<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner1251-8.webp" alt="M2P Fintech" title="" id="rvrudoanq" width="100%" height="317">India has the highest Fintech adoption rate of 87%, significantly higher than the global average rate of 64%.India is rapidly evolving and is one of the fastest-growing Fintech markets globally and has also emerged as Asia’s biggest destination for Fintech deals, leaving behind China. Advanced technologies and a customer-centric approach are what bring this thriving industry its profound growth in this decade.Having witnessed this flourishing industry and its achievements, let’s look back on its evolution rather a revolution. So, gear up as this article throws light on how the fintech industry has steadily evolved over the years.<h2 class="heading-node" id="5995" style="text-align: left">The fintech landscape in India</h2>Ever since the start of modern society, finance and technology were entwined robustly. The beginning of the Fintech industry globally is traced back to the 19th century when technology started to mark its place in history, which made the fintech industry flourish.According to a research paper by Arneris, Barberis &amp; Ross, the significant stages of fintech are differentiated into the following eras, which will help us understand the steady fintech evolution better.<h2 class="heading-node" id="ab20" style="text-align: left">Fintech 1.0</h2>Outmoded technologies like the telegraph and Morse code were first used to transmit financial information across borders to strengthen the infrastructure rapidly. Then, later during the 1950s, the credit card was first introduced and was the first financial product in the industry, and to everyone’s surprise, it is still in the game.In India, many British Raj banks were nationalized post-independence, when the country’s economic growth started to shoot up, and banking services were availed by many citizens.<h2 class="heading-node" id="aff2" style="text-align: left">Fintech 2.0</h2>This era has marked the switch from analog to the digitalization of finances led by traditional financial institutions. People perceived finance management and financial institutions differently after the outbreak of the internet. The 1980s and 1990s were the high point in history when online banking pushed the fintech industry to the limelight with electronic installment framework, web-based business models, web-based shopping, portable banking, and digitization of banks.The banks started to experiment with online banking in the 1980s, got the hang of it by the 1990s, and made it even more popular. In India, ICICI Bank was the first to step into this internet banking space with limited banking services like access to account details and transfers within the bank. Other banks also started to follow the path and rapidly altered the way of banking. It is no wonder banks had faced challenges like technical mishaps, fraud, complex cross-border transactions, payment methods, etc.Fintech 2.0 gave the fintech industry’s modernistic look, and the below listed important events triggered the rise of fintech in India.<ul class="list-node" id="ef0j04wu4"><li>The first Indian ATM to withdraw cash was launched in 1987, Mumbai by HSBC.</li><li>In 1980, the Central Bank of India launched the first credit card in India.</li><li>Stanford Federal Credit Union was the first institution to let its customers access banking functions via the new World Wide Web in October 1994.</li><li>PayPal launched in 1998, which took the payment systems further after the internet boom.</li><li>The Global Financial Crisis in 2008.</li></ul><h2 class="heading-node" id="2020" style="text-align: left">Fintech 3.0 — The rise of Indian Fintechverse</h2>By the time the 21st century rolled around, India had emerged as one of the active players in this era with a plethora of smart advancements and entrants. Moreover, the Global Financial Crisis in 2008 paved the way for the fintech industry to gain traction and become ubiquitous. People started to shift from the traditional banking system slowly and developed trust over the new entrants.The release of Bitcoin v0.1 in 2009, Google Wallet in 2011, Apple pay in 2014 was the start that shaped the face of the fintech industry in India. Since India focused on customer-centric financial products and services, it has seen more rise in few years. The 2016 demonetization drive pulled in a lot of significance for the fintech. The Indian government’s move towards Digital India and to turn India into a cashless economy with financial inclusion also hands out immense support to fintech companies.Ever since the traditional banks were struggling to roll out their banking services integrated with the SWIFT system, fintech start-ups started to share the industry space through collaboration. SWIFT system’s initiative like SWIFT GPI provides end-to-end tracking with high security for the transactions. The Indian financial sector opened the door wide open for fintech to offer innovative and cost-efficient financial solutions.The rapid adoption of fintech had many Indian firms establish like Paytm, Phonepe, Mobikwik, Freecharge in few years. This made sure smartphone adoption is here to stay and will become the primary method for people to handle their money wisely.The span of around five years led to more than 2000 fintech companies in India at present and became the era of fintech start-ups. This made even the traditional banks rethink their strategies and welcome more fintech inclusion in their services to get hold of present-day tech-savvy customers. Open Banking, Banking as a Service (BaaS) were adopted by traditional banks that allow third-party service providers to access their financial data. BaaS further fuelled the entry of neo banks and digital banks in India.Fintech applications like mobile payments, automated investment apps (Robo-advisors), online lending businesses, and crowdfunding platforms have taken the financial industry by storm.The following technologies contribute oodles of success to the fintech ecosystem:<ul class="list-node" id="852pkzxgr"><li>Artificial Intelligence (AI)</li><li>Machine Learning (ML)</li><li>Big Data and Data Analytics</li><li>Robotic Process Automation (RPA)</li></ul><h2 class="heading-node" id="4ca4" style="text-align: left">Factors that led to India’s immense Fintech growth</h2>The quick adoption of new solutions and financial services made India, a country with the highest fintech usage. The factors which drive India’s fintech growth to the next level are listed below.