<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/08/MicrosoftTeams-image-6.webp" alt="M2P Fintech" title="" width="100%" height="284">Disbursing salaries to the unbanked and underbanked is a crucial challenge for businesses. Direct debit, paychecks, and demand drafts are clearly not suitable options as their bank accounts are either inactive or non-existent. Though paying in cash sounds easier, it involves immense effort in calculating, withdrawing, distributing, and bookkeeping.&nbsp; Businesses worldwide grapple with the responsibility to pay their underbanked employees on time with utmost security. They leverage digitized payroll cards to optimize salary disbursal and deliver secure and seamless payouts.&nbsp; So, what is a payroll card? What are its pros and cons?&nbsp; Keep reading to know.&nbsp;<h2 class="heading-node" id="5ckwb8qg3">What is a payroll card?&nbsp;</h2>A payroll card is a prepaid card that employers use to pay their employees. The employer (business) loads the card with wage or salary via the respective routing/account number. These cards are reloadable and can be issued both in virtual and physical forms. Businesses are adopting customized payroll card programs to embrace sustainability, optimize their financial and human resources, augment bottom line performance, and extend value to employees.&nbsp; Payroll cards are a secure alternative to direct deposits (bank accounts), cash payments, and paychecks. They are ideal for traditional recurrent disbursals, daily wages, fees, just-in-time allotments, and other customized payments and reimbursements. They function like regular debit cards and can be used to make cash withdrawals, POS payments, utility payments, money transfers, and balance inquiries.&nbsp; Payroll cards help the unbanked segments receive salaries in a structured way while helping them save and track their spending. It eliminates the need for a bank account or physically going to a bank to cash a paycheck.&nbsp;&nbsp;<h2 class="heading-node" id="uqt09bdni">Types of payroll cards</h2>Payroll cards can be customized according to business requirements. They are broadly classified into four categories.<ul class="list-node" id="89x3ltnvt"><li>Branded payroll cards - The branded cards carry the card network logo and can be used for domestic and international transactions.&nbsp;</li><li>Personalized payroll cards - These cards have the respective card holder (employee) name printed on the card.&nbsp;</li><li>Instant issue payroll cards -&nbsp; As the name suggests, these payroll cards are issued on the spot. So they do not carry the name of the cardholder.&nbsp;</li><li>Portable payroll cards -&nbsp; If the cardholder holds multiple jobs or has cash flowing in from several sources, then portable payroll cards come in handy.&nbsp; These cards can accept government benefits, tax returns, and salaries from consecutive employers.&nbsp;</li></ul>The above-mentioned card types are not mutually exclusive. They can be mixed, matched, and customized as per the need. Now, let's check out the pros and cons of payroll cards for businesses and employees.&nbsp;<h2 class="heading-node" id="ehevreuu7">How payroll cards benefit businesses?</h2>For employers who intend to take full advantage of electronic fund transfer, <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid</a> payroll cards are a befitting option. The payroll cards program streamlines the payroll process while creating a win-win situation for unbanked employees and their employers. It is also deemed as an economical alternative to issuing paychecks.&nbsp;Here are some of the benefits:&nbsp;<ul class="list-node" id="bshphz1p0"><li>Reduces cost, effort, and time - The payroll card program reduces the costs and time associated with accounting and administration. It cuts down production effort involved in handling manual paychecks and issues associated with lost or stolen checks, stop payment orders, fraudulent cashing of duplicate checks, and more. It minimizes charges related to bank transactions and eliminates escheat issues.&nbsp;</li><li>Increases efficiency - Payroll cards use <a class="link" href="https://m2pfintech.com/blog/why-should-apis-be-your-holy-grail-for-prepaid-card-issuance/">API-based tech stacks</a> that leverage financial technologies to increase the efficiency, pace, and accuracy of payroll processing. Payrolls can be processed in no time, and disbursals can be optimized to their fullest potential.</li><li>Boosts sustainability - The rise of paperless, digitized payroll in the form of virtual and physical cards helps businesses embrace sustainable finance and operations. Payroll cards eliminate the need to cut trees for the paper required to produce physical cash, cheques, account stationery, and more. When the cards are metallic, plastic hazards too get out of the picture. Thus payments and salary disbursals can be made in a green and eco-friendly manner.</li><li>Builds trust and reliability - As salaries get credited to the card on time without the hassle of check bounces or bank strikes, the reliability factor of the employer increases. Employees trust their payroll cards will be ready to use without any security issues.