Mode Of Payment.docx

1.1 Introduction of Mode of Payment A payment is the trade of value from one party (such as a person or company) to another for goods, or services, or to fulfil a legal obligation. Payment can take a variety of forms. Barter, the exchange of one good or service for another, is a form of payment. The most common means of payment involve use of money, cheque, or debit, credit or bank transfers. Payments may also take complicated forms, such as stock issues or the transfer of anything of value or benefit to the parties. In US law, the payer is the party making a payment while the payee is the party receiving the payment. In trade, payments are frequently preceded by an invoice or bill. In general, the payee is at liberty to determine what method of payment he or she will accept; though normally laws require the payer to accept the country's legal tender up to a prescribed limit. Payment is most commonly effected in the local currency of the payee, unless if the parties agree otherwise. Payment in another currency involves an additional foreign exchange transaction. The payee may compromise on a debt, i.e., accept a part payment in full settlement of a debtor's obligation, or may offer a discount, for example, for payment in cash, or for prompt payment, etc. On the other hand, the payee may impose a surcharge, for example, as a late payment fee, or for use of a certain credit card, etc. The acceptance of a payment by the payee extinguishes a debt or other obligation. A creditor cannot unreasonably refuse to accept a payment, but payment can be refused in some circumstances, for example, on a Sunday or outside banking hours. A payee is usually obligated to acknowledge payment by producing a receipt to the payer. A receipt may be an endorsement on an account as "paid in full". The giving of a guarantee or other security for a debt does not constitute a payment 

Methods

There are two types of payment methods; exchanging and provisioning. Exchanging involves the use of money, comprising banknotes and coins. Provisioning involves the transfer of money from one account to another, and involves a third party. Credit card, debit card, cheque, money transfers, and recurring cash or ACH (Automated Clearing House) disbursements are all electronic payments methods. Electronic payments technologies include magnetic stripe cards, smartcards, contactless cards, and mobile payments.

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Payments may be classified by the number of parties involved in a transaction. For example, a prepaid care transaction usually involves four parties (the purchaser, the seller, the issuing bank, and the acquiring bank). A cash payment requires a minimum of three parties (the seller, the purchaser, and the issuer of the currency). A barter payment requires a minimum of two parties (the purchaser and the seller).

The infrastructure and electronic clearing methods are formed by the payment provider. Global credit

card

payment

providers

are Diners

Club, Visa, American

Express and MasterCard. Maestro and Cirrus are international debit card payment providers. In 2005, an estimated $40 trillion globally passed through some type of payment system. Roughly $12 trillion of that was transacted through various credit cards, mostly the 21,000 member banks of Visa and MasterCard. Processing payments, including the extending of credit, produced close to $500 billion in revenue.

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In 2012, roughly $377 trillion passed

through noncash payment systems. This led to total account and transaction revenues close to $524 billion.

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Debit cards In the U.S., debit cards are the fastest growing payment technology. In 2001, debit cards accounted for 9 percent of all purchase transactions, and this is expected to double to 18.82 percent in 2011.

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Cheques Main article: Cheque clearing Historically, cheques have been one of the primary means of payment for purchasing goods and services, though its share in the payment mix is falling worldwide. In 2001, in the United States, cheques accounted for 25% of the U.S.-based payment mix; and in 2006, this was projected to fall to 17%.

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In the United States, a cheque as a form of payment can legally be refused for any reason (or no reason).

needed

A payment by cheque is not a "payment" until the cheque has been cashed

(i.e., deposited) and cleared by the banking system.

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1.2 Breaking Down Payment Today's monetary system allows for payments to be made with currency. Currency, which has simplified the means of economic transactions, provides a convenient medium through which payments can be made; it can also be easily stored. For example, in the past, if an egg farmer with a large surplus of eggs wanted milk, he would need to find a dairy farmer who would be willing to take eggs as payment for milk. In this case, if a suitable dairy farmer weren't found in time, not only would the egg farmer not get his milk, but his eggs would spoil, becoming worthless. Currency, on the other hand, maintains its value over time. Payment can come in many forms. One form of payment is barter, the exchange of one good or service for another. Modern payments are usually done through currency, such as cash, check, debit, credit or bank transfers. Payments may also take complicated forms, such as stock issues or the transfer of anything of value or benefit to the parties. In US law, the payer is the party making a payment while the payee is the party receiving the payment. An invoice or bill typically precedes a payment. Payees usually get to choose how they will accept payment; however, some laws require the payer to accept the country's legal tender up to a prescribed limit. Payment in another currency involves an additional foreign exchange transaction. The payee may choose to compromise on a debt and accept a partial payment in lieu of full settlement of the obligation, or it may offer a discount at their discretion. The payee may also impose a surcharge, for example, as a late payment fee, or for use of a certain credit card, etc. Acceptance of a payment by the payee extinguishes a debt or other obligation. A creditor cannot unreasonably refuse to accept a payment, but payment can be refused in some circumstances, for example, on a Sunday or outside banking hours. A payee is usually obligated to acknowledge payment by producing a receipt to the payer, which may be regarded as an endorsement on an account as "paid in full." A payment system is any system used to settle financial transactions through the transfer of monetary value, and includes the institutions, instruments, people, rules, procedures, standards, and technologies that make such an exchange possible.

A common type of payment system

is the operational network that links bank accounts and provides for monetary exchange using bank deposits.

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What makes a payment system a system is the use of cash-substitutes; traditional payment systems are negotiable instruments such as drafts (e.g., cheques) and documentary credits such as letters of credit. With the advent of computers and electronic communications a large number of alternative electronic payment systems have emerged. These include debit cards, credit cards, electronic funds transfers, direct credits, direct debits, internet banking, and e-commerce payment systems. Some payment systems include credit mechanisms, but that is essentially a different aspect of payment. Payment systems are used in lieu of tendering cash in domestic and international transactions and consist of a major service provided by banks and other financial institutions. Payment systems may be physical or electronic and each has its own procedures and protocols. Standardization has allowed some of these systems and networks to grow to a global scale, but there are still many country- and product-specific systems. Examples of payment systems that have become globally available are credit card and automated teller machine networks. Specific forms of payment systems are also used to settle financial transactions for products in the equity

markets, bond

markets, options

markets,

markets, currency and

to transfer

markets, futures

markets, derivatives

funds between financial

institutions both

domestically using automated clearing house and real-time gross settlement (RTGS) systems and internationally using the SWIFT network. The term electronic payment refers to a payment made from one bank account to another using electronic methods and forgoing the direct intervention of bank employees. Narrowly defined electronic payment refers to e-commerce—a payment for buying and selling goods or services offered through the Internet, or broadly to any type of electronic An efficient national payment system reduces the cost of exchanging goods, services, and assets and is indispensable to the functioning of the interbank, money, and capital markets. A weak payment system may severely drag on the stability and developmental capacity of a national economy; its failures can result in inefficient use of financial resources, inequitable risk-sharing among agents, actual losses for participants, and loss of confidence in the financial system and in the very use of money The technical efficiency of payment system is important for a development of economy. An Automated clearing house (ACH) system processes transactions in batches. Transactions are stored and transmitted in batches to the ACH. ACHs are net settlement systems, so settlement may be delayed, and there is settlement risk.

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Real-time gross settlement systems (RTGS) are funds transfer systems where transfer of money or securities takes place from one bank to another on a "real-time" and on "gross" basis. Settlement in "real time" means that payment transaction does not require any waiting period. The transactions are settled as soon as they are processed. "Gross settlement" means the transaction is settled on one to one basis without bunching or netting with any other transaction. Once processed, payments are final and irrevocable. ACHs are typically used for low-value, non-urgent transactions while RTGS systems are typically used for high-value, urgent transactions.

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STEP2 is a Pan-European automated clearing house for the Single Euro Payments Area. TARGET2 is a RTGS system that covers the European Union member states that use the euro, and is part of the Euro system, which comprises the European Central Bank and the national central banks of those countries that have adopted the euro. TARGET2 is used for the settlement of central bank operations, large-value Euro interbank transfers as well as other euro payments. TARGET 2 provides real-time financial transfers, debt settlement at central banks which is immediate and irreversible. Globalization is driving corporations to transact more frequently across borders. Consumers are also transacting more on a global basis—buying from foreign eCommerce sites; traveling, living, and working abroad. For the payments industry, the result is higher volumes of payments—in terms of both currency value and number of transactions. This is also leading to a consequent shift downwards in the average value of these payments. The ways these payments are made can be cumbersome, error prone, and expensive. Growth, after all, is often messy. Payments systems set up decades ago continue to be used sometimes retrofitted, sometimes force-fitted—to meet the needs of modern corporations. And, not infrequently, the systems creak and groan as they bear the strain. For users of these systems, on both the paying and receiving sides, it can be difficult and timeconsuming to learn how to use cross-border payments tools, and how to set up processes to make optimal use of them. Solution providers (both banks and non-banks) also face challenges, struggling to cobble together old systems to meet new demands. But for these providers, crossborder payments are both lucrative (especially given foreign exchange conversion revenue) and rewarding, in terms of the overall financial relationship created with the end customer.

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The challenges for global payments are not simply those resulting from volume increases. A number of economic, political, and technical forces are changing the types of cross-border transactions conducted. Consider these factors: 

Corporations are making more cross-border purchases of services (as opposed to goods), as well as more purchases of complex fabricated parts rather than simple raw materials.

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Enterprises are purchasing from more countries, in more regions.

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Increased outsourcing is leading to new in-country and new cross-border intracompany transactions.

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More enterprises are participating in complex, automated supply chains, which in some cases drive automatic ordering and fulfilment. Online purchasing continues to grow, both by large enterprises as part of an automated procurement systems and by smaller enterprises purchasing directly.

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There is continued growth in the use of cross-border labour.

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Individuals are increasingly taking their investments abroad.

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The mode of payment refers to the various methods of payment by which the guest can settle or pay his/her bills in the hotel. Whenever guest checks in a hotel, he/she has to make clear about the modes of payment at the time of registration so that, it will greatly reduce the problem while settling the bills. When the guests check out of the hotel usually they pay the bills by cash or credit card, but in some cases, the charges are billed to the company account, by traveler cheque, and through travel agent/ airlines voucher.