<h3 class="heading-node" id="0376" style="text-align: left">Painless payments</h3>Easy digital payment is the key player in the fintech ecosystem, gaining trust and pulling many users in. Since its beginning, the merchants and shoppers have enjoyed this and made it even popular during the coronavirus outbreak. People were concerned about making a physical payment for safety reasons and quickly adapted to these digital payment modes in a jiffy. The demonetization drive in 2016 made every Indian switch to digital payments and online transactions, which was a green flag for fintech entrants at that time. People now make their digital cash flow without any second thoughts as they feel secure and safe more than handling physical cash.<h3 class="heading-node" id="b2cf" style="text-align: left">Payment wallets &amp; UPI apps</h3>This is one of the services which transformed the way people carry cash. Multiple digital payment apps like Google Pay, Apple Pay, Amazon Pay, PhonePe, etc., are definitely a booster for ‘Cashless India’. Features like easy transaction, secure, fast, multiple options benefit these payment wallets to make waves in the Indian fintech industry. Moreover, Artificial Intelligence (AI) and Big Data help users personalize their payments and store multiple bank accounts in a single digital wallet.<h3 class="heading-node" id="2917" style="text-align: left">Digital lending &amp; insurance</h3>Fintech is the cherry on the cake when it comes to market-based lending. When already banks were doing their great job in lending and insurance, fintech collaborated to make it even more feasible by giving enormous options, online availability, customer-centric loans, and speedy approval for businesses and customers.<h3 class="heading-node" id="b7e3" style="text-align: left">Wise finance management</h3>After the fintech boom, people witnessed many changes in the way they handle their finances. As every Indian has started managing finances digitally, it is easy to keep track of their expenses and make a calculative move. Robo-guides or Robo- advisors also help in wise finance management by providing automated, algorithm-driven financial planning services.<h3 class="heading-node" id="d8c7" style="text-align: left">Remittances</h3>Fintech's eases the way banks were making international transfers for decades. The remittance was considered an arduous task in the past, involving high fees, tons of paperwork, no tracking of money, multiple players, and a great deal of time. But now, fintech defines it as a flexible real-time payment with transparent fees, end-to-end payment tracking, multi-currency payments, and so on.Definitely a worthy throwback on this Independence Day 2021?This nostalgic look back at India’s Fintech evolution promises what the busy future holds for the country. The finance industry will flourish, but it demands a little more wait to reveal further episodes. So, let us wait to witness India evolve more and better in the future.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Evolution of the Indian FinTechverse

Prepaid Cards 101- A definitive guide for growth and profitability

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/banner.webp" alt="M2P Fintech" title="" width="100%" height="253">Have you ever noticed the numbers on your credit/debit/prepaid card? They have a string of numbers out of which the first six digits are called Bank Identification Number (BIN). The BIN number helps the merchant processor identify the card type, network, and the issuing bank for the transaction’s approval/decline. For instance, a Visa card starts with the number “4.” Master card starts with the number “5” and “2”, Diners starts with the number “3” and so on.They also enable merchants to accept different types of payments like digital and mobile payments.Now with the explosion of payment electronification and many becoming savvy financially, there has been a drastic increase in the number of card users. This, in turn, has led to a shortage of BINs; if we take a rather dim view, it can be observed as depletion of BINs.To stop this from happening, the International Standards Organization (ISO) amended the existing standard of (ISO/IEC 7812–1) Part 1: Numbering system from Six-digit to Eight-digit BIN in 2017. So, card networks such as MasterCard, Discover, American Express, Visa and others have started prepping for the change.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-24-copy.webp" alt="M2P Fintech" title="" id="adfawcve6" width="100%" height="253">Visa has been quite active with this change and regularly issuing updates and ready reference guides for this migration. Visa adopted this standard in 2017 and has urged its partners to migrate to the Eight-digit BIN by the end of April 2022.<h2 class="heading-node" id="69d4" style="text-align: justify">Who will be affected by this migration?</h2><ul class="list-node" id="lbi86ft9q"><li>Acquirers</li><li>Issuers</li><li>Processors</li></ul>MerchantsOn completion of April 2022, the card network’s 100,000 BINs will migrate to 10,000,000 BINs. The first Six-Digits will remain the same in this change, and the following two numbers (00,01,02…) will become part of the Eight-Digit BIN. Also, there will be no need to reissue replacement cards to the customers.Here are the key points that sum up this initiative:<ul class="list-node" id="vxdxnev6w"><li>After April 2022, the existing 6-Digit BINs will continue to function, and requests for new BINs will be assigned in 8-Digits.</li><li>6-Digit BINs will be supported, but they won’t be forced to convert to 8-Digit BINs</li><li>PCI guidance and Visa clearly outline that organizations storing the full 8-digit BINs require additional controls may include expanded scope.