</li><li>Drives employee loyalty - All employees who have payroll cards are eligible for real-time payments regardless of their relationship with the banks. This ensures that salaries are credited to all cardholders instantly without any bias or hassle. Irrespective of being banked or unbanked, employees can use this cashless payment instrument to spend, save and track their expenses safely. These inclusive processes and initiatives drive employee satisfaction and loyalty.&nbsp;</li></ul>Employee welfare is an integral part of any organization. Therefore, it is imperative to recognize and evaluate the advantages and disadvantages of employee payroll cards. It helps you make informed and better decisions that nurture the overall growth of the employees and the business.&nbsp;<h2 class="heading-node" id="fcvsqq9kv">How payroll cards benefit employees?</h2> For employees, payroll cards provide a convenient way to access wages/salaries without physically going into a bank or opening a bank account. Employees can use payroll cards at any merchant that accepts debit cards. They can also help employees avoid check-cashing fees and other charges associated with traditional banking products.&nbsp; Payroll cards offer many other advantages to employees.&nbsp;<ul class="list-node" id="je5f3uu4t"><li>Instantaneous, easy to use, transparent, and secure.&nbsp;</li><li>Provides a convenient way to receive salary/wages without a bank account.&nbsp;</li><li>Eliminates the hassle of cashing the paycheck.&nbsp;</li><li>Promotes financial wellness as cardholders can track their spending and budget more efficiently with a payroll card.&nbsp;</li><li>Helps employees stay without debt. as the spending can be monitored and controlled.&nbsp;</li><li>If the card is lost or stolen, it can be blocked to reduce fraud and loss of funds.&nbsp;&nbsp;</li><li>Can be used to incentivize employees through reward points, cash backs, and discounts on transactions.&nbsp;</li></ul><h2 class="heading-node" id="ckfgbv29e">Downsides of payroll cards</h2>Like any other good thing in life, payroll cards also come with their own downsides. &nbsp;<ul class="list-node" id="m1sbxu2gv"><li>First off, most cards come with monthly maintenance charges and may apply additional fees for certain transactions like balance inquiries, ATM withdrawals, and similar activities. &nbsp;</li><li>The second major downside may happen when there is a card “freeze.” Some service companies place a temporary hold or “freeze” on a card for several days or sometimes even weeks. Employees who do not have a bank account will be unable to make any payments until the freeze is relaxed. &nbsp;</li><li>Further, if the card is lost/stolen, the employee will not have access to the funds until a new card is replaced.&nbsp;</li></ul><h2 class="heading-node" id="cfeambdgp">Are payroll cards a right fit for your business?&nbsp;</h2>Payroll cards serve as a multi-functional tool for employees to create a robust everyday financial system that works for their specific lifestyles. According to surveys, consumers worldwide are actively choosing payroll cards over other forms of payment. In fact, even though most cardholders have access to a bank account, they prefer payroll cards because of the seamless functionality, cross-functional potential, and ability to control income by distinguishing it from other finances.&nbsp; Now you know why payroll cards are a right fit for your business! When you make your employees' financial lives easier, their productivity and loyalty increase multifold. Turnover rates reduce and efficiency improves.&nbsp;Businesses employing the payroll card program have ascertained that it saves time and money, enhances security, improves payment infrastructure, and eliminates issues concerning cash disbursements.&nbsp; Most importantly, they bridge the financial inclusion gap for employees without easy access to traditional banking services. When implemented correctly, payroll cards can be an efficient tool for managing employee expenses and compensation.&nbsp;<h2 class="heading-node" id="q53px9969">How modern card issuance helps?</h2>The advantages of payroll cards are synchronous to the agility and scalability of a <a class="link Hyperlink SCXW78303390 BCX0" href="https://www.m2pfintech.com/card-issuing-platform/" target="_blank" rel="noreferrer noopener">modern card issuance platform</a> catering to the gig economy and flexible working environments across the globe. The platform enables various features like seamless onboarding with an integrated identity verification solution, building multiple use cases like single-use cards, virtual cards, early salary, meal cards, shopping cards, etc., for the card users. The modern mobile-first cards offering instant limits and controls across different payment modes and transaction amounts ensure security and risk management for both employees and employers.&nbsp;Now, still wondering if payroll cards are right for you? Or are you looking for a robust payroll card program? &nbsp;You can get in touch with us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a>.&nbsp; We'll be happy to help.&nbsp; Looking for more nuggets of fintech wisdom?<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.