1.3 The different modes of payment 1. Cash 2. Cheques 3. Credit card 4. Company account 5. Traveler cheque 6. Voucher 7. Promissory note 8. Bill of exchange 9. Digital payment

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Cash

It is the simplest and common method of payment which is done in local currencies as well as foreign currencies. It is the most simple and instant mode of payment used by the guests. While doing the payment the bill is presented by front office cashier to the guest and payment is done on hand through cash. The cashier must know the current rate of exchange details and skill to

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evaluate the rates. Different countries have a different restriction to hotel regarding foreign currencies. Mostly in many of the hotels, there are a lot of tourists guest than the guest of same countries and many of the tourists pay with their own country currency so it is very important for the front office cashier to handle foreign exchange carefully because we cannot upset the guests. There is some procedure for foreign exchange transactions which must be adopted by the front office cashier while handling foreign exchange receipts. The procedures are: Collect the foreign exchange to be in crashed for the customer along with the passport Ask the guest for his room number, verify the details with registration card In most of the cases, hotels do not encash foreign exchange in case of non-resident. But it allows only up to 500 US$ against conversion In most cases, the non-resident will be referred to lobby manager and their exchange will be encashed only after receiving authorization from him Check the currency given for its acceptability with the list of currency provided by Nepal Rastra bank(NRS) Check the currency note against fake, fraud, stolen and out of circulation from the respective current circulars issued by NRB Fill up the encashment certificate with full details as required Ask the guest to sign on encashment certificate Calculate the total amount and remit in Nepalese currency after deducting the bill amount if any Provide guest with the original copy of encashment certificate Attach the foreign exchange to the second copy of encashment and deposit along with cash Enter all the require details in the front office cashier report and record of foreign currency summary 

Cheque

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Every hotel has its bank account to facilitates business. Hotel accepts both company cheque and personal cheque up to a certain limit accompanied by the bank guarantee card. It is another form of cash. Payment through the cheque is the safer and convenient. So most of the customers prefer to the payment through the cheque. 

Credit card

A credit card is a wallet-size small card issued and guaranteed by the bank to its valuable customer that authorizes the person named on it to charge goods and services to his or her account. It differs from a debit card with which money is automatically deducted from a bank account of the cardholder to pay for the goods and services. Use of credit card was originated in the U.S. in the 1920s. Early credit cards were issued by various firms (for example , oil companies and hotel chains) for the use of their outlets only. Credit cards are issued by banks and financial corporations after scrutinizing the customer creditability and repayment power. While considering an application for credit card, following details are called for; To ascertain that the applicant is receiving a regular income above a minimum required the limit. Salary/income proof To proof of residence. This is required for the safety of repayment. Under local laws, only a resident citizen is allowed credit card. For proof of saving and assets. To assess the creditability and repayment power of a client, it is required to find out the total savings in different schemes and assets in the name of the applicant. Benefits for credit card 

Reduces the need to carry cash

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Credit card can be only used by the card holder

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Risk is lowered, if credit card is lost the liabilities are limited

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Helps in urgent payments

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

Allows easy payment modes for male orders

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Allows easy cash withdrawals (up to a limit) anytime anywhere from any ATM or branch of a bank

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Allows the flexibility of the payment plan on an interest payment basis as per the convenience of the cardholder.

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Benefits of accepting the card for the merchant

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The merchant is assured for the payment by this mode

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Risk of bad debt arising out of personal credit is not with credit card

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Easy accepting and accounting system

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No need to know the client personally

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The service charge is cheaper than the interest lost in collecting credit payment

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Provides more publicity through different schemes of the credit card companies from time to time

There are also procedures for accepting credit cards which must be followed by the cashier and they are: Check the warning bulletins provided by the credit card companies. If the card is not in the bulletin the card cannot be accepted. In case it is listed in the bulletin then the card must be apprehended without offending the customer and inform the credit card company. Take imprint of the card on a charge slip provided by the bank Now fill up the amount and bill details on the charge slip, give the charge slip to the guest to sign in the specific place 

Company account

If the guest uses the hotel facilities and billing is instructed as per company account it means that the bill will be paid by the allied company. The big business organization makes an agreement with the hotel to provide services to their staff and customer of the company. Credit section of hotel sends a letter with the bill attached, to the respective company for payment. The bill should be signed by the guest who was sent by the company. The company may pay the bill through cash or by cheques.

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

Travel cheque

As the name suggests it is a cheque which is issued by a bank to the travelers in exchange for cash. When a traveler visits a long distance , they exchange their currency into traveler's cheque. The bank which issues the travelers cheque takes the signature of the traveler in the cheque undersigned. Traveler cheque is also another form of cash. It brings down the trouble of carrying a huge amount of cash, which does not seem to be safe for long distance travelers. Travelers check is encashed only when the cashier receives the specimen of the cheque holder signature and tallies it with the passport details. All uncashed travelers cheque are sent to the local bank for payment. 

Voucher

The special document which is printed form and issued by travel agencies and airlines stating the required services to be provided by the hotel to the guest. The hotel send a bill to a guest to respective travel agencies or airlines who issued the voucher for payment.



Bill of Exchange

According to the Section 5 of Indian Negotiable Instruments Act, 1881, "A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person to the bearer of the instrument."

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Promissory Note

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A promissory note is an instrument in writing (not being a bank note or e currency note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to, or to the order of a certain person, or to the bearer of the instrument.

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Digital Payment

Banking cards offer consumers more security, convenience, and control than any other payment method. The wide variety of cards available – including credit, debit and prepaid – offers enormous flexibility, as well. These cards provide 2 factor authentication for secure payments e.g secure PIN and OTP. RuPay, Visa, MasterCard are some of the example of card payment systems. Payment cards give people the power to purchase items in stores, on the Internet, through mail-order catalogues and over the telephone. They save both customers and merchants’ time and money, and thus enable them for ease of transaction.

 UNSTRUCTURED SUPPLEMENTARY SERVICE DATA (USSD)

The innovative payment service *99# works on Unstructured Supplementary Service Data (USSD) channel. This service allows mobile banking transactions using basic feature mobile phone, there is no need to have mobile internet data facility for using USSD based mobile banking. It is envisioned to provide financial deepening and inclusion of underbanked society in the mainstream banking services.

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 AADHAAR ENABLED PAYMENT SYSTEM (AEPS)

AEPS is a bank led model which allows online interoperable financial transaction at PoS (Point of Sale / Micro ATM) through the Business Correspondent (BC)/Bank Mitra of any bank using the Aadhaar authentication.

 UNIFIED PAYMENTS INTERFACE (UPI)

Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience. Each Bank provides its own UPI App for Android, Windows and iOS mobile platform(s).

 MOBILE WALLETS

A mobile wallet is a way to carry cash in digital format. You can link your credit card or debit card information in mobile device to mobile wallet application or you can transfer money online to mobile wallet. Instead of using your physical plastic card to make purchases, you can pay with your smartphone, tablet, or smart watch. An individual's account is required

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to be linked to the digital wallet to load money in it. Most banks have their e-wallets and some private companies. e.g. Paytm, Freecharge, Mobikwik, Oxigen, mRuppee, Airtel Money, Jio Money, SBI Buddy, itz Cash, Citrus Pay, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, SpeedPay etc.

 POINT OF SALE

A point of sale (PoS) is the place where sales are made. On a macro level, a PoS may be a mall, a market or a city. On a micro level, retailers consider a PoS to be the area where a customer completes a transaction, such as a checkout counter. It is also known as a point of purchase.  INTERNET BANKING

Internet banking, also known as online banking, e-banking or virtual banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website.  National Electronic Fund Transfer (NEFT) National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating oneto-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme. Individuals, firms or corporates maintaining accounts with a bank branch can transfer funds using NEFT. Even

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such individuals who do not have a bank account (walk-in customers) can also deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT. However, such cash remittances will be restricted to a maximum of Rs.50,000/- per transaction. NEFT, thus, facilitates originators or remitters to initiate funds transfer transactions even without having a bank account. Presently, NEFT operates in hourly batches - there are twelve settlements from 8 am to 7 pm on week days (Monday through Friday) and six settlements from 8 am to 1 pm on Saturdays.  Real Time Gross Settlement (RTGS) RTGS is defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). 'Real Time' means the processing of instructions at the time they are received rather than at some later time; 'Gross Settlement' means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable. The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is 2 lakh. There is no upper ceiling for RTGS transactions. The RTGS service for customer's transactions is available to banks from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 14:00 hours on Saturdays for settlement at the RBI end. However, the timings that the banks follow may vary depending on the customer timings of the bank branches.  Electronic Clearing System (ECS) ECS is an alternative method for effecting payment transactions in respect of the utility-billpayments such as telephone bills, electricity bills, insurance premia, card payments and loan repayments, etc., which would obviate the need for issuing and handling paper instruments and thereby facilitate improved customer service by banks / companies / corporations / government departments, etc., collecting / receiving the payments.  Immediate Payment Service (IMPS)

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IMPS offers an instant, 24X7, interbank electronic fund transfer service through mobile phones. IMPS is an emphatic tool to transfer money instantly within banks across India through mobile, internet and ATM which is not only safe but also economical both in financial and non-financial perspectives.  MOBILE BANKING

 

Mobile banking is a service provided by a bank or other financial institution that allows its customers to conduct different types of financial transactions remotely using a mobile device such as a mobile phone or tablet. It uses software, usually called an app, provided by the banks or financial institution for the purpose. Each Bank provides its own mobile banking App for Android, Windows and iOS mobile platform(s).

 MICRO ATMS

 

Micro ATM meant to be a device that is used by a million Business Correspondents (BC) to deliver basic banking services. The platform will enable Business Correspondents (who could be a local kirana shop owner and will act as ‘micro ATM’) to conduct instant transactions.

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1.4 Payment Methods The payment methods you can use depend on your billing country and what you're buying. Whenever you're making a purchase, you'll see available payment methods on the checkout page or on your invoice—just choose your billing country and take a look. Expand all | Collapse all 

Credit or Debit Card

Using a credit or debit card is an easy way to pay for any plan in any country. We support several card types. 1.

Pay now: select Credit or Debit Card on the checkout page.

2.

Pay by invoice: select Invoice on the checkout page and confirm your billing details. Then go to your Transaction History and click Pay Invoice to pay it by card.



Direct Debit (SEPA)

You can pay using Direct Debit for any plan. Direct Debit is widely available across Europe. This payment method isn't available in the United States. 

Pay now: select SEPA (Direct Debit) in the EU, or Direct Debit in the UK, on the checkout page.

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Pay by Invoice: select Invoice on the checkout page, then go to your Transaction History and click Pay Invoice to pay it by SEPA or Direct Debit.

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Wire Transfer or Direct Bank Deposit (ACH)

If you’re buying an annual plan, you can pay by Wire Transfer or Direct Bank Deposit (ACH) in any country except Egypt. 

Pay now: you won’t be able to add your bank details on the checkout page. Instead, you'll need to pay by invoice.

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Pay by invoice: select Invoice on the checkout page and confirm your billing details. Then go to your Transaction History and click Pay Invoice. Our bank details and steps for making the payment are listed on the invoice.

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Check

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If you’re in the United States, you can pay by Check for annual plans. Outside of the US, the option to pay an invoice by check is only available for some plans and countries. 

Pay now: not available, you'll need to pay by invoice.

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Pay by invoice: select Invoice on the checkout page and confirm your billing details. Then go to your Transaction History and click Pay Invoice. Our address and instructions for completing your payment are listed on the invoice.

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Local Bank Transfer

Outside of the United States, you can pay by Local Bank Transfer for annual plans in certain countries. 

Pay now: not available, you'll need to pay by invoice.



Pay by invoice: select Local Bank Transfer on the checkout page, then go to your Transaction History and click Pay Invoice. If you selected local bank transfer on the checkout page, you can only pay the invoice by local bank transfer—you can't pay the invoice by credit or debit card.



PayPal

You can pay using PayPal for all plans, in some countries. PayPal isn't available in the United States. 