</li></ul><h2 class="heading-node" id="f71d" style="text-align: justify">Why the sudden urgency about this migration?</h2>While the standard is out for migrating to Eight-Digit BINs, ISO did say that they are maintaining the other issuing BINs in the six-digit sequence until the deadline of April 2022. The mandate also doesn’t require the removal of Six-Digit BINs. Therefore, the concerned parties must continue supporting both Six and Eight Digit BINs.The time taken for the adoption will significantly vary by the stakeholder. So, even though the deadline is still 10 months away, there is a concern regarding the impact of updating the backend systems. Especially those involved with issuer processing, routing, and other activities need to assess the impact and get ready for the changes.Industry watchers were almost sure that this initiative will call for a longer PAN. Still, Visa has decided to implement the same on the existing 16-digit- PAN structure. It has become quite clear that the decision will affect the PCI compliance of the existing truncation and masking rules. Any organization that stores the full BIN and the last four digits of the card will become non-compliant unless the rules are not modified.The decision did not specify any modification, and it requires organizations to handle 8-digit BIN as cardholder data. But organizations that spent massive efforts over the years to lower their PCI compliance load will face an explosion of responsibilities and remediation efforts. It will probably result in actions, expense, and their own timeline of non-compliance.So, card networks have been encouraging its vendors, agents, partners, and other stakeholders to actively assess the impact they would be experiencing across their systems. This assessment would help them to increase their efficacy and avoid any hurdles when handling transactions.<h2 class="heading-node" id="005c" style="text-align: justify">How does this change impact?</h2>As six-digit BINs are on the decline, it will be challenging to rely on them for authorization, routing, and transaction clearing. The effect might not be immediate but will slowly and surely escalate when Eight-Digit BINs become the norm. Both Merchant and Service providers might face issues in the following scenarios:<ul class="list-node" id="j85h67z8k"><li>Prepaid card’s identity</li><li>Chargeback and Fraud</li><li>Transaction processing</li><li>Merchant services and disputes</li><li>Reporting</li></ul><h2 class="heading-node" id="7198" style="text-align: justify">How to prepare for the change?</h2>Visa has issued directives for both merchants and service providers on how to handle this change. They have explicitly said that the changes are specific and may need to require a timeline extension. So, organizations, service providers, and other stakeholders are encouraged to initiate and pool the resources necessary to prepare for Eight-Digit BINs.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

The BIN Migration|Preparing for 8-Digit BINs

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/banner1251-13.webp" alt="M2P Fintech" title="" id="hytqs9p1m" width="100%" height="356">We have come a long way in payments starting from the barter system, coins, currencies, paper cheques, and plastic cards to one-click payments, e-wallets, and <a class="link" href="https://m2pfintech.com/blog/blockchain-and-fintech-use-cases-and-applications/">cryptocurrencies</a>. Payment space keeps evolving at breakneck speed with new technologies that focus on bringing more convenience than ever before. Wallets and currencies are now out of action and considered obsolete by the millennials. Ever since the emergence of contactless payments, we are entirely freed from carrying traditional currencies everywhere. Technologies keep providing users with a better payment experience and NFC is one of them.Here is a short story that illustrates the brief above.One sunny morning, the grocery store’s aisle was my runway. I was excitedly grabbing all my favorite drinks and snacks for the ‘Netflix weekend’ scheduled with my friends. So, I head to check out with a happy face and a fully loaded cart. Unfortunately, that is when I found out that I forgot my wallet.So, in this scenario, what was the state of action?Scenario 1:&nbsp;I ran back home to get my wallet.Scenario 2: Got a favor from the shopkeeper to pay him back later.Scenario 3:&nbsp;Forgot all the fuss and used my phone to complete the payment.And nowadays, Scenario 3 is the hero everywhere as people have their cards and applications loaded in their smartphones to make payments anywhere anytime. NFC is one of many such technologies that is smoothing the way.<h2 class="heading-node" id="de52">What is NFC?</h2>The abbreviation stands for Near Field Communication. It is a wireless technology that initiates the communication between two nearby electronic devices to provide the most convenient experience to customers globally. NFC makes the transactions and digital content transfer simpler by connecting the electronic devices using electromagnetic fields.<blockquote class="block-node" id="1eqo4mvgr">NFC initiates the connection at a distance of 4cm or less and operates at the frequency of 13.56 MHz to make secure transfers.</blockquote><h2 class="heading-node" id="ed11">What are NFC payments?</h2>NFC payments are popular contactless payments that use NFC technology to initiate the connection between the reader and the NFC-enabled devices. You can pay using smart devices like mobiles, watches, or simply tapping debit/credit cards. It initiates secured, convenient, fast, encrypted, and touchless transactions at the point of sale.