Digital Financial Tools and Applications/(डिजिटल वित्तीय टूल्स और एप्लीकेशन्स)

Digital Financial Tools and Applications

Digital Financial Tools and Applications

• Digital Financial Tools and Applications services are accessed and delivered through digital channels, including payments, credit and saving, and so on. m-banking is the use of a mobile phone to access banking services and execute financial transactions.

• The government of India introduced new services to move toward a cashless economy; all transactions are carried out using different payment methods such as an Aadhaar-enabled payment system, unified payment interface, and immediate payment service, and taking several measures to promote and encourage digital payments in India.

 Digital financial service figure: 8.1

Introducing Digital Financial Tools:

• Digital financial tools and Applications expand the delivery of basic financial services to people through new technologies like the Internet, mobile phones, and the transfer of money through new digital channels. These channels have significantly driven down the costs for customers and service providers, opening the door to providing 24-hour service for 365 days, as shown in figure 8.1. 

Digital financial Tools:

• You define digital finance tools and Applications as financial services delivered over digital infrastructure, including mobile and internet. mobile phones, computers, or cards used over point-of-sale (POS) devices connect individuals and businesses to a digitized national payments infrastructure, enabling seamless transactions across all parties. It includes:

• All types of financial services, such as payments, savings accounts, credit, insurance, and other financial products.
• All types of users, including individuals at all income levels, businesses of all sizes, and government entities at all levels.
• All types of providers of financial services, including banks, payment providers, other financial institutions, telecom companies, financial technology fintech) start-ups, retailers, and other businesses.

Understanding OTP (One Time Password) and QR (Quick Response) codes:

• One-Time Password (OTP) is also known as One-Time Pin. It is a string of characters or numbers automatically generated that is valid for only one login session or transaction, on a computer system or other digital device. This prevents some forms of identity theft by making sure that a captured username/password pair cannot be used a second time.

• One-Time passwords can be sent to the user's phone through SMS or push messaging and are used to protect web-based services, private credentials, and data. OTPs will minimize the risk of fraudulent login attempts and thus, the risk of stolen data.

• When users create a digital asset or an account, they are prompted to enable the two-factor authentication system such as username and password. Next time, when the user tries to log in, the system sends the temporary password (either four or six digits) to the registered mobile handset, and the user punches the code into the system. The code is a random series of numeric and alphanumeric characters. These OTPs are usually valid for a certain number of minutes.

• The information flow works like this:

• Users enter the username and password.

• Request is sent to the backend.

• Username and password are matched.
• User receives OTP through SMS.
• User enters OTP and logs into the site.

• OTP works through random algorithms that generate a new and random password each time they are used. The algorithm always uses random characters and symbols to create a password so that a hacker/cracker cannot guess the future password. It uses several techniques to create a password, including:

• Time-Synchronization: OTP is valid only for a short period.
• Mathematical Algorithm: The password is generated using random numbers processed within an algorithm.

Why is a One-time password safe?

• This prevents some forms of identity theft by making sure that a captured username/password pair cannot be used a second time. Typically, the user's login name stays the same, and the One-time password changes with each login. One-time passwords are a form of strong authentication, providing much better protection to e-Banking, corporate networks, and other systems containing sensitive data.

Features of OTP:

• three characteristics of OTP make it a viable option to implement and ensure data safety. These features are secured access, simple infrastructure, and swift delivery.

• The cycle of OTP begins and ends in a couple of seconds. Through OTP SMS, the users receive four or six-digit codes. Apart from the SMS system, users also receive the OTP through IVR, or it can be generated by the consumers and delivered through SMS. 

Quick Response Code (QR):

• The QR code system was invented in 1994 by the Japanese company Denso wave. It is a two-dimensional barcode used for adding web links to a printed page. When you scan such a QR barcode using a webcam or mobile phone camera, the QR application takes you to a website, a YouTube video, or some other web content. It is an easy way of sending people to a site without having to type a URL.

• The code contains information on both the horizontal and vertical axis. Compared to regular barcodes, it allows much larger amounts of row data to be embedded. These can be numeric, alphanumeric, or binary data of which up to 2953 bytes can be stored. The smallest element (black or white square grid) of the QR code is called a module. A QR code is composed of a combination of black and white modules, position detection patterns, timing patterns, and format information that contains error correction level, which includes Reed-Solomon error correction. Figure:8.2 shows the structure of a QR code's elements:

Figure:8.2 Quick Response Code (QR)

• Position detection patterns: The position detection patterns are arranged at three corners of the QR codes (Micro QR has one.) The position of the QR code is detected with the position detection patterns that allow high-speed reading. It can be read from any direction, which significantly improves work A, B, and C, the rate of black and white modules is 1:1:3:1:1 to specify the rotation of the code.