Pay now: select PayPal on the checkout page and fill in your billing info. You'll be redirected to PayPal to complete your payment. Please read our PayPal Payments article for more details.



Pay by invoice: Please don’t choose the Invoice option on the checkout page. You’ll need to select PayPal on the checkout page since you can’t pay an invoice by PayPal.

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1.5 Making a Payment  Pay Now Find the payment method you want to use above and see if you can use it to pay now. You'll enter your payment info on the checkout page and submit your payment. Then your account is all set!

 Pay by Invoice See if the payment method you want to use has an option to pay by invoice. If so, choose invoice on the checkout page and fill out your payment info, then we’ll email you an invoice to pay. Click Make Payment in the email, or open the invoice from your Transaction History tab. Payment methods and instructions for making the payment are listed right there on the invoice.

 Supported Currencies The currency you’re charged in depends on the billing country where your payment method is located. Before you complete a payment, we make sure to clearly display your billing currency right above the Confirm or Pay button.

 Purchase Orders You can add a purchase order number to your invoice. However, purchase orders aren’t valid forms of payment. In order to activate your account, you’ll need to pay using one of the accepted payment methods listed on the invoice.

Survey Monkey Audience You can pay for Survey Monkey Audience responses by credit or debit card. Or you can pay using Audience Credits by paying an invoice upfront, then use credits to pay for individual projects. All the details on how to pay, payment methods available, and where to send payments is right there on the invoice.

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 Survey Monkey Billing Information Payment methods, instructions, and SurveyMonkey bank details are all located directly on your invoice. Please send payments according to the information listed on the invoice. If you need additional business information for accounting purposes, you can check out our Contact Information for Payments.

1.6 Advantages and Disadvantages of Different Payment Types

The list of things to consider regarding your business is never ending and what forms of payment you accept is just one more item on the ever growing list. With that in mind, let’s discuss the advantages and disadvantages of different payment options to help you decide what is best for your business. Payment type: CASH The phrase, “Cash is King” has always been the rule of thumb, but even this King has weaknesses. Cash is instant gratification; you receive the money, and it’s yours unless they return the item, but even then you can offer store credit instead of cash in hand. Let’s take a look at the almighty dollar. Advantages of Cash: 

Instant money in hand, except taxes of course. (Hey, nothing is entirely free!)

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There are no transaction fees with cash like there are with credit cards

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Minimizes bookkeeping, which means less stress & less hassle

Disadvantages of Cash: 

Money in the drawer can be tempting for some employees to steal

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A safe needs to be on site or frequent trips to the bank for deposits must be made, which takes time and money.

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Money at your location increases your risk for theft not just from employees but criminals as well. Payment Type: CHEQUE

Checks have always seemed funny to me, don’t get me wrong, we all use them, but a check is simply an I.O.U. (“I owe you”). Checks have been around for probably longer than you think but lately are becoming somewhat of a dying form of payment. With the technology boom of online banking & online bill pay, which have become a fast favorite for most people, written checks are becoming less and less common. However for a merchant, like cash, the beauty of checks is that it costs nothing to accept. Now that being said, this payment method does come with drawbacks.

Advantages 

Some customers prefer to pay with a check instead of carrying cash or using a credit card. The age of your customers may also be a factor, folks over the age of 40 tend to be more comfortable with checks than with credit cards. Checks are also better to send in the mail for payments and invoices.

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Checks can now be processed electronically at the point of purchase much like a credit card but cost less to process in most cases. If you team up with a large processor, they may offer Point of Purchase check processing (P.O.P).

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A check is usually better than a customer walking out the door because they don’t have cash or plastic. (There are exceptions to every rule)

Disadvantages of Checks: 

Just because you have a check in hand, that doesn’t guarantee payment; bounced checks can even cost you money. Depending on your bank, they may assess fees for these

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bounced checks. Checking accounts can be frozen, empty or even nonexistent. A hand full of NSF checks can mean you start bouncing checks of your own since your account is lighter now than it should have been. 

Customers can put stop payments on checks, close their account, and even post-date checks if the cashier is not paying attention. All of these delay payment.

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If your bank does not offer remote capture, you again will be spending time and money away from your business driving to the bank regularly, hoping these are more than “I owe you” notes. Payment Type: CREDIT CARDS

Credit cards came to the market in the 1950s growing in popularity ever since. Credit cards, like cash and checks, have come a long way since they first rolled out. Today, the statistics show that approximately 7 in 10 Americans have at least one credit card in their wallet. According to the U.S. Census Bureau, the population at the beginning of 2016 was 322 million people, which means there are approximately 232 million American potential customers with credit cards ready to purchase.

Advantages of credit cards: 

Accepting credit cards boost sales. Credit cards are becoming the most common method of payment, and your customers expect the ability to pay by credit card at any location. Studies show consumers who pay with a credit card spend more than if they were paying with cash. Who doesn’t love a good “impulse buy?”

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Accepting credit cards increase cash flow. Credit card transactions are deposited directly into your account, no need to head to the bank. As a general rule, a reputable processor should have your funds deposited within 24 – 48 hours after settling out. (Bank standards and holidays apply, just like for all other forms of payment)

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Accepting credit cards creates legitimacy. Customers see those credit card logos on your door, the brands they trust that are in their wallet, and strangely enough, there is a

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transference of confidence to your business. Merchants who are “cash-only” seem foreign and ancient in this new credit card-centric worldview. Disadvantages of credit cards: 

Credit Cards can add another level of difficulty to bookkeeping and accepting credit cards can be an added monthly expense in most cases. Surcharging products can alleviate the costs associated with credit card acceptance.

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Credit cards do come with risks such as chargebacks and fraud. But added steps like EMV and PCI Compliance give you the protection you need to combat fraud. Additionally, finding a reputable processor who can help you with tokenization and encryption is an important consideration. The more steps you take to protect your business and your payment system at the time of set-up will allow you allay your worries once you start processing.

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Refunds on credit cards are not immediate. While a credit card transaction may take seconds, the reversal or refund is not nearly as fast. Many steps are involved in issuing refunds, the general rule of thumb for a refund to be processed on a credit card is 2-30 days depending on many factors. Payment type: MOBILE PAYMENTS

How times have changed from bartering with sea shells (8000 years ago) to wearing a watch that pays for lattes. Mobile wallets are the newest craze to hit the market, and Apple Pay, Samsung Pay, and Google Wallet are the front runners blazing the trail. Not all mobile wallets are the same, some accept loyalty programs where others do not, some only accept certain types of cards, etc. If you decide you want to be on the cutting edge of technology, talk to your merchant service provider about what they recommend when it comes to mobile payment options.

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Advantages of the Mobile Payments: 

NFC (Near-field Communication) payments are the newest form of accepting credit cards, and if you like to be on the cutting edge of technology you won’t want to be left out

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Nearly two-thirds of Americans in 2015 owned a smartphone. Chances are if your customer has a smartphone they will likely have a mobile wallet. The more options you can offer your clients the happier they will be.

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Mobile payments are secure. The POS system does not have access to the full card number so malware cannot take the information. Apple Pay, for example, does not store your card information at all.

Disadvantages of the Mobile Payments: 

You must have NFC equipment. No NFC hardware = no mobile wallet payments

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There are many mobile wallets out there, and they don’t all work the same, you will have to figure out which one is right for you.



The rewards for the customer to use a mobile wallet are not 100% clear yet. The customer may not receive certain “perks” at that approved retailer because the system would show the charge coming from Google instead of the authorized retailer.

In the end, regardless of what types of payments you decide to accept, your customers at the very least will expect to be able to pay with cash and credit cards. You have many decisions to make about which payments are right for your business. If you’re still on the fence about what payment methods to accept, talk to a merchant service provider, talk to other business owners, but always do what feels right for you and your business.

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2.1 Introduction of research methodology This chapter focuses on data and research methodology. It highlights the use of statistics to test research hypothesis and assumptions done during the course of research. The chapter discusses the rationale used while drafting the questions for sample study and the differences in questionnaire for mode of payment. The survey explored the unexplored area comparing the users of Plastic Money, Cheque and cash. Awareness about the conditions of card holders, services and security measures has been ascertained during the survey. The popularity of the cards and cash is also an important factor that would contribute to the overall growth of different kinds of electronic modes of payments and electronic services offered to the user. Additional benefits of cards relate to shopping convenience, loans and disbursements in the form of credit and debit facility, safety and recordkeeping. Currently acceptability of mobile wallet payment is limited at outlets though Paytm has increased acceptance at many outlets. But the wide acceptability of wallets is still required to gauge the correct impact of wallet on payments services. The current effort captures the data set considering the limitations of the system. Research methodology comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating data, making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fir the formulating hypothesis A useful research methodology must be systematic, logical, empirical and replicable. The researcher should follow certain systematic methods, steps and stipulation in designing, planning and execution of the research.25

2.2 Objectives of an Efficient Payments System

In Strategic Review of Innovation in the Payments System: Issues for Consultation A useful starting point for assessing potential gaps in the payments system is to establish a set of desirable attributes for such systems. This does not of course mean that each payment instrument must deliver all these attributes. But ideally the payments system overall would offer a mix of payment methods that collectively offer each of these attributes in a way that allows end-users – businesses, consumers and government – to meet their needs at a reasonable cost.

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While not exhaustive, the following are some of the key attributes that can be important to endusers.

2.3 Attributes Valued by End-users Timeliness Not all payments are time-critical, but users of the system should at least have options available that provide timely payment. Timeliness has at least two elements. In some cases, such as emergency government payments, the timing of the availability of funds to the recipient is critical.

Accessibility It is desirable that everyone who needs to make and receive payments should have ready access to the payments system. Once again this may have different elements. One is the ability to access the payments system when and where required. Cash, and more recently credit and debit cards, have provided ready access for face-to-face transactions, but ‘remote’ transactions have historically been more difficult, typically requiring the use of cheques or a visit to a bank branch. Innovations over recent years have of course dramatically improved access, with first telephone, then internet banking, and more recently mobile banking and payments.

Ease of use It goes without saying that systems that are easier to use are preferable to those that are more cumbersome. But this is not just an issue of convenience. Ease of integration with other processes Payments are rarely made in isolation. Typically they are made as part of a process that requires some form of information exchange and reconciliation. Payment systems should be able to integrate efficiently with these processes. Key examples are the capacity of payment systems to carry additional information relevant to the payment and the ability of payment messages to be easily integrated with accounting and other business systems.

Safety and reliability End-users of a payment system need to have confidence that the system wil be available when expected and that payments will reach the intended recipient at the time promised.

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Low and transparent prices If two systems perform exactly the same function, users can be expected to prefer the cheaper one. However, each system typically has different attributes, and end-users make choices by weighing up those attributes and relative pricing.

2.4 Desirable Attributes for Payment System Design The above attributes are those that are directly relevant to the end-users of payment systems. There are other attributes of the design of payment systems that are less obvious to end-users, but which are important to ensuring that payment systems are efficient and are well placed to deliver the sorts of attributes discussed above. These include the following.

Efficient design Payment systems should be designed in a way that achieves the system’s objectives in an efficient and cost-effective manner.

Security and robustness The system should have a level of security and operational robustness commensurate with the importance of the system.