Pros and Cons of Payroll Cards

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/MicrosoftTeams-image-9.webp" alt="M2P Fintech" title="" width="100%" height="253">The ecommerce market in India is growing at a dynamic pace. Estimated to reach $188 billion by 2025, the sector received $15 billion in investments from private equity and venture capital firms in 2021. At this rate, the Indian ecommerce industry will surpass the US to become the second largest online commerce market by 2034. Xpressbees, Amazon, Flipkart, and Cars 24 are some of the leading ecommerce firms that are making big waves with their investment and expansion plans.Rising smartphone penetration, evolving customer expectations, and convenient digital payments play a major role in the ecommerce boom. Online transactions in the Indian ecommerce ecosystem are estimated to grow by 96% to touch USD 120 billion by 2025. The growth of digital payment options such as credit cards, debit cards, prepaid cards, UPI, and BNPL added impetus to online shopping transactions.In this article, let’s decode the anatomy of payment card transactions in an ecommerce setup.Payment processing is how businesses complete credit and debit card payments. It includes authorization, funding, and settling of a transaction. For a consumer, an online card transaction is a pretty straightforward process that happens within a few seconds. All they need to do is enter the card details, and authorize the transaction with an OTP.And voila! The transaction is successful.<h2 class="heading-node" id="zpom3032i">Key Players in Ecommerce Payments</h2>While the entire transaction may only take seconds, it involves a complex network with multiple steps and players behind the scenes. Here are the players involved in carrying out a transaction.· Cardholder (customer with the payment card)· Merchant (ecommerce website)· Payment Gateway· Payment Processor· Card Network· Issuing Bank· Acquiring BankNow, we are sure you know who a cardholder and a merchant is. So, let’s take a deep look at other players and their role in card transactions.<h2 class="heading-node" id="wpqhfks61">Payment Gateway</h2>A payment gateway (PG) is a service that authorizes transactions between online businesses and their customers in a secure and convenient way. In simple terms, it acts as a secure tunnel between the merchant’s payment portal and the payment processor.<h2 class="heading-node" id="ifw2nj4oj">Role of Payment&nbsp;Gateway</h2>A payment gateway is a central cog in the transaction processing ecosystem for both online and in-store purchases. In a transaction process, PG is the front-end mechanism that collects, authenticates cardholder information, and transfers the details to the merchant’s bank in real-time. Then, the transaction is processed in the merchant’s bank. All payment gateways are PCI-DSS compliant and SSL-certified.For example, imagine you go to an online store, pile up your cart, and click on check-out for billing. When you enter your payment method and details on the website, a payment gateway helps you transfer money to the merchant.<h2 class="heading-node" id="y8i3jrc7z">Payment Processor</h2>A payment processor is a vendor service that acts as a conciliator between the financial institutions and the merchant involved. It facilitates authorization of the transactions and relays the data to clear and settle the transactions for the merchant. Some payment processing services include card acceptance, PCI compliance assistance, security solutions, and customer support.<h2 class="heading-node" id="l1mstpbl2">Role of a Payment Processor</h2>In a transaction, the payment processor acts as a tunnel between the merchant and the customer banks. It takes the information from the payment gateway and connects with the issuer through the card network to authenticate and approve the transaction. The role of the payment processor is summarized below:· Seek authorization for a transaction· Connect with the cardholder’s issuing bank· Transfer funds into a merchant account<h2 class="heading-node" id="5l1rujvkp">Card Network</h2>A card network is a card infrastructure provider that facilitates payment card transactions between the issuer and the merchant. Conventionally, the network validates, processes, and sets the terms for the card transactions. The major card networks in India are MasterCard, Visa, RuPay, Discover, and American Express.<h2 class="heading-node" id="0cnrfhxyg">Role of a Card&nbsp;Network</h2>The card network acts as a communicator between the merchant’s acquiring bank and the customer’s issuing bank. It is responsible for transmitting the transaction information to the correct issuing bank, verifying the issuer’s authentication results, and delivering responses to acquirers.