<h2 class="heading-node" id="c903">Mechanism and applications of NFC technology</h2><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-11-3.webp" alt="M2P Fintech" title="" width="100%" height="284">NFC is a specialized branch out of RFID (Radio-Frequency Identification), a widely used technology for asset tracking, access control, attendee tracking, and much more.NFC creates a short-range communication using electromagnetic radio fields between two devices — one to transit and another to receive a signal, just like how you connect your Bluetooth device.The devices are differentiated into two- Passive and Active. Tags and other small transmitters are considered passive devices since they contain data that other devices can read, whereas active devices can read and transmit data. Such active devices are your smartphone that reads and helps share necessary data with other compatible devices if required.NFC is now introduced in a chip format as well. A beauty salon in Dubai recently introduced ‘chipped nails’ where a tiny chip is embedded in the nails and used to transfer information such as your digital business card or social media handles by just tapping your fingernails on the device. These services can expand to contactless payment systems too.NFC is used in three simple modes:<ul class="list-node" id="wqfacotvm"><li>Peer-to-peer mode:&nbsp;Two active NFC-enabled devices can initiate a connection to read or transmit information between each other. The Android Beam Technology uses this mode to transfer information and enable Bluetooth devices.</li><li>Reader/writer mode:&nbsp;We can read/write information from a passive device (contactless smart card or RFID tags) using an active device(smartphones/smartwatches).</li><li>Card emulation mode:&nbsp;Here, NFC acts as a contactless card, and we can use our smart devices in place of debit or credit cards to make digital payments.</li></ul><h2 class="heading-node" id="9a7f">How do NFC payments work?</h2>Contactless payments are now mushrooming with its wide range of options like EMV chip cards, mobile wallets, QR codes, and digital payment apps for the customers to experience ‘touchless and effortless’ check out and save time during their shopping spree. Moreover, they are a faster and secure mode of payments as there is no need to enter a PIN as it transfers the encrypted data to the NFC device instantaneously.NFC links the payment and reader devices wirelessly when they are closer to each other. Once connected, the payment can be initiated from the payer’s devices like smartphones and smartwatches through the installed payment applications like Google Pay, Samsung Pay, Apple Pay, etc. Then, the payer must just hover the device near the payment terminal, and NFC chips exchange encrypted data for completing the transaction within few seconds.<h2 class="heading-node" id="3528">How do merchants accept NFC payments?</h2><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-9-2.webp" alt="M2P Fintech" title="" width="100%" height="284">All a merchant needs is an NFC-enabled reader to accept the payments, and that’s that. The shopper can make NFC payments through smartphones, smartwatches, and NFC-enabled accessories — wristbands, phone cases, or rings. These devices have a small chip that communicates with the merchant’s NFC reader via radio waves.The shoppers have now picked their goodies - CURTAINS UP!Now, the merchant ensures the NFC reader’s connection is good to go. The shoppers bring their NFC-enabled device closer, typically within two inches, or simply tap the cards (with contactless indicator displayed on them) on the reader. The shopper unlocks the app with the PIN/use biometrics and selects the card to complete the payment.<h2 class="heading-node" id="32bd">How are NFC and EMV connected?</h2>EMV and NFC are closely connected in changing the payment landscape to hit the big time with secure and encrypted payments. EMV stands for Europay, MasterCard, and Visa — named after the organizations found. EMV is the payment technology that enables transactions with chip-embedded cards, whereas NFC is the digital version of EMV offering contactless payments.EMV payment is carried through the small computer chip embedded in the debit and credit cards. This chip communicates with the POS when dipped to authenticate the transaction successfully. These highly secured payments can be made using EMV-enabled devices and readers. To avoid any fraudulent activity, for every EMV transaction, a unique transaction ID is created, which cannot be replicated. Additionally, the cardholder must enter a PIN/ sign the receipt to complete the transaction. NFC is the technology that facilitates EMV transactions digitally using smartphones giving the ease of not carrying a physical card.On the flip side, NFC payments are contactless and follow tap-and-go technology. As said, gestures like hover or tap are all you need to complete the transaction.EMV is a bit slower when compared to NFC in processing a transaction. So, most customers still prefer opting for NFC to save time in a big queue as it is also as secure as EMV. So, merchants can opt for readers that accept both NFC and EMV payments to provide customers with a seamless checkout offering the latest and stress-free payment options.<h2 class="heading-node" id="bb30">Benefits of NFC Payments</h2>These wireless innovations give a better user experience and prove anything can happen at our fingertips. NFC has changed how merchants and shoppers look at making payments. It has also made both merchants’ and shoppers’ life simpler.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-10-1-1.webp" alt="M2P Fintech" title="" width="100%" height="284"><h3 class="heading-node" id="6ae9">(i) High-level security</h3>NFC payments are incredibly secure when compared with cash or magnetic-stripe cards. This is because the payment transactions are end-to-end encrypted, and details are highly secured.The customer can pay only at the POS terminal using their devices by providing the PIN/biometrics to unlock the payment screen. Another added security is that NFC payment readers can connect only one device at a time. This can prevent situations like customers paying for the wrong bill.<a class="link au nf" href="https://medium.com/m2p-yap-fintech/how-does-payment-tokenisation-work-d2f47186f718" rel="noopener">Tokenization</a>&nbsp;also plays a major role here. When people use apps like Apple Pay to carry their transactions, their sensitive payment credentials are masked with random strings of characters (tokens) to battle online and digital breaches. This new token is generated whenever you make a new transaction.