Interoperability Payment systems should aim to achieve a high degree of interoperability with other systems.

Open access Systems should be designed in a way that makes the entry of new participants easy, quick and inexpensive for both the new entrant and incumbents. This may be dependent on the architecture of the system, the standards applied and the business arrangements in place.

Risk management Payment systems have the potential to generate a number of risks for participants, most notably credit risk. Managing these risks is an important focus of design for systems processing large values, but all systems should have risk-management features commensurate with the level of risk generated.

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Ease of adaptation to changing needs For many reasons the needs and preferences of both payment system users and operators evolve over time, often in response to changing technology.

The main objectives are: To reduce the corruption which takes place mostly through the cash medium  To reduce the burden of the cost of printing currency and also handling them.  The transfer of money from one place to another is also gruesome.  To track the movement of money which is not possible completely in cash medium.  To revive the banking sector which is high on NPA and bad loans.  To make loans cheaper and affordable for everyone. In short, cashless is better in all aspects. But there are certain challenges for India to go completely this way. Otherwise, it's good for a growing economy like India.

2.5 Hypothesis: The objective of the study was to find out the customer perception and impact of demographic factors on adoption of digital mode of payment: In pursuance of the above objectives, the following hypotheses were formulated for testing: 

H01 There is no significant difference is perceived by respondents for various attributes of digital payment on the basis of gender of respondents.



H02 There is no significant difference is perceived by respondents for various attributes of digital payment on the basis of age of respondents.



H03 There is no significant difference is perceived by respondents for various attributes of mode of payment on the basis of education of the respondents.



H04 There is no significant difference is perceived by respondents for various attributes of mode of payment on the basis of profession of the respondents.



H05 There is no significant difference is perceived by respondents for various attributes mode of payment on the basis of annual income of the respondents.

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2.6 Data Collection The current study is based on primary data collected from 40 respondents from the different parts of Ulhasnagar. A well-structured questionnaire was designed to collect the information from the respondents the questionnaire was designed to study perception of customer towards adoption of digital payment mode. Likert five point scales were used for obtaining responses. The responses have been collected by means of face-to-face interviews by authors.

2.7 Scope the development of internet technology, the scope of digital payments has really improved. At present, around 70% of business organizations in India are managing their financial transactions through digital payments. The most attractive thing about the digital transaction is, it is very easy and simple to manage the transactions without any hassle. You don’t need to stand in long queues in order to make the payments to your clients.

With digital payments, you can simply pay or receive an amount over the internet connection. In order to enhance the comfort of users, the digital payment services are now maintained through mobile devices. Yes, now you can easily pay, receive, deposit or check the balance on your mobile device. In this digital era, everything is now available on the Smartphones. Thus the digital payments are also introduced wisely. The small business organizations now don’t have to waste their valuable time on the premises of financial institutes. They can simply manage their necessary financial transaction through their Smartphone. ftcash is one of the reputed financial service providers in India. Since 2015, it has been offering digital payment and loan facilities to the users. It has designed a unique mobile application, through which it is very easy to manage the payments. The mobile application is maintained with a user-friendly interface with all necessary features. The customers can use different payment options like credit card, debit card, net banking, PayPal, UPI, mobile wallets and other in order to manage the payments. You can simply search the name and number of the merchant, through the search functionality and can proceed the transaction.

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2.8 Limitation Not many people carry cash anymore. Most of the population has switched over to credit, debit, electronic, and other forms of non-cash payments. If you insist on only taking cash payments, you’ll end up losing a lot of customers. Cash is easy to counterfeit. Be prepared to invest in plenty of counterfeit banknote detection pens. Extra vigilant bookkeeping is required. Cash, especially large amounts of cash, can be hard to keep track of. Your bookkeeping will need to be more detailed than ever if you hope to stay out of trouble with the government come tax time. And, unless you plan to stuff your mattress,

you’ll

also

be

making

several

trips

to

the

bank.

Credit cards are the most common/preferred payment option. You’d be hard-pressed to find someone without a credit – or at least a debit – card. Accepting credit cards encourages impulse buys. Credit cards are easy to use and quick (at least from the customer’s perspective) to process. The entire see it, want it, buy it cycle goes by relatively quickly for those favoring credit purchases; which allows prospective customers more leeway when it comes to buying on impulse. Credit cards can be used to make PayPal purchases. If you’re already using PayPal, like most online freelancers, then you’re already accepting credit cards! PayPal allows customers to input a credit card number in lieu of logging in if they don’t have (or don’t want) a PayPal account. Checks can bounce. If your client has insufficient funds in their account at the time they attempt to pay you, their check could bounce. Not only does this result in a payment delay, but you could potentially be charged a fee depending on where you bank. You may also be charged an overdraft fee if you paid bills or gave the go-ahead to an automatic payment counting on your client’s check to go through. Certain mobile methods are prone to security leaks. Depending on which mobile payment method you choose, you may have to worry more about security. Not all readers are created equal. If you choose a mobile payment method that involves using an app with an actual, tangible, card reader – like Square, Paypal Here, or Inuit GoPayment – then you may have compatibility issues. Most mobile credit card readers are iPhone compatible, but nothing else is guaranteed. Be sure to do your research.

T2.he fees are through the roof. With few exceptions, the fees involved in receiving online payments are exorbitant. The cut taken out of your final pay is usually a fair trade for the “pros” listed above; however, if you’re expecting an exceptionally large payment, you might want to use a method that leaves you with the bulk of the profit.

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2.9 Swot analysis of payment bank Strengths      

Innovative business models Nationwide and last mile coverage Large existing customer base Anywhere anytime banking Lower servicing and customer acquisition cost Financial inclusion

Weaknesses     

Loss of business due to poor network/ internet Lack of awareness among people on latest technology and products/ services Low margin business Limited products offering Security concerns

Opportunities   

Immense potential for market expansion in rural areas Greater innovation will help to produce and offer unique products and services Technology to help offer right product to right customer at a right time

Challenges     

Cash dominated economy Technology inexperience and literacy constraints will lead to lower acceptance of technology Lack of awareness Low customer loyalty Regulatory restrictions

2.10 Sampling 

Sampling unit

This call is for defining the target population to be surveyed. In this research the sampling unit was the customers who have been using the payment modes.

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

Sample size

In this survey the sample size decided was 40. 

Sampling procedure

We adopted Intercept questionnaire method for collection of primary data, as it is not possible to take appointment from a large number of respondents. Purpose of this research was told to respondents and questions were explained to them in case there was any need for understanding any particular question. There had been no personal bias or distortions were allowed while recording the responses. 

Sampling area:

The respondents will be located in Ulhasnagar camp -5. 

Sampling Method

Non probability convenience method was employed in the study.



Research Approach

A structured questionnaire is used for collecting data from the respondents through survey method.

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3.1 Introduction of Literature of Review Government's digital push has ushered in a new era of digitalization in India. Digitalization is not just a part of our lives anymore. It is life. How digital economy & its tool impacts society and in turn, how society shapes those evolving tools is something that will ultimately define our future. As the digital economy is still evolving, there are obvious questions about this new economic model that have yet to be answered. Post demonetization in India, some wonder whether cash will become extinct while others have doubts about digital transformation of India. Infact, many have asked whether a single globally accepted currency will emerge. This book is an attempt to simplify all these questions, doubts and apprehensions. The book (Journey Towards Cashless India by Jayant Parishes) will explain all the relevant fundamental concepts using real life examples as well as case studies. This will be a useful book not only for students preparing for competitive exams like UPSC, State PCS, Banking, MBA etc. but, for anyone who wants to understand India's challenging journey towards a cashless economy amidst the dark clouds of black money. The purpose of literature review is to extract the essence of the concept related to research. The theories that are evolved by writers and scholars are included for gaining a complete result. According to a 2015 report by Price Water House Coopers, India’s unbanked population was at 233 million. Even for people with access to banking, the ability to use their debit or credit card is limited because there are only about 1.46 million points of sale which accept payments through cards. A study by Boston Consulting Group and Google in July noted that wallet users have already surpassed the number of mobile banking users and are three times the number of credit card users. The simplest advantage to paying with cash is the limitation it puts on what you buy. Without a buy-now-pay-later mentality associated with credit cards, you will purchase only items that are affordable, and covered by the cash you have on hand. This way, you never have to worry about buying anything you can't afford at the moment. Paying with cash also helps to curb impulse spending habits. Ditching your cards for cash can help you save big by leading you to curtail your spending. That's because researchers have found that paying with cash — physically handing over your money and watching it disappear — is painful.

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According to (Davidson et al, 1999), cash is any medium of exchange, which is immediately negotiable. It must be free of restriction for any business purpose. Cash has to meet the prime requirements of general acceptability and availability for instant use in purchasing and payment of debt. Acceptability to a bank for deposit is a common test applied to cash items. This is a process of Planning, controlling, and accounting for cash transactions and cash balances. It is channeling available cash into expenditures that enhance productivity, directly or indirectly. addition, Cash is ready money in the bank or in the business. It is not inventory, it is not accounts receivable (what you are owed), and it is not property. These might be converted to cash at some point in time, but it takes cash on hand or in the bank to pay suppliers, to pay the rent, and to meet the payroll. Profit growth does not necessarily mean more cash. (Davidson et al, 1999) Cash is the important current asset for the operations of the business. Cash is the basic input needed to keep the business running on a continuous basis: it is also the ultimate output expected to be realized by selling the service or product manufactured by the firm. The firm should keep sufficient cash, neither more nor less. Cash shortage will disrupt the firm’s manufacturing operations while excessive cash will simply remain idle. Without contributing anything towards the tint’s profitability. Thus, a major function of the financial manager is to maintain a Sound cash position. Handelsman and Munson (1989), “Switching behaviours from credit card to cash payment among ethnically diverse retail customers” shows that the credit card sales constitute an important revenue source for many retailers. Their ever increasing use and evaluation into other forms, such as debit and electron cards, demands that retailers gain a more complete understanding of how they are used by diverse consumer segments. Particularly needed is a better understating of the propensity to switch over from credit card to cash payment and the incentive required to initiate switching. In view of the cost to the retailer of administering credit card payment systems, the retailer’s overall profit position may be enhanced by converting a larger proportion of credit card sales to cash sales. Four aspects of credit card usage and switching ethnicities are investigated, propensity to switch over from credit card to cash payment at various levels of monetary incentive, the effect of product price on propensity to switch, the frequency of credit card usage, and the preferred method of payment of credit card balances (installment versus full payment). Several significant differences are shown among the three ethnic groups studied (Anglo-American, Chinese-American and his panic-American)