<h2 class="heading-node" id="1pkqmuofu">Issuing Bank</h2>An issuing bank is a financial institution or a bank that issues and distributes (credit/debit) cards to customers. It operates as an essential intermediary between the cardholders and the card networks. Despite the common misconception, card networks do not directly issue cards to customers because of the fundamental risks involved in issuing credit to customers. Only issuing banks do.For instance, if a credit card holder does not pay off his or her debts, the issuing bank will write them off. In addition, the issuer will become responsible for recouping the costs. It is important to note that specific card networks like Discover and American Express serve as their own issuing banks.An issuing bank is typically a commercial consumer bank, commonly known as the issuers. It provides the framework to facilitate reliable and regulated transactions and the rules and standards for payments performed on its system.<h2 class="heading-node" id="2esexjmnq">Role of an Issuing&nbsp;Bank</h2>A card issuing bank is one of the key players in the card transaction and payment processes. Each time a cardholder makes a purchase/payment using a card, the transaction moves through multiple financial institutions and systems before the amount is credited to the merchant’s bank account. The issuing bank assents the transaction based on the customer’s available credit or funds in the account. Upon receiving the authentication request, the issuer’s Access Control Server (ACS) reviews the information, verifies the cardholder using their form of authentication, and responds to the merchant. It also subjects the transaction to its defined set of fraud and risk regulations.In the case of a credit card issuance, an issuing bank generally manages everything on the customer front, such as payment portals, rewards programs, payments, collections, etc. It plays a crucial role in evaluating and determining the credibility of a chargeback. For example, when a cardholder notices a counterfeit or invalid charge made to their credit or debit card, they immediately contact their issuer to file a dispute, kick-starting the chargeback process. The issuer validates the complaint and communicates the chargeback to the acquirer. The acquirer then notifies the merchant to either accept or challenge the chargeback.The issuer is responsible for authenticating the cardholders’ financial information and account data to determine their creditworthiness. Based on the assessment, it extends the line of credit to the cardholders and offers financial support for transactions/payments made with its cards. In addition, the issuing bank also renders essential services such as card activation, setting the purchase limit, suspensions, and card renewals.<h2 class="heading-node" id="p8c1kk2db">Acquiring Bank</h2>An acquiring bank is a financial institution or a bank that offers merchant accounts to businesses. These accounts enable merchants to accept direct debit/credit card payments. An acquiring bank, otherwise known as an acquirer or a merchant’s bank, is a licensed member of a card brand and is responsible for creating and maintaining the merchant’s account. It also manages the communications between card networks and businesses.Usually, the acquirer acts as a payment processor or an Independent Sales Organization (ISO) and processes credit/debit payments on behalf of a merchant. It provides merchants with unique IDs to manage card payments. In turn, the merchants pay a significant fee to the acquirer for their services in the transaction process.Transaction processes are prone to various financial frauds, that include breach of sensitive customer information. As a significant player in the payment process, an acquiring bank ensures transaction security and strictly complies with the Payment Card Industry Data Security Standard (PCI DSS). In the event of a fraud or data breach, the acquiring bank stands liable for the compromised transaction(s).<h2 class="heading-node" id="xswoi0hlp">Role of an Acquiring Bank</h2>As the merchant’s bank, acquirers are responsible for routing the payment card transactions to the appropriate issuing banks. Once the issuing bank disperses the amount from the cardholder’s account, the acquirer accepts the payment and credits the money to the merchant’s account. Furthermore, the acquiring bank exchanges fund with various issuers each time a consumer makes a purchase, returns for a refund, or raises a chargeback. It then issues a net balance (gross sales deducting the fees and reversals) to the merchant for transactions during the given period.When a cardholder uses a card in a purchase, the acquiring bank will either accept or decline the transaction based on the card holder’s account information available on the issuing bank and card network’s database. This process entails two steps.Step 1: Authorization — Request the issuer to validate the card details. If sufficient funds are available in the account, the transaction will be completed.Step 2: Authentication — Verify cardholders’ identity based on the card details entered during the purchase. The authentication process is typically carried out using 3D Secure (3DS).