<h3 class="heading-node" id="ce00">(ii) Comfort and convenience</h3>Shoppers don’t have to carry their wallets everywhere. They can simply use their smart devices for an easy checkout process. Another added functionality is to store multiple debit/credit cards in the payment apps and personalize the transaction according to their needs. Simple gestures like tap, wave, and hover are needed, and the payment is complete.<h3 class="heading-node" id="7719">(iii) Saves time at checkout</h3>Dealing with cash or using magnetic stripe cards consumes more time for both merchants and shoppers. Sometimes, shoppers skip purchasing in a few stores with a long queue in the POS terminal. To avoid such situations, merchants need to upgrade their POS terminal by providing a smooth experience to their customers, which increases their sales. So that, shoppers can save time in the checkout process when they opt for NFC payments. The less time it takes to complete the transaction, the more the customer is satisfied.<h3 class="heading-node" id="86b0">(iv) Touchless &amp; contactless</h3>The corona pandemic triggered the urge for contactless payments. This resulted in a steady increase rate of people opting for contactless payments. As a result, people are slowly opting for contactless payments that guard them against the spread of viruses when dealing with cash or card receipts.<h3 class="heading-node" id="8d5c">(v) Cost-efficient</h3>Since everyone’s best friends is their mobile phones in their everyday lives, NFC payments are cost-efficient for payee and payer sectors. So, the merchants must get an NFC reader and upgrade their payment terminal to seamlessly carry out the NFC payments. This even a small business merchant can afford to uplift their business. NFC reader is the better choice for merchants as it consumes less power too.<h2 class="heading-node" id="z3arn9s6q">NFC payments and its rapid evolution</h2>Contactless payments are omnipresent post the pandemic even though they were already a popular payment method before. Even exchanging money was considered a perilous task during this pandemic, but NFC has come to the rescue with its touchless feature. As a result, most people have upgraded to NFC payments helping businesses to drive their sales and ensure safety at the same time.The stats further strengthen the payment space with all positive predictions.<ul class="list-node" id="qlq2muew4"><li>The global market value of NFC payments is estimated to exceed $10.4 billion by 2026, with more than 14.5% CAGR from 2021 to 2026.</li><li>According to the report by Payments Journal, 30% of the consumers are making their payments contactless after the pandemic. Moreover, 70% who are new to this payment space wanted to continue making their payments contactless even after the pandemic abates.</li><li>The NFC’s market size is flourishing and is expected to touch $30 billion by 2023.</li></ul>The future of NFC payments, as predicted, will remain on the rise and will shape the payment space for the better over the next few years. Fintechs further mold it by offering innovative resources to provide the most convenient payment method for customers.One thing is sure, the NFC payments are here to stay, and the future holds more for payment space.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

NFC Payments - Simplifying Payment Space

How to implement the best Prepaid Payment Instrument (PPI) for your business?

Embedded Finance 101: The bridge connecting tech and financial services

Future of Digital Payments: Matched With Industry Needs

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Bring-to-me-Blog_31May21-2.webp" alt="M2P Fintech" title="" width="100%" height="358">Brian was a kid who loved bedtime stories, and every day his mother picked a new book for his bedtime story. One day, his mother read him the Japanese folktale “The Magic Mortar.” In this folktale, the magic mortar gave whatever its owner wished for until he says stop. Brian was mighty impressed and wanted one for him. The very next day, he saw his mother ordering groceries from an app, and he wanted to know how it works. When explained, Brian exclaimed that the app is the magic mortar he was looking for.Pretty interesting, isn’t it?Little did we realize that we all have a magical tool in our pockets to make our lives easier. We can enjoy the comfort of our home and make everything reach our front door.Yes, you are thinking it right. It is called — ‘Bring it to me’ or simply ‘to Me’ economy.<h2 class="heading-node" id="7a46" style="text-align: justify">So, what exactly is the ‘Bring it to me’ economy?</h2>The products and services are right at your doorstep instead of you getting in your car and going to the store every time. Starting right from fertilizers for your garden to vegetables for sumptuous cooking, you get every item online.Furthermore, ‘time’ has become a valuable currency and today’s customers are willing to bear the cost if it reduces their workload. Also, businesses have started realizing that they need to go a step beyond the digital realm to retain customers. So, front door delivery options have become the new normal.<h2 class="heading-node" id="836f" style="text-align: justify">The Role of Technology</h2>On the other hand, silently, our economy is moving ahead with a plethora of advancements and innovations. Technology is the leading player that drives the rapid economic growth of every country, including ours. With the cool trends springing up every day, shoppers expect more like same-day delivery and technology inclusion into their lifestyle.(i) Financial TechnologyFintech’s biggest contribution to this evolution is the digital money transfer services, as economic growth is highly connected with <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">financial inclusion.