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in these usage behaviours such differences might even be extended to international comparisons involving consumers domiciled in different countries. Barker (1992) in his study, Globalization of credit card usage: The case of a developing economy” investigate the attitude of Turkish consumers towards credit cards, and the approach of card issuers by surveying two samples of 200 card holders and non-holders. The better educated, middle aged members of the upper middle class seem to be the prime target; the most important reasons for using a credit card were “case of payment”, followed by “risk of carrying cash”, Non holders do not carry credit cards because they do not know much about it; informal sources of information appear to be more influential than mass media advertising in penetrating the market; proposes that the usage and the administration of credit cards are influenced very much by the infrastructure of the country and hence, credit card companies have to modify their marketing and administrative procedures rather than following a standardized approach. Natarajan and Manohar (1993) “Credit Cards–an Analysis”. A study has been attempted to know that to what extent the credit cards are utilized by the cardholders and the factors influencing the utilization of credit cards. The study is confined to cards issued by the Canara Bank. A random sampling technique is used to collect the data. Ten components i.e. numbers of purchases, shops, percentage of purchases, place, frequency, type of product, type of services, cash withdrawal facilities, add on facility, insurance schemes are identified and used for the measurement. Chi square test has been conducted to know the level of utilization. For this, both personal and nonpersonal factors also have been taken into consideration. Chi square test reveals that sex, age, educational qualification of card holders has no relationship with utilization of Can Card. While occupation, income, employment status of spouse, mode of getting card has relationship with utilization of Can Card. Vora and Gidwani (1993), “Plastic at a premium” show the usage facilities and varieties of cards. The research shows that credit card is extremely useful to those people who use it as to increase their purchasing power through the plastic card. Angelini (1998) and Bech and Garratt (2003, 2006) analyze banks’ incentives to postpon payments in an RTGS system in a two-bank model. Banks postpone payments in order teconomize on the costly reserves needed to settle payments, and Angelini (1998) shows that this results in a dead-weight loss for the system as a whole, since the receiving bank faces more uncertainty over the timing of its inflows and needs to invest in more precautionary reserves.Since banks are ex ante identical, both can end up having to start the day with higher

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reservebalances to meet the payment obligations that can arise over the day.14 Bech and Garratt (2003, 2006) formulate a normal-form game between the two banks and demonstrate that, while different central bank intraday policies (a collateralized credit regime or a priced creditregime) can change the set of equilibrium outcomes of the game, both regimes involve anequilibrium where banks postpone payments relative to the social optimum.

Simon and Victor (1994), “Customers’ Risk Perceptions of Electronic Payment Systems” finds that one reason for the slow adoption rate of electronic fund transfer at point-of-sale (EFTPoS) is that consumers perceive that EFTPoS has a higher level of risk than other traditional payment methods. Study shows that EFTPoS has the lowest physical risk and highest financial risk, the credit card has the lowest psychological risk and highest time loss risk, while cash has the highest physical risk and lowest performance risk. Physical risk, financial risk and time loss risk for cash payment are significantly higher when purchase is large while performance risk for EFTPoS and credit card payment is significantly higher when the purchase is small. Users of EFTPoS have a significantly higher level of perceived financial and time loss risk than non-users, while non–users have higher level of psychological risk. Article suggests that in order to reduce customer’s fears and worries, it is also appropriate to consider introducing some risk reduction techniques. e.g. endorsements by key people in society (reducing psychological risk), money-back guarantee (reducing financial risk) and live demonstration and free trial (reducing time loss risk). Research indicates that technological excellence cannot dictate success; a good marketing mix, prompt service support, sufficient legal protection and educational efforts, etc. are also relevant. Simon and Victor (1994) examined the reasons why ATM card holders accept or reject EFTPOS and how they viewed the risk of EFTPOS when compared to credit and cash. The authors signified that more marketing research and consumer participation was needed in designing and introducing e-banking services so as to gain more user acceptance. They signified that in order to reduce fears in the minds of people regarding security, it was required to introduce risk reduction techniques such as money back guarantee, live demonstration and free trial to reduce psychological, financial and time loss risk. The researchers suggested that to prove e-payment methods more successful, it should be based on proper marketing risk, prompt service support, sufficient legal protection and awareness. Krishnan (2001) examined the evolution of E-banking in Malaysia and analyzed the various electronic delivery channels used by local banks to assess the consumer reaction to these delivery channels. The objective

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of the study was to present progressive development of e-banking, electronic delivery channels and some pertinent issues for successful implementation of E-banking. The study was based on a sample of 300 bank customers, and revealed that 90 per cent of respondents visit their bank branches at least once every month, 63.3 per cent customers indicated four or more visits to ATMs every month, 20 per cent of the respondents were using tele-banking services. Only 6.7 per cent customers indicated that they would not be interested at all using these services. The 37

Almeida (1995), “The Future in cards” shows that credit card business is booming as more than 1.1 million Indians have credit cards with them. Their numbers are expected to grow at an even faster pace as issuing banks get aggressive. Studies show that more than 4000 business establishments in the country accept credit cards. The country now provides all the ingredients for a healthy credit cards industry: a rapidly expanding, increasingly acquisitive middle class, a growing yen for travel and entertainment sophisticated merchant establishment and greater transparency in financial system. Acquiring banks for business from merchant establishment has brought the commission down and if the issuing bank happens to be also the acquiring bank, it get the entire merchant discount. Finally, no payment system can ever replace cash in India on a wide spread basis.

George (1995), “The card majors lead the way” shows that VISA and Master Card play a major role in any international payment system. Both VISA and Master Card act also as franchisers, lending their names to member banks’ card and acting as guarantor of payment to merchants willing to accept the cards. For this and for handling transactions, VISA and Master card charge a fee which varies from country to country, but is approximately 3 cents (90 paisa) per transaction. They are card clearing agencies. VISA and Master card each have nearly 22000 banks all over the world as their members and handle several million transactions each day. This gives them a transaction handling capability unmatched by any individual bank. They are not credit card companies but function on the line to provide a global network that allows authorization, clearing and settlement of card transactions, both of credit and debit cards. Torbet and Marshall (1995), “One in the eye to plastic card fraud.” Paper explores the potential use of behavioral and physiological biometric techniques in the battle against credit card fraud in the retail environment. It discusses different techniques such as automatic speaker,

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dynamic signature verification, fingerprint, facial recognition, retinal and iris scanning, hand and finger geometry. Author feels that while biometric technologies have the potential to reduce plastic card fraud there are several problems which must be addressed before they can be used in retail environments, like the recognition performance, speed of use, usability, customer acceptance, device cost are considered along with industry standards for biometric devices. Worthington (1995), “The cashless society” paper describes the cashless society, where clumsy and expensive-to handle coins and notes are replaced by efficient electronic payments initiated by various types of plastic cards is a tantalizing prospect for the twenty-first century. Some of the interested parties stand to gain more than others if the cashless society becomes a reality. Paper outlines the rationale of those who are keen to promote the cashless society and the implications for marketers charged with winning consumer acceptance for payment by plastic card. Commencing with a European-wide view of the European plastic card market, focuses on recent developments within the UK, one of Europe’s leading countries in the use of plastic cards as a means of payments. The plastic card payment product is analyzed under the three headings of pay later, pay now and pay before and a view is offered as to the future prospects for each type of plastic card in contributing to the development of the cashless society. Maganty (1996), “Changing Dimension.” the author discusses the emerging trend and importance of debit card in daily lives of Indian society. Debit cards are expected to be in use in places where most transactions are done by cash or cheque in supermarkets, petrol stations, convenience stores. There cards are designed for customers who like paying by plastic card but do not want credit. These cards not only keep the cardholder debt free but also provide a detailed account of spending. These types of cards are ideal for those who have a tight budget and want to keep within it. Study shows that there are two types of debit cards i.e. on line and off line debit cards. With the computerization and modernization plastic money will become the status symbols in the 21st century of Indian traditional bound society. Radhakrishan (1996) study on “DEBIT CARDS” shows that the debit cards also have found wide acceptability than credit cards because of assurance of payments to retailers, switching of cardholders to debit card because of using interest free period to avoid high interest cost, annual charges as compared to debit cards etc. The study shows that the growth of service industry in the country, electronic fund transfer, point of services offer a large potential for banks to cutting down cost associated with the paper based clearing and payment services. The introduction of

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debit cards can take place subsequently and the objective should be to attain a critical mass in issuing number of such cards so that the operation becomes cost effective. Worthington (1996), “Smart Card and retailer-who stand to benefit?” Paper describes the major current payment options which are open to consumers, and accepted by retailers with a review of the costs and benefits of each payment option. Retailers, as the merchant acceptors of payment by suffer from the introduction of the smart card. Article sets out to explore the pros and cons of the smart card for retailers. The introduction of the smart card will not eliminate any of the existing method of payment and it is probable that the smart card will even introduce new means by which nonfinancial data, such as purchase patterns, can be collected and exchanged. There will also be substantial costs involved for retailers such as upgrading thousand of stores and head office systems, replacement of point-of –service terminals, training to thousands of cashiers for the acceptance of smart cards. The smart card could be a useful addition to the existing payment options at the point of service. It could offer retailers to access to new delivery channels and better communication channels and help to maintain relationship with customers. Nash and Sinkey (1997), On competition, Risk, and Hidden Assets in the Market for Bank Credit Cards” show that the market for credit cards has been the subject of recent attention and controversy because of “High” profits earned on credit cards and substantial premiums on the resale of credit card receivable. This paper estimates risk-return profiles for credit card banks and explores the role of intangible assets in determining resale premiums on credit card receivable. In addition, the effect on resale market of securitization and the opportunity cost of acquiring new accounts are analyzed. Using alternative measure of risk and alternative control groups, authors find, for the year 1989 to 1995, that Credit-Card banks earned significantly higher return on assets but that these returns were associated with greater risk-taking. Black and Morgan (1998), “Risk and democratization of credit cards”. Research paper show the dramatic rise in credit card charge-offs in the midst of a vigorous expansion suggest that bank card borrowers have become inherently riskier. This paper investigates how the mix of credit card borrowers has changed in recent years, and how those changes affect delinquency risk. The new card holders seem riskier along several dimensions. They tend to earn less, and as a result, they owe relative to income. This rise in debt burden almost certainly contributed to the rise in charge offs, since debt burdens are a key determinant of delinquency risk. Cardholders are also more likely to work at relatively unskilled blue collar jobs. This

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occupation shift may also have contributed to the rise in charge-offs, since delinquency rates are higher in those occupations, perhaps income is more cyclical. Some of the personal characteristics and attitudes that have changed, such as martial status and job tenure also imply somewhat higher risk. Fernand (1998), “What credit card firms won’t tell you.” shows that convenience of credit card is not without its cost. The author warned the customers to use the card in effective and in a rational way because while choosing a particular card, the cardholder need to check different cost like annual fees, transaction fees, membership fees, and interest on revolving credit, lost card liability, reward point and facilities attached to different cards. Sometimes attractive facilities caught the cardholders in their debt trap if they don’t appraise the card before using it. It happens in the normal course, that card companies won’t tell each and every thing to cardholder like whether interest charges are annually or monthly, transaction fees for using ATM , annual fees VS. transaction fees, lost card liabilities for unauthorized use of card etc. According to author the card pushers offer a convenience but a good thing never comes with any strings attached.