<h2 class="heading-node" id="rdmedr6bw">Payment Processing Workflow&nbsp;</h2>All the parties delved upon above are integral players in the card transaction ecosystem. Transactions would not be viable without any one of them.Curious to know how payment card transaction flow works?Let’s take the example of a credit card payment for instance.Here you go!<ol class="list-node" id="nuiohlbzx"><li>The customer initiates a purchase. The purchase can be made in person, online, or over the phone.</li><li>The merchant evaluates the credit card details entered during the purchase and routes the information to the payment gateway.</li><li>The payment gateway routes information to the payment processor.</li><li>The payment processor communicates the authorization request to the appropriate card network.</li><li>The credit card network routes the request to the cardholder’s issuer.</li><li>The issuer validates the received information and approves/declines the transaction.</li><li>The card network sends the issuer’s response to the acquiring bank.</li><li>The acquiring bank redirects the authorization response to the merchant.</li><li>Based on the response, the merchant accepts or declines the transaction. It deposits all the authorized transactions with the acquiring bank.</li><li>The acquirer credits the merchant’s account and submits the transactions to the credit card network for payment.</li><li>The credit card network pays the acquirer and charges the issuing bank.</li><li>The issuer posts the transaction to the cardholder’s account.</li><li>The cardholder receives the monthly statement and makes payment.</li></ol><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/Banner-for-Issuing-and-Acquiring-Banks-blog_2.webp" alt="M2P Fintech" title="" id="lpb5e7uta" width="100%" height="253">Payment processing is an indispensable part of any business, both online and offline. In the stride toward a digital economy, ecommerce payment processing is a modish necessity.Intrigued? To know more about payment processing, write to us at <a class="link markup--anchor markup--p-anchor" href="mailto:business@m2pfintech.com" target="_blank" rel="noreferrer noopener">business@m2pfintech.com</a>.<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.

Anatomy of Payment Card Transactions in Ecommerce

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/Star_of_the_month__July_2021_V1_Star_of_the_Month_Word_Press1.webp" alt="M2P Fintech" title="" width="100%" height="317">Yay, it’s ‘Star of the Month’ time again!This July, we happily spotlight Gokula Krishnan, our industrious and dynamic M2Peer. We had a heart-to-heart chat with Gokul and unearthed his enigmatic fun side when he confessed his love for acting, bikes, rain, and Maestro Ilayaraaja’s music. He also took us on a quick fascinating trip down his career path, his motivations, and the work he adores.Well, we know you are curious now.Here are some nuggets from our chit-chat.<h2 class="heading-node" id="99ad">1.&nbsp;How do you usually start your workday?</h2>The moment I reach the office, the first thing I do is relax. This helps me to turn on a positive mindset to start a bright and fun workday. Then I proceed with my work schedule.After a quick catch-up with the admin team, I understand the requirements for the day. I then follow up on the admin tasks across all office locations.<h2 class="heading-node" id="da8b">2.&nbsp;What are your main responsibilities as an admin?</h2>The fun part about my job is that there are no set works or limits. Every day is a new day, and so are the incoming requirements. So, there are a lot of new learnings here.Right from managing couriers, laptops, identity cards, and other ad hock requirements, I need to ensure the tasks are completed on time. Once my admin-related works are completed smoothly, I will collate data to report to my team.For better understanding, let me breakdown the work process into three steps:· Understand the requirement· Coordinate and come up with solutions· Execute themIn a nutshell, I handle the planning, coordination, and execution of day-to-day administrative activities at M2P.<h2 class="heading-node" id="383e">3.&nbsp;How have you grown through the years as an M2Peer?