</a> Digital wallets were a huge hit to pull many customers to ‘bring it to me’ economy lifestyle. They are widely accepted right from a street vendor to huge shopping centers, which make their transactions quicker. Mobile payment apps and gateways help in hassle-free and secure money flow during transactions. They also assist in tracking and analyzing the customer’s spending habits and preferences to bring matching products and advertisements.<a class="link" href="https://m2pfintech.com/blog/bnpl-the-rising-fintech-star/">BNPL (Buy Now Pay Later)</a> gives the customer the comfort of purchasing their desired products anytime with the ‘pay later’ option. Even Fintechs can now customize loans and insurance for the assistants helping in delivery service. Thus, fintechs helps businesses in building a friendly and personalized approach to the customers.(ii) Artificial Intelligence &amp; Machine Learning TechnologyMany grocers and FMCG companies have started incorporating AI &amp; ML technologies to capture their target segment. The virtual fitting room is the buzz during this pandemic. A customer can virtually try on clothes, accessories, shoes, or watches and check if it fits them in a 360-degree view. Even the shoppers can visualize a 3D furniture model to check if it fits their environment and space before making an order. So, there is a virtual solution to everything using artificial intelligence and augmented reality technologies in today’s digital world.Delivery models like Autonomous ground vehicles (AGVs) with lockers, droids, and drones are state-of-the-art in the regular delivery service with their super-fast and reliable features. AGVs with lockers boost the delivery system even on Sundays and late nights, where human effort is least expected. On the other hand, drones will help in reaching the product (up to 15kg) in the rural areas at a relatively high average speed. Droids are small autonomous vehicles that relatively travel slowly on the sidewalks for doorstep delivery. With these innovations, we are on the way to reduce human intervention in delivery systems.(iii) Blockchain TechnologyBlockchain technology guards the customers’ information involved in the process and avoids any digital breaches and other cyber-attacks due to its centralized nature. It builds the customers’ trust in their privacy and the security of digital assets. It also increases sales and streamlines payment processing with high efficiency.<h2 class="heading-node" id="22e8" style="text-align: justify">What awaits us in the future?</h2>The ‘Bring it to me’ economy has gained its popularity by bringing services home. Be it personal grooming or professional cleaning, or any other service; the customers are ready to avail them.Nowadays, people are redefining their satisfaction based on memorable experiences and interactions. Businesses need to put their heart and soul into providing their best customer experience to reinforce and market their brand digitally.Be it a simple emoji that brings a smile or the level of service offered, businesses are now in a race against themselves to turn their products and customers as their brand ambassadors because the end is not the supermarket shelves but the customer’s doorstep.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

‘Bring It To Me’ Economy: A Touch of Digital Magic

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner1251-6-1.webp" alt="M2P Fintech" title="" id="t5u9jgsxm" width="100%" height="317">The advent of international payments has been long-standing in the financial world, facilitating commerce and trade. Be it sending money back home or international business contracts, today’s rising global commerce can be attributed to the growing volume of international digital <a class="link" href="https://m2pfintech.com/blog/future-of-payments-processing-matched-with-industry-needs/">payments</a>.It is a valuable ally for businesses and individuals who wish to enjoy commerce or transactions across borders. The surge in cross-border B2B payments is exponential since the penetration of the internet. With predictions of 30% growth in the next three years, cross-border e-commerce has taken off to exponential heights in these 2 years.Also, the businesses that offer software as a Service (SaaS) heavily depend on cross-border payments as their demographic is spread across the globe. In recent years, these players have played a monumental part in increasing the volume of cross-border transactions.The advancements in Fintech today empower many businesses and individuals to make instant payments. Businesses can experience stress-free invoicing, tax handling, and recurring billing in a few clicks. They also have access to top-notch support portals to handle any issues that arise out of a transaction.Fintech companies experiment with technologies like <a class="link" href="https://m2pfintech.com/blog/blockchain-and-fintech-use-cases-and-applications/">Blockchain</a> to bring more transparency and Artificial Intelligence for better regulatory compliance.<h2 class="heading-node" id="2511" style="text-align: justify">What are cross border payments?</h2>Cross border payments happen when the payee and the recipient are in different countries. These transactions can be retail, wholesale or recurring in nature. Decades back, the electronic messaging system served as a crucial mode to enable cross border payments.The cross border payments industry now utilizes many payment modes like <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit cards</a>, cross-border <a class="link" href="https://m2pfintech.com/blog/what-is-a-payment-gateway-and-payment-switch-understanding-the-basics-of-payments-architecture/">payment gateways</a>, <a class="link" href="https://m2pfintech.com/blog/tale-of-money-transfers-from-hawala-to-one-click-remittances/">wire transfers</a>, e-wallet, distributed ledger technology, <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs,</a> etc., every day to facilitate international payments.<h3 class="heading-node" id="d1xc42b0j" style="text-align: justify">Cross-border payment methods</h3>In fact, we can classify cross-border payment methods as Past, Present, and Near Future, where every advancement is an incremental leap in payment facilitation and user experience.