• Alignment pattern: The alignment pattern is used for position detection when there is displacement of modules due to distortion.

• Margin: The margin is a blank area around the QR code. Models 1 and 2 require a margin of four modules and the micro QR code requires that of two modules.

• Timing patterns: White and black modules are alternately arranged to determine the coordinate.

• Format information: It contains the error correction rate and mask pattern of the code. The format information is read first when the code is decoded.

• Error-correction code (Read-Solomon code): Read-Solomon code is applied to restore the data when a part of the QR code is missing or damaged. The restoration rate varies on 4 different error correction levels.

QR codes contain other types of information:

• Business cards can contain an electronic version of the contact information. Scan the code, and the reader application adds the contact to your address list.

• It can contain an e-mail message with a subject and message text. That message can be a request for information so that in return you might get a reply email with additional information and attached files.

• It can contain a geographical location. Scan the code on a poster advertising a restaurant, and its location becomes available to your navigation software, informing you how to get to that place.

• Now, let us look at some business-related scenarios where you would use QR codes.

• Use a QR code to direct a customer to the URL of your website, Facebook, Twitter, or other social media pages.

• Use it on your business card with your contact details embedded inside the code.

• Use it to link to a Google Maps location for your new store location.

Unified Payment Interface (UPI):

• A Unified Payment Interface (UPI) is an instant real-time payment system that allows users to transfer money between two bank accounts on a mobile. It was developed by the National Payment Corporation of India facilitating inter-bank transactions. To carry out any transaction, a user will only have to use a virtual address, known as a Virtual Payment Address (VPA). UPI has been developed by the National Payment Corporation of India (NPCI) and is regulated by the Reserve Bank of India (RBI). UPI has now become the most preferred form of digital payment. The UPI payment application is compatible with most banks and digital wallets. Some of the apps include Google TEZ, Bank, PhonePe, Paytm, and Airtel Payments.

Features of UPI:

• Some of the features of UPI allow users to benefit from several services. The transactions that can be carried out using UPI.

• It offers instant money transfer via mobile device 24x7 for all 365 days.
• Sending and receiving funds from/to bank account using VPA.
• Making a request for funds from/to the bank accounts using a mobile number.

Transaction Limit:

• Per day transaction limit is up to Rs. 1 lakh. The transaction limit may be revised from time to time. The following are the types of transactions that can be conducted through UPI.

• Remittances: By using this app, you can send or transfer money quickly to your friends and family.
• Bill payments: Pay utility bills such as mobile bills, electricity bills, and shopping bills.
• Merchant transactions: Booking movie tickets online and buying groceries on an online app.

Register with UPI:

• Here are the steps, you need to follow for registering on your bank's UPI app:

1. Download the UPI application from the Google Play App Store or the Bank's website.
2. Once you have finished downloading the app, create a profile by entering your details for registration, such as your name, virtual ID, and password. The virtual ID you create will be your payment address.
3. There is an option, such as Add or Link or Manage Bank Account which allows you to link your bank account number with the newly created virtual ID.
4. When you make a payment through UPI, it is required to enter the M-PIN which has to be set at the time of registration. To generate M-PIN, perform the following steps:
5. Choose the bank account from which you want to pay using UPI and mobile Banking Registration/generate MPIN.
6. If you click Generate MPIN, you will receive a One-Time Password (OTP) from the bank on your registered mobile number.
7. Now you will enter the last 6 digits of the debit card number and the expiry date of your card.
8. Enter the 6 digits of OTP and MPIN and click submit button and your MPIN will be generated.

How to Make Payments Using UPI?

1. Log on to your bank's UPI mobile application.
2. Select the option make payment/send or pay.
3. Enter the beneficiary's virtual ID and amount to be transferred followed by the account number.
4. You get a confirmation message, once again check the payment details to confirm the payment.
5. Enter the MPIN to authenticate your payment. Click the submit button, and the amount will be transferred in seconds.

How to Receive Payment Using UPI?

• To receive money from a person, it will help you understand how to accept or decline if someone sends you a UPI payment.

1. log in to your UPI app. Go to the UPI payment option.
2. Click the collect or request money option.
3. Enter the payer's virtual ID and the amount that needs to be credited.
4. Check to review the payment details and then click to confirm.
5. The requested money will be sent to the payer in the form of a notification.
6. Now, the payer accepts the request to send a notification. He/she will be prompted to enter the UPI MPIN to complete the money transfer transaction.
7. If the payer is the correct UPI MPIN, the requested amount will be debited from the payee's account.
8. Once you know the transaction is complete, both the payer and payee will get verification about the transaction, and the fund will be transferred immediately to the payee.

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