</h2>My growth curve has always been an upward one. I have learnt and am learning, and there is still a long way to go.At M2P, I started out in the packaging section, then moved across teams and learned to develop my coordination skills for all requirements. Handling multiple requirements helped me learn about admin, finance, and HR departments. It is ideal to say that over the years, I grasped many things that still motivate me to bring the best out of me.<blockquote class="block-node" id="n4rv26itx">I am grateful to one of my mentors, Balakrishnan Elumalai, who helped me learn new things in finance.</blockquote><h2 class="heading-node" id="dff7">4.&nbsp;Is there a quote/saying that motivates you?</h2>I usually try to take an out-of-the-box approach to many things.Motivational Quote? Nothing of that sort.But music? Definitely!I am a huge fan of Maestro Ilayaraaja Sir. Whenever I feel like I need motivation, I listen to his melodies and get back on track instantly.<h2 class="heading-node" id="62b5">5.&nbsp;What’s that one thing your colleagues don’t know about you?</h2>Ah well, here it goes. I haven’t revealed this to my peers yet.I love trying my hands at acting in films. In fact, I’ve played an actor in a Tamil film that’s yet to be released in theatres.<h2 class="heading-node" id="de03">6.&nbsp;What inspires you the most about M2P?</h2>It’s the way the co-founders drive the organization. The culture they aspire to develop and the immense opportunities they create to learn and grow. They inspire me to hustle every day.Not just that. All M2Peers are equally welcoming and very helpful. They’ve reached out and helped me to learn many things from scratch. This empathetic and warm culture inspires me a lot 😊<h2 class="heading-node" id="a62a">7.&nbsp;What’s your idea of a perfect day?</h2>Each day is perfect for me. Going to bed with a dream and waking up with a purpose. But whenever possible, I love spending time with my family. Spending quality time with my dear ones is a perfect topping on my perfect day.<h2 class="heading-node" id="7a4e">8.&nbsp;What was your career path before joining M2P, and how has it changed?</h2>It wasn’t all easy when I started my career. Initially, I worked in the packaging section of a company. Then I went on to act in some films.But the real magic happened when I started my journey at M2P. I saw a new dimension unlock for me and a wonderful opportunity to learn. From the packaging section, to finance, and now admin-related works, I have learnt a lot of new things here at M2P. From the learning stage to exploring new horizons, I can see my career and personal life grow here.<h2 class="heading-node" id="b894">9.&nbsp;What are your hobbies/ interests?</h2>I love riding bikes alone. Driving in the rain while listening to Illayaraaja’s symphony is heaven on earth to me. I also love to play cricket at times.<h2 class="heading-node" id="fe7d">10.&nbsp;Anything else you want to share about M2P?</h2>M2P is the best place to learn, grow and have fun. As simple as that.I have never faced stress at work, as there are so many wonderful people around.<blockquote class="block-node" id="hkxiyaj4x">One word can sum up my journey at M2P — AMAZING!</blockquote>Cheers!<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.

Get to Know Gokula Krishnan, our Admin Hero

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/Creative-AePS-Blog-03.webp" alt="M2P Fintech" title="" width="100%" height="253">Over 85% of bank accounts in India are inactive.Research shows that the inactive accounts can be attributed to the issues faced by the underserved populace across remote corners of the country.<blockquote class="block-node" id="vrcfnudss">Bringing the underbanked and unbanked population into mainstream financial services is crucial for&nbsp;<a class="link au lm" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/" target="_blank" rel="noopener ugc nofollow">financial inclusion</a>, the foundation of economic growth.</blockquote>Digital payment modes such as mobile wallets,&nbsp;<a class="link au lm" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/" target="_blank" rel="noopener ugc nofollow">UPI</a>, contactless, payment cards, and QR codes have enabled universal access to financial services. But they still leave a gap for senior citizens, underprivileged, and inerudite sections of the society. These sections find it challenging to buy a smartphone or a payment card or even remember a passcode or PIN. Thus it becomes harder for them to join the digital Indian ecosystem.To resolve these challenges and to enable people from all walks of life to benefit from digital financial services, Aadhaar enabled Payment System (AePS) was brought into existence.Before diving in to know more about AePS, let’s have a quick look at what Aadhaar is and how it helps financial inclusion.