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com//m2p-website-file/marekting-cms/m2p-blog/2025/05/1-1.webp" alt="Cross border payment" title="" id="py8ljf39p" width="100%" height="253">The Past<h3 class="heading-node" id="8e54" style="text-align: justify">Wire transfer</h3>It is an electronic transfer of money, where the money is ‘wired’ from one account to another. If you are initiating a domestic transfer, it is called a “Bank wire.” In the case of cross-border payment, wire transfer is interchangeably referred to as “Remittances.” It is the oldest method of initiating a cross-border payment.<h3 class="heading-node" id="c67b" style="text-align: justify">How does it work?</h3>Here the payee visits their designated branch and provides the details of the receiver. Those details include the bank account number, name, recipient country’s currency, SWIFT code, IBAN (International Bank Account Number), bank address, amount to be transferred, etc.The currency rate is fixed before the transaction. The details are directly sent to the recipient branch or via an intermediary bank. That’s not all; the payee also has to pay certain charges like service tax, conversion charges, and other applicable charges. Based on the instructions, the recipient bank credits the amount to the recipient’s account within 5 working days or more at times.<h2 class="heading-node" id="dd8c" style="text-align: justify">Payment Service Providers (PSP)</h2>A popular option for immigrants, Payment Service Providers (PSP), effect transactions either in the form of physical cash or online payments.<h3 class="heading-node" id="b848" style="text-align: justify">How does it work?</h3>The sender visits the agency with the current nation’s currency and proper ID proof for physical cash. The recipient can visit the agency at his location and collect the money after dedicating transfer charges to completing the ID verification process. For online transactions, the sender visits the PSPs apps or websites. Within a few clicks, money flies over the nations and reaches the receiver’s bank account directly.<h2 class="heading-node" id="8db4" style="text-align: justify">The Present</h2><h3 class="heading-node" id="affb" style="text-align: justify">Credit cards</h3>It is a reliable mode of payment while traveling abroad. A <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit card</a> eliminates the need to carry cash in hand. They also offer attractive benefits like interest-free loan periods (a month or more), reward points, gift coupons, shopping offers, easy EMI options, travel insurance perks, etc.<h3 class="heading-node" id="0caa" style="text-align: justify">Forex cards</h3>Many banks and financial institutions offer <a class="link" href="https://m2pfintech.com/blog/forex-cards-international-travel-made-effortless/">forex cards</a> explicitly designed for globetrotters. They can make money transfers across multiple countries with a single card. It helps the users avoid currency exchange rate fluctuations by locking in the rates while getting the card.<h3 class="heading-node" id="0b4e" style="text-align: justify">Digital wallets, ewallets &amp; mobile wallets</h3><ul class="list-node" id="th56mo1sb"><li>These are virtual wallets that can store money and customer information (credit card/debit card number, date, bank details, etc.).</li><li>eWallets are used like <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid cards</a> where we can store our money.</li><li>Digital Wallets are used to store card numbers, account numbers, expiry dates, IFSC codes, etc. This confidential information resides in the cloud.</li><li>Digital wallets can be used on desktops, whereas mobile wallets can be used on mobile devices.</li></ul><h3 class="heading-node" id="f39a" style="text-align: justify">MasterCard Send</h3>Initiated by the global network provider, MasterCard Send allows both businesses/ individuals to make real-time cross-border payments to the recipient’s debit card number. It does not rely on the bank’s ACH system, so there is no need for a routing or account number to send the money across.<h3 class="heading-node" id="a125" style="text-align: justify">Visa Direct</h3>Visa Direct offers push payments to individuals/businesses across the globe. The business/user can tap into Visa’s global network and send payments in real-time or by a maximum time limit of 24 hours.<h3 class="heading-node" id="c742" style="text-align: justify">SWIFT GPI</h3>SWIFT GPI or Global Payment Initiative aims for transparent and faster cross-border payments. It breaks down all the costs involved, and the payee can keep tabs on where the payment is at any given time. While the older methods of cross-border payments are traditionally mysterious, SWIFT GPI unveils the mystery and significantly increases the speed.<h2 class="heading-node" id="80ee" style="text-align: justify">The Near Future</h2><h3 class="heading-node" id="05b1" style="text-align: justify">Open Banking APIs</h3>Open Banking<a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/"> Application Programming Interface (APIs)</a> aims to simplify the complicated procedures of cross-border payments. As it democratizes access to customer and their data, it becomes easier for fintechs and other financial institutions to build products that address their target demographic version of cross-border payment app.<h3 class="heading-node" id="f3c8" style="text-align: justify">Decentralized Ledger Technology (DLT)</h3>A term made popular by Blockchain tech, DLT can be applied to cross-border payments’ three most challenging aspects. They are backend processes, compliance, and as a means of payment. DLT can speed up the backend process while offering transparency at every step of the transaction. It can also reduce compliance-related costs and can introduce an entirely new method of payment.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2021/05/2-1.webp" alt="M2P Fintech" title="" width="100%" height="253"><h3 class="heading-node" id="yj7z6hw5g" style="text-align: justify">How do cross-border payments work?