Gambir (1998), “Credit cards in India”. He describes that credit cards are relatively new to India. Treated as a status symbol and as a vehicle of consumerism Indian banks burst this business. Till recently as it did not go along very well with the spirit of people because they do not have much money to spend because of bad economic conditions. But with increasing economic and financial liberalization and growing prosperity of the urban middle class banks fells that it is desirable to enter into this line of business. Author feels that Credit Cards and money transfers with latest technological changes would definitely reduce the burden on cash in our system. Therefore, RBI has to give an impetus to the popularity of plastic money which is consistent with present policy of economic and monetary liberalization. Carow and Kenneth (1999), “Debit, Credit, or Cash: Survey evidence on Gasoline Purchases.” analyzed the consumer’s payment option to use debit, general purpose credit cards, gasoline credit cards, or cash. Based on the results from a nested multinomial logit model, author’s found consumers are more likely to use cash when they have less education , lower incomes, are middle-aged and own fewer credit cards. Debit and credit card users are younger, more educated and hold more credit cards. Respondents who use their debit card are less likely

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to use their gasoline credit card. The result suggests that greater debit card usage will place the greatest competitive pressure on the gasoline credit card program. Plouff, Yandenbosch and Hulland (2000), “Why smart cards have failed looking to consumers and merchant reactions to a new payment technology” describes that more than a decade, bankers and other outside financial services community such as hardware manufacturers have sought to solidify the place of smart card technology as a viable retail pointof-sale alternative and, more boldly, as an outright replacements for cash in everyday consumption situations around the globe. Despite strong development efforts and numerous fact- finding market trials, many banks have found smart card technology to be a losing proposition. This article presents a detailed case study of both consumer and merchant adoption of one smart card –based retail point-of-sale system. The system, called “Exact”, was test marketed for a full year in Canadian market. Various perceptual and demographic data from consumers as well as firm –level data from retailers are both presented and assessed. The ensuing discussion offers pragmatic suggestions for those in the financial services community as to how the apparent difficulties and shortcomings of smart card technology may be overcome. Payments systems play a fundamental role in an economy by providing the mechanisms through which payments arising from transactions can be settled. In a broad sense, paymentssystems can be defined as “systems of exchange financed by private and/or public liabilitie and the institutions that facilitate the clearing and settlement of these instruments” (Lacker2005). This broad definition encompasses all non-barter exchange in the economy. In anarrow sense, payments systems can refer to the interbank settlement system, which is “acontractual and operational arrangement that banks and other financial institutions use totransfer funds to each other” (Zhou 2000).41 Leung and Lai (2001), “Improving the quality of the credit authorization processes a quantitative approach”. This paper proposes that the quality of a company’s authorization system should be measured by two major considerations. First, the system should enhance quality of customers service by reducing the waiting time at the point of sale. Second, it should reduce the risk of accepting transactions of bad credit. In this paper, a major credit card company is used to demonstrate how the credit authorization process can be improved using a quantitative approach. Opportunities for quality improvement were first identified though brainstorming sessions with top management, by using quality improvement tools. A queuing

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model was then used to redesign the authorization process. Finally, simulation model was used to test and evaluate the new process design. As a result of these improvements, it was determined that more than US$2.5 million were saved annually and authorization efficiency was improved by more than 40 percent. Saha (2003), “The booming credit card business of Indian banker.” In this study analysis has been done of the credit card business in India. Article is both from the banker point of view and from the users point of view. It is estimated that the credit card volume is increasing around 15% p.a. on average for last 10 years and volume of transaction increased by 20% on an average in last 10 years in India. Various hypothesis and objectives are set to find out which bank offer varieties of services to consumer in relation to credit card. A comparative analysis is made for all the credit cards. In general, most of the credit card is doing very well and the competition is cut throat. Different factors such as income level, fees customers’ service network, add on card facility, revolving credit facility, insurance facilities, cash withdrawal charges, lost card liabilities etc. taken into account for selecting the best credit card provider in country. The study also finds that city bank is the best card which provides all the facilities at the minimal charges. Bhargava (2004) title “Debit cards: A new generation plastic money” analyses that debit cards are fast catching up with the customers. A combination of factors like ease of availability, debitaverse profile of customer and zero interest rates are propelling the usage of Debit Cards. The study emphasizes to increase the usage of these cards, bank will need to improve infrastructure and continues to focus an increasing installations of point of sale [POS] in smaller cities and on the locations which are frequently used by cardholders, and to develop new marketing programmers that educate customers on the benefits of replacing cash with plastic. Cunningham (2004) “College Student credit card usage and the Need for on campus financial counseling. And planning services”. The purpose of this study was to examine the use of credit cards among college students and the need for on-campus financial counseling and planning service. The research objective was two fold: (a) to determine if college students are responsible with their credit cards and (b) to evaluate the need for on-campus financial counseling. Participants in the survey (N=110) completed a survey consisting of various question about students’ use of credit cards. Results showed that while a majority of the students who completed the survey were very responsible with their credit cards, there as a group (composed of study) who were having significant credit problems. The paper concludes with suggestion regarding on campus financial counseling services.

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Humphrey (2004) “Replacement of cash by cards in US consumer payments” Authors uses over the past 25 years time series data. The results shows that the share of cash in consumer payments appears to have fallen from 0.31 in 1974 to 0.20 in 2000, cheques replaced cash during the 1970, credit cards replaced some cheques during the 1980, while debit cards replaced both cash and cheques in the 1990s. Author feels even though, cash is not projected to go to zero anytime. Prasad (2004), “Product innovation-A suggestion from a Reader: KCC vs. ATM” article examined the utility of Kisan credit card from the point of view of both the Kisan Credit Card (KCC) holders and commercial banks. It is an innovative product designed by the government of India (GOI) in consultation with RBI/NABARD. The facility of issuance of “cheque Books” to KCC borrowers is one of the important improvement. But this product needs further improvements by making it a technology driven to extension of Automated Teller Machine (ATM) to agriculturists in rural and semi-urban areas. “KCC ATM CARD” provides benefits to agriculturists as well as to commercial banks. Agriculturists gets instant cash for agriculture inputs such as fertilizers, seeds, pesticides and overdraft facility to current account holder holding “KCC ATM CARD” which involves no cost and boosting self–esteem among farmers. On the other hand, by providing the ATM facility, the commercial banks can reduce fixed cost per transaction. Author feels that by extending technology driven products will boost the image of commercial banks and helps to enlarge the base of his value agriculture advance which could attract the more farmers to commercial banks. Sant (2005), “Credit cards emerging Trends and Prospects” shows benefits, growth/potential growth, usage pattern, technological changes, delinquency rates, and fraud settlement, by the credit card companies. Survey shows that spend per card in India are very low at around Rs. 20,000 per year against international average of around $900 (i.e. about Rs. 40,000) per year per card. Demands have increased for higher quality and level of services. Major card issuers in India, domestic and foreign, are currently busy racking their brains in trying to protect their organizations from frauds. To overcome this problem a new technology i.e. “Smart-Card” that allows for greater security against fraud. Authors feels that with the establishment of credit information bureau of India Ltd. (C/B/L) customer had motivation to maintain good credit history and helps in lowering of delinquency rates. Article also shows that credit card industry grows by 37% with ten million cards in circulation.

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Al-Alawi and Al-Amer (2006), “Young Generation Attitudes and Awareness Towards the implementation of Smart Card in Bahrain: an exploratory study. The study puts a light on latest advancement and innovations in the world of information and communication technology by the way of smart card. A smart card resembles in size and shape to a normal credit card or bank ATM card, with a microprocessor chip implanted into card. These cards are used not just as identity cards, but hold a relatively huge amount of editable information including the cardholder’s bank data, e-purse, finger print, health record, blood group, traffic and license details and other vital information. Study present a general overview history, features application and introduction of smartcards in the kingdom of Bahrain. A total of 513 questionnaires were distributed to the students of the University of Bahrain. The questions asked included question to check the acceptance of the people to replace their current cards with a smart card and their awareness of the new National Smartcards in Bahrain. It also evaluates the effects taken by the government to create awareness among the public about the usage and features of the smart cards.. Devlin (2007) “An Analysis of main and subsidiary credit card holding and spending.” This study seeks to examine why most multiple credit cardholders have a “main” card (i.e. a card used more often than others) and “subsidiary” cards (i.e. cards used less often or only in an emergency) and the spending pattern associated with main and subsidiary cards. This study is a qualitative in nature, using a survey which contained open-ended questions to acquire data. Response were subject to content analysis to categories the reasons given for having a main and subsidiary card. Results show that 85 per cent of the 141 respondents indicated that they had a main card and the most frequently quoted reason for having such a card was the superior discount and promotions which were offered by the card issuer. Not surprisingly, main cards were used for the broadest range of transactions while subsidiary cards were used for a more restricted range of transactions, a majority saying that their subsidiary cards were held for “stand by purpose”. The results suggests that managers who market credit cards should aim to ensure that, in all times, the discount they offer, the promotions they arrange and their loyalty schemes are superior to those offered by competitors. By meeting these aims, higher number of consumers, who are multiple cardholders, are likely to use their card as a main card, thereby generating more income for their credit card issuer. Mandeep Kaur and Kamalpreet Kaur(2008),in their article, “Development of Plastic Cards Market: Past, Present and Future Scenario in Indian Banks” conclude that Indian banking sector technology as all the groups of bankers have now recognized it as essential requirement for

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their survival and growth in future Despite the strong advances in e-payments, an estimated 90 percent of personal consumption expenditure in India is still made with cash which indicates the tremendous growth potential of this business. So this can be considered as mere beginning which indicates the bright future prospects of plastic card market in India. 45Subhani in 2008 conducted a study on ‘Plastic Money/Credit Cards Charisma for Now and Then’. The study was based to find out the charisma of plastic money, its usability and affordability and its impact on its preference to use. The research found that the preference to use of plastic money/ credit card has its pros and cons with its usability and affordability. According to the consumer behavior, plastic money is a form of conditioning and acts as a stimulus which qualifies a consumer to spend. The study shows that the preference to go for plastic money has a positive attitude that it is easy to use.The perception of credit card usability is associated with a psychological phenomena that people are likely to spend less with credit card and spend more with the same amount of cash on hand in the same budget and this precept also linked with the consumer self convenience. 45 Amin (2008), “Factors affecting the intentions of customers in Malaysia to use mobile phone credit cards” shows that mobile phones have provided an opportunity for banking institutions to introduce new services to the public. The latest service, which is now available in Malaysian banking institutions, is the mobile phone credit card. The purpose of this paper is to provide a preliminary investigation of the factors that determine whether Malaysia’s bank customers will use the new mobile phone credit card technology. Paper extends the applicability of the technology acceptance model (TAM) to mobile phone credit cards and includes “Perceived credibility (PC)”, the “amount of information about mobile phone credit cards (AIMCs)” and “perceived expressiveness (PE)”, in addition to “Perceived usefulness (PU)” and “Perceived ease of use (PEOU)”. The result indicate that PU, PEOU, PC and the amount of information contained on mobile phone credit cards are important determinants to predicting the intentions of Malaysian customers to use mobile phone credit cards. However, PE is not an important determinant in predicting the intentions of Malaysian customers to use mobile phone credit cards. Al-Laham (2009) in his research “Development of Electronic Money and its Impact on the Central Bank Role and Monetary policy” asserts that, in recent years there has been considerable interest in the development of electronic money schemes. Electronic money has the potential to take over from cash as the primary means of making small-value payments and

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could make such transactions easier and cheaper for both consumers and merchants. Electronic money is a record of the funds or “value” available to a consumer stored on an electronic device in her possession, either on a prepaid card or on a personal computer for use over a computer network such as the internet. This paper argues that electronic money, as a network goods, could become an important form of currency in the future. Such a development would influence the effectiveness and implementation of monetary policy. Author feels that, if an increased use of e-money substantially limits demand for central bank reserves, it would require changes in the operational target of the central bank and a closer coordination of monetary and fiscal polices.