<h2 class="heading-node" id="0c61">Aadhaar, driving inclusivity, and benefits</h2>Aadhaar is a 12-digit individual identification number issued by the UIDAI (Unique Identification Authority of India) on behalf of the Indian Government. In India, the Aadhaar number serves as a proof of identity and address. Any citizen of India is eligible to apply for Aadhaar Card. They can receive it via India Post, and as an e-Aadhaar downloaded from the UIDAI website.Aadhaar, the world’s largest biometric ID system, has been a crucial enabler of inclusive financial services in India. It captures fingerprints, retinal scans, and facial identification as chief authentication factors for transactions. So, the bank customer need not carry a smartphone or a payment card, or remember PINs and passwords.<blockquote class="block-node" id="vqdwnw2pm">More than 131 crore adults registered with Aadhaar have seamless access to banking services, insurance, and direct benefit transfers from over 700 financial inclusion schemes announced by the central and state governments.India’s financial inclusion index stands at 53.9, which is an impressive display of inclusivity brought about by Aadhaar.</blockquote>Aadhaar leverages advanced technology for transparent and targeted delivery of financial services, benefits, and subsidies without the hassle of intermediaries. Aadhaar saved the Indian government ₹2.25 lakh crores in Direct Benefit Transfers (DBT) by getting rid of fake beneficiaries and routing benefits to deserving people.<h2 class="heading-node" id="aab1">What is AePS?</h2>Aadhaar enabled Payment System (AePS) is a payment system that facilitates interoperable digital financial transactions through Aadhaar card-based verification (quick eKYC). It uses a Unique Identification Number or the Aadhaar number to make transactions effortlessly. Serving as a simple, secure, and user-friendly platform, AePS helps blue-collared workers, senior citizens, and the underprivileged to benefit from cashless transactions.AePS is a bank-led model, and any Indian resident can utilize the service just with their Aadhaar number that is linked to their bank account — Aadhaar Enabled Bank Account (AEBA). The Aadhaar enabled Payment System allows online transactions to take place at PoS (Micro ATM)/Kiosk/mobile devices through the Business Correspondent (BC) of any bank using Aadhaar authentication.Leveraging AePS, banks can empower all segments of society by increasing user-friendly access to cash deposits, payments, money transfers, and withdrawals. AePS use cases are accessible at any biometric-enabled touchpoint, viz., all-in-one integrated devices, mobiles/PCs/tablets, or any accessories that meet the technical specifications defined by UIDAI. By enabling AePS solutions, banks can enable seed status checks for direct benefit transfers, social security pensions and government subsidies.<h2 class="heading-node" id="f55b">What are the requirements for AePS transactions?</h2>AePS does not need a smartphone, document, or payment card. It only requires the customer to link the Aadhaar card to the bank account to capture the following info.<ul class="list-node" id="3lglglm5z"><li>Aadhaar Number</li><li>Biometrics-fingerprint identification</li><li>Name or Bank Issuer Identification Number (IIN)</li></ul>If not, just remembering the last four digits of the Aadhaar number will do. The Business Correspondent with an AePS machine or Micro ATM on assisted mode should be able to do any transaction for the customer.<h2 class="heading-node" id="ab00">Key objectives</h2>The main objective of AePS is to use Aadhaar number/ Virtual Identity to access AEBA for banking transactions through Business Correspondents (BC).It also aims to:<ul class="list-node" id="n7aofhjeh"><li>Securely facilitate&nbsp;<a class="link au lm" href="https://m2pfintech.com/blog/why-payments-interoperability-is-a-must-for-todays-generation/" target="_blank" rel="noopener ugc nofollow">interoperability</a></li><li>Enable quick eKYC services</li><li>Electronify retail payments as per RBI regulations</li><li>Build a full range of Aadhaar enabled Banking Services</li><li>Improve financial inclusion in India (According to the goals of GoI and RBI)</li><li>Enable intrabank and interbank transactions through a central switching &amp; clearing agency</li><li>Empower bank customers to use Aadhaar for banking transactions</li></ul>In addition, AePS helps deliver Government disbursements like NREGA, social security pension, and handicapped old age pension.