on the same line), the Indian finance ministry mulls a 1% income tax rebate for credit or debit card payments.
India is experiencing a disruption in financial services, or one can say it is going to experience the Indian Independence Movement of the year 1857; whichever is the case, the Indian payment market is surely going to see a big revolution. The RBI did a splendid job by granting 11 licenses for payment banks. The payment bank is a great piece of innovation from the RBI and is an excellent example of a step taken into reality and the future. Accepting the change itself is a commendable job.
The Indian payment market is cash-dominated, and people just love cash; in some cases, they even love to sleep over cash (some pump cash into their mattresses or cushions). Change is coming, and without saying it, change also brings many opportunities and challenges. To date, the Indian market has a big menu or table full of so many exciting items like new licenses, smartphones, Aadhar identification, IMPS, e-sign, payment banks, etc. All the changes coming in need drastic changes in regulations, technologies, design, and market trends, and the biggest one is subscriber behavior or mindset.
Change Brings Change
Do you remember what WhatsApp did in 2009? Brace up for the same now. This will turn India into a cashless society, or more of a digital cash society. On the impact side, one can expect positive outcomes.
- Expand the financial sector’s reach by leveraging mobile media.
- Domestic remittances and inter-payment bank transfers will cut the time to send and receive funds and payments to almost zero.
- Ease of use for financial services via various interfaces like IVR, USSD, SMS, and smart apps
- Expand the set of services to a larger sector of society.
- Solution Providers (Service Providers) for Prompt Payment of Bills, Enabling Better Cash Flow
- Acquire a large number of customers for their solution or services.
Change to Bring PaymentIntelligence
As they say, there will always be southward runners when you are walking toward the north. The more you grow, the more you run southward; the more you try to go south, the more you will be pushed off towards the north.
- Many innovation critics are trapped in a toxic mindset of envy and insecurity, preventing them from recognizing their own capabilities and potential.
- It’s important to avoid being influenced by negative perspectives encountered while researching; I should have focused on completing this write-up without distractions.
- The realm of digital payments is witnessing a significant addition with Microsoft Payments, or MS Pay, entering the fray alongside Apple, Android, and Samsung.
- The official support for host card emulation in Windows 10 for phones adds a new layer of legitimacy to the competitive landscape, shaping the future of payment technology.
We can correlate the parts of the first and later parts to make context out of the same, pointing to the new wave of payment, which will bring excellent change and good things to life and people’s jobs.
The Winners Of The Show
The issuance of 11 Payment banking licenses is evidence of the Indian Payment Market getting the 1st major step towards freedom from cash. The top 9 are as below
- Aditya Birla Nuvo Ltd
- Airtel M Commerce Services Ltd (Part of India’s largest MNO, Bharti Airtel Ltd)
- Cholamandalam Distribution Services Ltd
- Department of Posts
- FINO PayTech Ltd
- National Securities Depository Ltd (NSDL)
- Reliance Industries Ltd (RIL)
- Tech Mahindra Ltd
- Vodafone m-pesa Ltd ( Part of Vodafone India Ltd)
Since the RBI does not want corporates in banking, they are going for the next big thing that’s available – payment bank licenses. The reasons why payment banking will revolutionize the money movement are many. Consider the areas they will touch, and how their mere presence will impact everyone.
New Class of Banks
The new class of banks, which will be proven as “To be Disruptive”, will give basic savings, deposit, payment, and remittance services to people without access to the formal banking system. Finally, India will also see financial inclusion in the real sense. The savings groups will run by using an existing/upcoming mobile wallet, developed for basic/smartphones. It will bring ice cream eating simple processes.
The use of existing/upcoming mobile wallets, Automatic book-keeping/message service, and Group savings will be another disruptive move that will be very effective and safe in the name of Chit-Fund (Kind a of Savings Group). The payments banks will target financially excluded customers like people in the diaspora, low-income households, and informal small-scale businesses.
Payment Banks working Model
Payment banks, for now, are restricted from the business of lending so they will be shielded from the risks that conventional banks are exposed to. In the long run would like to see services coming in like microcredit, micro insurance, funeral cover, Accidental insurance, etc. Over time, there is a big opportunity to build a credit rating system for ratings and learning behavior which will then enable extra benefits and services to attract more and more subscribers to this.
- Which route to go as a crux of this discussion?
- What are your views on the same?
- What are the implications of this radical change?
- Is it going to change the Indian world (very likely), be a significant “win”, be a nice hack, or simply serve as a road sign indicating that this path is “UNKNOWN”?
As CTO of leading FinTech enterprise, i understand the paramount importance of selecting systems that align seamlessly with our market, strategies, and overarching goals. Your valuable insights and feedback are invaluable as I navigate this critical decision-making process.
Food For Thought
While we witness an upsurge in mobile payment announcements from diverse smartphone manufacturers, it’s only prudent to approach these developments with a discerning eye. Despite the buzz, uncertainties linger regarding the true impact of these services on driving substantial smartphone sales. This juncture calls for a unified effort from financial institutions and other relevant entities, converging to capitalize on cutting-edge technology and harnessing the robust foundation of existing mobile network infrastructure.
Through this strategic collaboration, we have the unique opportunity to capture new customers, enhance use cases, optimize operational efficiency, and bolster our revenue streams. My dedication to this shared vision is pivotal, and together, we can pave the way for transformative growth and innovation in the FinTech landscape. Your insights and engagement are pivotal to this endeavor, and I eagerly anticipate your contributions to this transformative journey.
African banks can grow a lot by following global rules, coming up with new ideas to succeed in the future, and gaining the trust of customers. Right now, many banks in Africa don’t have that trust.
Points to Note:
it’s time to figure out when to use which tech —a tricky decision that can really only be tackled with a combination of experience and the type of problem at hand. So if you think you’ve got the right answer, take a bow and collect your credits! And don’t worry if you don’t get it right; this next post will walk us through neural networks’ “neural network architecture” in detail.
Feedback & Further Question
Do you need more details or have any questions on topics such as technology (including conventional architecture, machine learning, and deep learning), advanced data analysis (such as data science or big data), blockchain, theoretical physics, or photography? Please feel free to ask your question either by leaving a comment or by sending us an via email. I will do my utmost to offer a response that meets your needs and expectations.
Conclusion – Simply increasing the Earth’s rotation speed by 30 times will not result in an increase in salaries received by individuals at that same rate. While changes like this bring societal benefits, it’s important to exercise patience before expecting immediate results. It’s like waiting to milk a cow. What is the potential impact of mobile-based payment systems? Will it revolutionize the world, result in a major victory, or simply be a convenient solution? Various forms of mobile payment apps, including proximity, mobile apps, SMS, and USSD, are saturating the market. The cloud hosting service has emerged victorious in the realm of mobile payment systems. Financial institutions and partners across the globe will benefit from the widely available support, which offers consumers secure options for making payments using their smartphones.
#mobilepayments, #mobilemoney, #FinancialCrises, #TransformLives, #Cashpayments
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