P Manivannan (2013) in his research paper “Plastic Money a way for cash Less Payment System” examined that Plastic Money i.e. usage of Credit card was measured a luxury, and has become needed. These plastic money and electronic payments was and used by only higher income group. This facility extended not only to customers in urban areas or cities, but also to customers residing in rural area. However, today, with development of banking and trading activity, the fixed income group or salaried classes are also start using the plastic money and electronic payment systems and particularly Credit cards. Lowenstein and Hafalir in 2012 conducted a study on “The Impact of Credit Cards on Spending”. The study focused on two types of customers: one who carry debts and the one who do not carry debt. The one who carry debt are known as the Revolvers and the one who do not carry debt are called the convenience users. The study measured the impact of payment with credit card as compared to cash by an insurance company employees spending on lunch in a cafeteria. It was found that there was change in the payment medium of people from cash to a credit card when an incentive to pay with a credit card was given. It was then found out that credit cards do not increase spending. However, the use of credit cards has a differential impact on spending for revolvers and convenience users. Revolvers spend less when induced to spend with a credit card, whereas convenience users display the opposite behavior. 46 Nirmala. R. Sonu (2015): ANALYSIS OF THE USE OF PLASTIC MONEY highlighted the advantage of instant transaction as one of the major factors favoring the use of plastic money over real money by the population today. It has already been highlighted by the study that convenience of not carrying cash and ease of transaction is one of the major psychologically

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influencing factors that encourage the use of plastic money instead of real money. Additionally, the results of the study have also stressed upon the convenience and ease of use while paying or shopping by plastic money. The saving of time and the fact that the plastic money seems to be more portable also seems to further the cause of a possible change in the scenario of money usage in the economy. On the other hand, Security comes forward as a major cause for concern for the population using plastic money. Therefore, it is easy to conclude that the population is ready as ever to use plastic money at a greater level due to 47its high levels of ease and convenience.47 A 2009 study by Deloitte predicts that by the end of 2015, seventy percent of mpayment users will be under the age of 40 and that the annual spend of these Millennials (also referred to as Generation Y) will reach $2.45 trillion dollars in the US alone. Not surprisingly, m-payment solutions are a hot topic again after a chequered history of successes and failures since the turn of the millennium. However, the m-payments landscape is complex and continues to evolve as there are several types of services (i.e. contactless, remittance), various technologies (NFC, QR Codes, SMS) that enable the m-payment service, and various stakeholders (financial institutions, mobile network operators, regulators) each with their own motivations, expectations and capabilities (Au and Kauffman, 2008; Carr, 2007; de Bel and Gâza, 2011; Pandy, 2014). While the number of diverse stakeholders and solution providers has created many opportunities in the m-payment domain, it has also led to a highly fragmented market (Pandy, 2014).Use of a mobile device has frequently been used when defining an m-payment (Au and Kauffman, 2008; Goode, 2008; Jacob, 2007; Karnouskos & Fokus, 2004;Pousttchi, 2008) which can include laptops, tablets, and mobile phones. More recently though, de Bel and Gâza (2011, p. 12) define an m-payment as “a transfer of funds in return for a good or service, where the mobile phone is involved in both the initiation and confirmation of the payment." This definition dovetails with the view expressed by Contini et al., (2011, p. 4) who believe that there has been a shift from “enabling a mobile device to be used as a browser, accessing existing internet-based banking and retail systems….to the use of an application-enabled mobile phone as a payment form, substituting for a check, cash or a card, to eventually create a mobile wallet”. Pratik B (2017) Demonetization effect: Digital payments India's new currency; debit card transactions surge to over 1 billion. MUMBAI: Amid the ongoing raging debate on the benefits of demonetisation, there’s been a strong growth in digital payments and transactions in the

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months since the currency swap was announced on November 8, according to Reserve Bank of India data. Dezan Shira and Associates (2017) Growth of Digital Payments Systems in India.Digital transactions have trebled and quadrupled in volume and value across various modes from wallets to cards and interbank transfers from a year earlier. Card transactions at point of sale (PoS) terminals at merchant locations have surged, reflecting a positive for the economy as more people start using their debit cards for payments rather than for withdrawing cash at ATMs. Debit card transactions rose to more than 1billion in January from 817 million last year. While ATM transactions have remained constant at around 700 million, the incremental growth has been driven mostly by card swipes at PoS terminals. In line with government reforms, Prime Minister Narendra Modi has pushed Indians to adopt cashless transactions, giving the digital payments sector a significant boost.The sector is experiencing an unprecedented jump in growth since November 2016, when the government demonetized high currency bills (Rs 500 and 1000) – which represented 86 percent of India’s cash in circulation. By February 2017, digital wallet companies had shown a growth of 271 percent for a total value of US$2.8 billion (Rs 191 crore). Prior to the sudden developments in 2016 enabling the massive disruption in India’s payments landscape, a Google-BCG Report estimated that India’s digital payments industry would grow to US$500 billion by 2020, contributing to 15 percent of the country’s GDP. An important driver of this growth is India’s vast smartphone user base – the second largest in the world. are digital payments?Digital payments refer to electornic consumer transactions, which include payments for goods and services that are made over the internet, mobile payments at point-ofsale (PoS) via smartphone applications (apps), and peer-to-peer transfers between private users. KPMG (2017) Digital Payment-Analyzing the cyberspace. The digital payment ecosystem in India Digital payments comprises payment transactions carried out using a variety electronic modes such as cards, mobile or internet based set ups, to send and receive money. The ecosystem consists of buyer (customer), seller (merchant, service provider) and Payment Service Provider (PSP) that enables transfer of money from buyer to seller for the product/service availed. The PSPs in India consist of both bank and non-bank players. As of July 2016, PSP segment had44 authorised Pre-Paid Payment Instruments (PPIs) including mobile wallets, prepaid

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cards providers and eight authorised payments banks, eight authorised cross-border money transfer operators and eight authorised white-label Automatic Teller Machines (ATM) operators.These PSPs offer a variety of digital payment modes – from traditional ones such as National Electronic Funds Transfer (NEFT), National Electronic Clearing Services (NECS)/ Automated Clearing House (ACH), bank cards (credit, debit, pre-paid), internet banking, mobile banking to newer ones such as wallets (PPIs), Aadhaar Enabled Payment System (AEPS), Immediate Payment Service (IMPS), UPI, Bharat Bill Payment System (BBPS), and now AadharPay and India QR code.Undoubtedly, mobile instruments as the form factor and technology are driving innovation and adoption. Banks and non-banks are now rolling out products driving adoption on mobile platform. In this context, increasing availability of mobile phones (internet enabled mobile phone are expected to cross 500 million by 2020) and ubiquitous availability of data network infrastructure, further rollout of 3G and 4G network, and large merchant ecosystem are critical enablers, and require coordinated effort from industry, government and regulators. As per RBI’s report, ‘Vision-2018’, a four pronged strategy focusing on regulations, robust infrastructure, effective supervisory mechanisms and customer centricity has been adopted to push digital payments in the country. The policy initiatives such as simplified Know Your Customer (KYC), removal of Two Factor Authorisation (2FA) for small value transactions, recent disincentives for cash transactions, lowering of digital payment costs and building infrastructure such as National Optical Fibre Network (NFON) and standardisation such as UPI, BHIM (internet based mobile application) will help in adoption and usage of various modes of digital payment.These enabling mechanisms along with relentless innovation driven by PSPs and technology service providers (such as FinTech, etc.) provides to launch customer centric and easy to use products, ecosystem of large number of merchants and customers shall continue to drive onslaught of digital payment on cash and other modes of non-digital payments. The long-term success for digital payments would be contingent of convenient and easy to use mode, a robust regulatory framework, an effective customer redressal framework, fool proof security measures to enable confidence and trust, incentivizes larger participation and benefits similar to cash transactions i.e. ease of use, universal acceptability, perceived low cost of transaction, convenience and immediate settlement. Ease of use: Based on our survey, ease of doing payments is one of the major contributors for

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users to move to digital payments. We believe this can be a key enabler to encourage people to opt for digital banking/payments. Awareness: While there has been a significant uptake of digital payments, there is still a considerable amount of work that needs to be accomplished. There should be continuous focus on educating customers and merchants on the advantages of digital transactions. Awareness campaigns regarding security best practices, ease of usage and grievance redressal forums for issues in digital payments can go a long way to increasing adoption. Enhanced customer service: An effective and efficient customer service mechanism is one of the critical components for increased adoption. A digital payment ecosystem comprises of number of players – telecom operators, payment gateways, banks and regulators. It is important to clearly define the roles and responsibilities of all stakeholders. Effective customer handling will be one of the primary drivers for adoption and all stakeholders need to ensure that consumer interests are paramount in their operating and business models. The following need to be looked at: • Institutionalise mechanism for handling customer complaints/grievances • Establish chargeback and dispute resolution process Fit for purpose offerings: The payment transaction data collected by PSPs can be used by them to provide customised deals and offers to the customers, thereby influencing their buying pattern. security: It is imperative for the security architecture to ensure confidentiality, integrity, authenticity and non – reputability. Robust encryption measures for communicating customer and payment information between stakeholders should be established along with periodic risk management analysis, security vulnerability assessment of the application & network50.

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It is important to design use cases with optimal transaction flows and information exchange to simplify payment transactions. Similarly, while measures around information security and data privacy are essential, it is crucial to achieve the trade-off with customer convenience. Few prevalent measures are the relaxation of 2FA for online payments below INR2000. Adoption of Aadhaar for authenticating online transactions and its usage for KYC can further encourage the use of digital payments in India. Techonology enhancements and innovations: Increasing penetration of mobile phones, ubiquitous connectivity, alternate modes of authentication such as voice and biometrics and adoption of cloud and Internet of Things (IoT) are the technologies that can shape the way for future transaction in India. Unified Payments Interface (UPI) can be further refined to enable a large scale adoption of digital payments in India by overcoming current short falls e.g. integration of various service providers such as banks and other financial institutions on this platform and uniform customer experience. Merchant adoption: The depth and breadth of merchant participation are significant determinants for adoption of digital payments. Merchants need to be encouraged with sufficient incentives for them to actively contribute to the growth of the digital payment ecosystem. Merchant discount rate and other transaction charges on digital payments are in the process of being rationalised and a new regime of transaction charges based on high volume and low charges is expected to be rolled out. Special care is being taken of small and rural merchants,for instance, one of the largest public sector bank has proposed zero transaction/ MDR charges on such terminals.

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4. Data Analysis, Interpretation and Presentation 4.1 Introduction: A primary research was undertaken and a questionnaire was prepared through Google forms and data was collected from 40 respondents. Respondents include like a general local people that through collected the information about payment mode. 15 questions relating to mode of payment were asked from the respondents. The Questionnaire was divided into personal information related to mode of payment.