</h3>Cross-border payment is a complex mechanism that involves many players. It carries many fees right from currency conversion to the respective country’s tax and other service charges. Both domestic and overseas entities work together to accomplish the transfer.For example, when a software purchase transaction is initiated, the “correspondent bank” requests the money from the “respondent bank.” Here both the correspondent and the respondent bank will have their colleague bank across the globe. So, the funds will leave the buyer’s bank and reach that bank’s counterpart present in the merchant country, ready for remittance. Then the remittance is transferred to the merchant’s bank for settlement. So, in short, banks work with other players like payment service providers; to transfer the money while navigating currency conversions, different tax regimes, transaction fees, etc. Further, slowing down the process.One of the most popular banks for forex settlements is the CLS bank. Founded in 2002, explicitly for mitigating risk and settlement of Forex transactions, CLS works with 18 currencies in cross-border payments. Even though it has been instrumental in making forex payments easier, it does have some drawbacks. With new emerging currencies gaining global transaction volume, CLS is limited by 18 currencies and is yet to catch up with technological advancements of member countries’ payment infrastructure.To create a seamless flow for the cross-border payments, some changes must be incorporated quickly to ensure better penetration across the value chains:<ul class="list-node" id="cp59ifqob"><li>Applications of Real-Time Payments will offer much-needed transparency. The parties involved can track the transaction status anytime. For example, this is what SWIFT GPI is trying to achieve. It has the potential to be replicated in other payment methods.</li><li>The time factor taken to complete a cross-border payment should be brought to days from weeks. Small and Medium Businesses (SMBs) should have better access to these payments as cash flow is the backbone of their operations. Unpredictable delays and complex transactions will hamper its growth.</li><li>Today’s customers, both retail and corporate, are looking forward to solutions that adapt to their evolving needs. They also favor the platforms where the solutions are embedded for all access.</li><li>Customers today prefer a choice of methods and security when initiating transactions. A flexible ecosystem where transaction history, audit, and reconciliation can give valuable insight and a seamless experience.</li><li>Integrations are a much-needed factor to bring about global interoperability and linking fragmented value chains. No matter the transaction origin, the experience of the transaction must be seamless for the merchant.</li><li>Typically, the stakeholders in this transaction flow more often follow the same regulations. They can be bifurcated into ‘front end’ and ‘back end’ stakeholders. The Front-end players are the Tech companies who look at the ‘data’ aspect of the transaction and can have lighter compliance standards. The onus should lie in compliance with balance-sheet exposure, counterparty exposure, and liquidity for the backend players.</li></ul><h2 class="heading-node" id="3198" style="text-align: justify">How is fintech disrupting cross-border payments?</h2>With Blockchain taking the lead in the fintech space, digital currencies can be used in cross-border payments instead of national currencies limited by geography. As digital currencies are built with technology, it provides a bread crumb trail for the transaction trace and reduces the need for intermediaries. Also, the DLT applications of Blockchain can provide transparency and security at the core. Along with these innovations, Fintech also offers the following benefits:<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2021/05/3-1-1.webp" alt="M2P Fintech" title="" width="100%" height="253"><ul class="list-node" id="4nv0g5ncq"><li>Constant enhancement: Fintech giants are leveraging the latest technologies like Blockchain to make cross-border payments completely transparent and tamper-proof. They concentrate more on the user experience and focus on making complex processes swift and convenient.</li><li>Ease of use: Virtual wallets allow the users to stay free from making a note of all the passwords, account numbers and worry about their confidentiality. You can feed all your confidential information with a single tap and complete your purchase.</li><li>Convenient:&nbsp;Forex cards are travel allies. It makes our wallets light when we are traveling to different countries handling different currencies. We can simply swipe on the retail outlets or wave it with a contactless card. Like an ATM card, it allows us to withdraw the local cash in any country (fed while receiving). The best part is few banks are waiving the ATM withdrawal fees, cross-currency charges, etc.</li><li>User experience:&nbsp;Cross-border payment gateways help businesses to sell across borders. As they comply with PCI data security standards, customers feel secure while buying from a foreign website. Consumers can purchase by simply typing their email ids and enjoy rapid check-out.</li><li>Marketing mate:&nbsp;Businesses can use the buying patterns of the consumers collected through their wallets and retarget them with attractive offers. Wallets offer rewards to buyers in the name of cashback. This money can be utilized only in their portal and increase the sales of the online platform.</li></ul>Over the past decade, cross-border payments industry innovations are drastic and soaring high, with creative Fintech minds entering the space each day. Cross-border payments are no longer a daunting task consuming more time and effort. And we can expect many more innovations that make cross-border payments a secure and transparent exercise.To know more about cross-border payments, write to us at business@m2pfintech.com<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

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