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Showing posts from June, 2017

Is UPI being preferred over prepaid instruments (PPIs) for peer to peer payments in India?

As per the recent news report, aggregate value of transactions made through United payments interface (UPI) during May 1st –May 28th had a higher growth rate, than transactions made through mobile wallets and other prepaid payment instruments. The aggregate value of transactions between May 1st and May 28th was Rs 2450 crore, which is 11.42 % higher than the transaction value in April. At the same time, the transactions through PPI stood at Rs 2280 growing at a rate of a modest 2.1 % over the April value. Additionally, the number of transactions from UPI channel was 8.2 million as compared to 82.7 million transactions made through PPIs.

The numbers suggest  that UPI is increasingly being used for peer-to-peer transactions for a higher average ticket-size of about Rs 2988. On the other hand, average ticket size for PPIs stands at Rs 276 for both peer-to peer and merchant payments. Mobile wallets in India being semi-closed, users generally load the wallet up to the extent of their usage…

Comparing the contribution of FDI and Migrants to the Indian Economy

Recent news reports indicated that the FDI inflows in India hit a new high of $43 billion in the year 2016-17. The ministry of commerce and industry said in a press statement, “The intent all this while has been to make the FDI policy more investor friendly and remove the policy bottlenecks that have been hindering the investment inflows into the country”. FDI inflows being an important metric for evaluation of economic development of the country, generates a lot of interest in the Government and the industry alike. In comparison to FDI inflows, remittance inflows to India have been $62.7 billion in FY16-17 as per the latest World Bank reports. Close to 16 Million Indian migrants, who send remittances and play a crucial role in India’s macro and micro economic development, are often shrugged off and mistreated.

Indian migrants face multiple problems at various stages which are further complicated by involvement of middle-men, corruption and lack of policies for Migrant welfare. Gettin…

Payment Schemes - 1

The way people pay for things is rapidly changing. Fintech start-ups have been quick to identify pain points in traditional payment systems, which, so far, have been interbank clearing and settlement systems, or those run by the various card associations. Here’s a first of a series of quick primers on payment schemes.
What is a payment? A payment is a message. Unlike your typical WhatsApp message, however, a payment instruction comes with obligations - it obliges (at least) one financial institution to debit one account (a financial instrument) and credit another.
This is what happens if Alice pays Bob, both of whom hold accounts at the same bank. Alice instructs her bank to debit her account and credit Bob’s account. When the bank gets the message, it verifies that Alice and Bob both have accounts with it, that both accounts are active, that Alice has enough funds in her account to do the transaction, and that there are no regulations that may disallow the payment. The bank authentic…