Above diagram shown of the age division as per 40 respondent of percentages . The highest age of 19,22,23,25 years old. In the 19 years old including the 6 people of 15%(female and male). In 20 age year of 5 people of 12.5%,in 21 years old including 5 of 12.5%, In 22 years old of 6 respondent of 15%, In 23 years old 6 people of 15%, 24 year of 4-10% , 25year old 6 people 15% , in 26-28year old 2 person of 1%.

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Row Labels Female Male Grand Total

Count of 1. Gender

18 22 40

Out of 40 respondents 18 are females and 22 are males. As graph depicts 45% are female respondents and 55% are male respondents.

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Cashless system was introduced would be more like of people of 80% 32 respondent and 20% of 8 respondent are less likely to use the refectory( female and male).

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Total respondent of 40 as divided of 100%. they will feel enough information to make an informed decision yes of given of 60% as people of 24. No choose of respontant of 7 of 17.5% and may be was 9 respondent of 22.5%. The respondent through are known that the more respondent given the yes response.

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The benefits that a cashless systems is helpful to at college these question to shown the answer of diagram through .the 82.5% of 33 respontant are given the yes answer and 17.5% of 7 people are not agree to these questions.

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Some time the people was to thought about the dietary and nutritional and they will want to benefits. In above diagram shown on 20 respondent was given the response of yes of 100% out of 50%. The 30% of 12 people are may be given , that had no idea about the question.20% are respondent are given no they not agree.that means the 50% are highest levels of people agree with these statements.

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82.5% are people to given the response of yes the respodent of 33 . Minimum peple are not get the benefit that why they peopel are given no response of17.5% people of 7.

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70% of people are using the continue payment system and 30% of are not using the payment.Now these generation digital payment that why using the online payment.

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32.5% of people are using the mobile banking and online banking services get from bank.ATM are aslo now using the 27.5%. that know about other online payment system.credit card 5% of 2 people they not more using cards and telephone banking are minimum used of people they not more uses the calling of 2.5%.

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Functionality of payment

No. Of people

%

Fully Aware

17

42.5

Partial Aware

18

45

Not Aware

5

12.5

Total

40

100

That through known the Higher people are aware to payment.

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More people are not want to disclose the any information on net .they not believe the any security they fair the hacking and crack the detail .that why many people are not given to yes response. the 40% of respontant to no and 60% of people given positive response of 60% of 24 people and 40% of 16 respondent.

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Now smartphone using everywhere all has the smartphone it's mobilized.that is why the 65% of becoming to reponse to making a payment through smartphone.30% of both are using smartphone as well as computer. Computer are not using anywhere of any payment of urgency so not available of computer so better they using smartphones.therefor minimum response was came of 5% of 2 respondent.

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Highly respontant are response to 75% of they are agree and also highly agree of 7.5% to believe the transaction are secured . Disagree and highly disagree are also there they not be believed on transaction they not do any transaction so 15% of people are not agree and 1% of highly agree.

More of response are came to agree of 42.5% 17 respondent and strongly agree of 12.5% of 5 people they thinking about in future that time not more people are not used the cash digital India .A few people feel that using the aslo cash becouse illiteracy. That not much knowledge about digital payment, that way 27.5% disagree and 1% of highly disagree as well as neutral of 15%.

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Which mode of payment do you prefer must of at time?

Now recently, the more of application are founding that through they will do the any payment to accessily , easily as well as fastest .In above diagram shown of the paytm , Google wallet, free charge and MobiKwik but highest of Paytm of 52.5% of 21 respondent . The paytm are most of facilities and offer that why the people to attract to Paytm and cash back offer.second of googel wallet they also much more used 32.5% of 13. mobikwik are not using the as per the survey therefore it will be lowest mode of 5% of 2 respondent and 10% of 4 respondent of using free charge.

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Mobile apps can help you classify your purchase for budgeting

Mobile application so much important as well as useful. Mobile apps through now people are doing the trading. Purchase the goods and done the payment of online. Most important the budgeting. Every people are think about the budgeting, and that through doing the trading.in the diagram 72.5% of people agree to Mobile apps help to budgeting.

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The rate of mode of payment was 1 to 5 .they respodent are given the rate of that they want. The total response of 40. The total rate of 140.i.e. of min is 3.5 of mode of payment. Mode of rate mode of payment is 4 ,means the mode of payment is suitable and usable. And median of 4 .The mode of payment the highest rate of 4 the respondent of 13 of 32.5%.

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5.1 Suggestions To Improve Digital Payments

The Indian government says that it aimed to improve the digital mode of payments in the country, however, the actions required for this direction are not adequate. Earlier this week, an official from Confederation of All India Traders revealed that the bank Cheque facility may be withdrawn in the near future to boost digital payments especially, card payments. But, it is not known how much forcible actions would succeed. Many educated people these days are interested in using their cards for all their needs. Yet, the problem is the additional charges on the use of cards. Many merchants at their PoS charge extra one or two per cent on the total amount of the bill which causes many customers to step backward from their cards.

Merchants want to collect their rental charges or transaction charges that are charged by the banks from their customers who use their cards at their machines. As a result, use of card payments are discouraged by people. If banks encourage their merchants by eliminating charges if they use certain number of transaction per month, then merchants can encourage their customers to use cards to reach their target transactions. Then, customers will also use them happily.

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Many government departments or institutions like electricity department are charging additional amount as service charge on card payments. In one way, government wants to improve digital transactions and in another way they are discouraging with additional charges.

In a country like India, where the majority of people are price sensitive, government should encourage the citizens positively. But, in reality the card payments and even net banking attracts charges so people are not interested to use them. They prefer to use cash with its easy handling and lack of charges. Rather than imposing additional charges, government should find out the ways to improve digital payments.

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5.2 Conclusion The electronic payment systems are crucial to the success of electronic commerce. Being a business critical system, the underlying electronic payment system is required to be very secure, reliable and trustworthy. Thus, an electronic payment system needs to satisfy various important requirements such as money atomicity, anonymity, authentication, privacy, transferability, non-repudiation etc. Cryptographic techniques are employed to achieve one or more requirements of electronic payment systems. Symmetric and Asymmetric Encryption, digital signature, blind signature, dual signature, hashing, message authentication codes, authentication protocols etc. are the most prominently used cryptographic techniques in the design of electronic payment system. Electronic payment models can be broadly classified in two categories: Token based payment system and Credit Card based payment system. Token based systems use an instrument, which itself carries the value. During payment processing, approval of transaction is not required. Token itself carries the value and is transferred from payer to payee. In a credit card based payment systems, value of the money is stored at third party namely bank and transaction need to be approved from the bank. At present, credit card payment systems offer the most practical and popular payment methods for on-line payments over the counterpart electronic payments methods. Credit Card payments reduce the risk and costs associated with handling cash and checks. Credit cards for on line payments have a large user-base and benefit from familiarity and simplicity of use and also allow international payments. Another advantage of the secure credit card model is that the user needs not be registered to the payment service, only the transportation of the credit card number is needed. This model has an audit ability of the transactions which is from the viewpoint of the merchants and banks. The transactions can always be traced and it can be decided that who I the payer and who is the payee. On-line payments with credit cards can be 166 risky in the sense that card information may be intercepted or altered during transmission which may lead to fraud. The information may be stored on vendor’s servers and they may fall victims to hackers who may later sell the information or use the information to make illegal purchases. Because of the distinctive structure of credit card numbers, with their inbuilt check digits, programs can be written to scan a data stream for occurrences of such patterns. The data stream

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could be either an intercepted transmission, a file on disk, reclaimed disk space on a shared system, or even the stream of keystrokes produced by someone typing at their workstation. One of the drawbacks of the systems includes the lack of anonymity that is, paying by credit cards reveals payers identity to providers and vendors. Some users treat it as an encroachment in their privacy. Token based systems which are analogous to cash are bit strings and that can be copied as many times as desired. Since tokens are digital data, they can be easily copied. Thus, in case of token based systems, some mechanism is required to protect against double spending. The service is achieved on the basis of conditional anonymity. An advantage of the electronic cash model is that the payments offer anonymity to the user. One main drawback is the cost associated is very high. Micro On-line payment methods support frequent transfer of very small amounts. Because of the small amounts involved, higher efficiency can be achieved by slightly relaxing the security mechanism. Micro payment systems are payment systems which support low value payments at a low transaction costs. Unlike macro on-line payments, which use expensive public key cryptography and on-line communication with the trusted third parties, the security requirements of the micro on-line payment are relaxed by using light weight cryptographic primitives and off-line payment verifications. So the transactional overheads are minimal. A central challenge for on-line payment methods is to provide authentication mechanisms that allow both secure payments and convenience of the transaction process. Although there is a large range of on-line payment systems, credit cards for payment and SSL for security are dominant. At 167 present, credit card payment systems offer most practical on-line payment method and have become most acceptable payment methods for Internet over all the on-line payment systems despite of their disadvantages of high cost and unsuitable for low-value purchases. Needham Schroeder Authentication Protocol is a basic scheme for authentication.

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5.3 Bibliography



www.google.com



www.wikipedia.org



www.shodhganga.com



www.kullabs.com



http://www.businessdictionary.com/definition/mode-of-payment.html



http://kalyan-city.blogspot.com/2011/04/different-modes-of-payment-what-are.html

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5.4 Appendix QUESTIONNAIRE ON MODE OF PAYMENT:

Kindly fill up the questionnaire which is required for collecting data for my research work. I assure you that I will keep the information confidential and use only for my academic purpose. 1. If a cashless system was introduced would you be more or less likely to use the refectory? A. More

B. Less

2. Do you feel you have enough information to make an informed decision? A. Yes

B. No

3. Would the benefits that a cashless system brings be helpful to you at your time at college? A. Yes

B. No

4. Would you access to your personal nutritional and dietary information be benefits to you? A. Yes

B. No

5. A cashless system could estimate the need to bring money to college, would this be a benefit to you? A. Yes

B. No

6. Would you want to continue using payment system? A. Yes

B. No

7. If yes than which service you get from bank? A. Online banking B. Mobile banking B. D. ATM

C. Credit card

E. Telephone banking

F. Others

8. Are you aware regarding the functionality of payments? A. Fully aware

B. Partial aware C. Not aware

9. Do you feel safe in disclosing your details on net? A. Yes

B. No

10. Which device do you use for making payments? A. Smartphone

B. Computer

C. Both

11. Which mode of payments do you prefer must of the time? A. PAYTM

B. Free charge C. Mobikwik D. Google wallet

12. How do you rate the mode of payments service that you have used? A. Satisfied

B. Dissatisfied

C. Unsatisfied

13. Do you believe your transactions are secured? A. Agree

B. Highly agree C. Disagree

D. Highly disagree

14. In a few year people will hardly use cash to make a purchase? A. Agree

B. Disagree

C. Strongly Agree D. Strongly Disagree

15. Mobile apps can help you classify your purchases for budgeting? A. Agree

B. Disagree

C. Strongly Agree

D. Strongly Disagree

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