<h2 class="heading-node" id="8be7">AEBA services</h2>With the help of AEBA (Aadhaar Enabled Bank Account), banks can offer the following services.<ul class="list-node" id="hakcr4xsc"><li>Cash Deposit</li><li>Balance Enquiry</li><li>Purchase</li><li>Cash Withdrawal</li><li>Mini Statement</li><li>Aadhaar to Aadhaar Fund Transfer</li><li>eKYC</li><li>Best Finger Detection</li><li>Demographic Authentication</li><li>Aadhaar Seeding Status</li><li>Self-Help Group (SHG) Transaction</li><li>BHIM Aadhaar Pay</li><li>Authentication</li></ul><h2 class="heading-node" id="7a75">How can customers use AePS?</h2>Customers can make AePS transactions in two ways.<ul class="list-node" id="uxpw6ofk8"><li>Through Business Correspondents&nbsp;— who usually represent the banks or entities. They are equipped with Micro ATM devices for facilitating customer transactions.</li><li>Through BHIM Aadhaar Pay at merchant locations&nbsp;— where the customer can make payments just by using Aadhaar number/VID and verify their identity using biometrics.</li></ul><h2 class="heading-node" id="614d">5 steps to perform an AePS transaction</h2>The steps below will guide customers to perform an AePS transaction easily.<ol class="list-node" id="9kqme9bxs"><li>Visit an ATM or contact a banking representative</li><li>Enter the 12-digit Aadhaar number and bank account number in the PoS machine</li><li>Choose a transaction type from the list- cash deposit, mini statement, withdrawal, balance enquiry, or fund transfer</li><li>Enter the transaction amount</li><li>Verify identity using biometrics (iris scan, fingerprint, or face recognition)</li></ol>Once all this is done properly, the transaction will be completed, and you can collect your receipt.<h2 class="heading-node" id="f14e">Why and how can banks and merchants offer AePS?</h2>For BanksBanks can reap the following benefits by offering AePS to their customers.<ul class="list-node" id="63zbggip1"><li>Reach more customers by engaging with Business Correspondent</li><li>Cut costs by leveraging digitization and reducing the printing of cheques and payment cards</li><li>Save time and money using a Business Correspondent instead of brick and mortar branches</li><li>Enable smooth interoperability among banks</li><li>Establish a quick and easy paperless KYC</li></ul>When banks wish to offer AePS to their customers, they just have to apply with NPCI / UIDAI. Then, they will be permitted to deliver AePS after the vetting and application process is completed.For MerchantsMerchants can accept AePS for cost-effective and inclusive payments. This will help them widen their customer base. Merchants can offer AePS by just applying to an authorized bank. After this, they can then receive digital payments for goods and services that are delivered from their customers.<h2 class="heading-node" id="1574">Greater security, trust, and inclusion</h2>When banks and merchants offer AePS, their customers can easily transact just with biometric authentication, either a face recognition, iris scan, or fingerprint identification. All these three aspects can never be forged, ensuring secure transactions.Banks and merchants can gain more customers through AePS as transactions can happen without the need of a physical card, passbook, smartphone or any other document. This will improve customer trust and confidence to make transactions in rural areas, especially among the underbanked segments. Banks across India are attributing enhanced revenue and cost-cutting to AePS offering.Want to add AePS to your payment ecosystem? Write to us at&nbsp;<a class="link au lm" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a><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.

Revolutionizing Financial Inclusion- Aadhaar enabled Payment System (AePS)

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/B2B-Experience_Main-Banner.webp" alt="M2P Fintech" title="" width="100%" height="529">Enhancing customer experience is imperative for any business. Even if the products and services are feature-rich, they can still be undervalued if the interface is boring and navigation inefficient. Poorly designed interfaces can lead to poor customer experiences that result in increased overhead costs and customer attrition. Whether you are in the B2B or B2C space, boosting customer experience, cutting cost and minimizing churn is crucial for survival.To drive customer loyalty, boost revenue, and maximize value proposition, great Experience Design (XDE) is vital.But how can you implement XDE without compromising security and compliance?We got expert help here.Catch Mahalakshmi, our Experience Design Lead, share her perspectives on how smart design thinking and a customer-centric approach can enhance user experience. Drawing from her experience, she implores deep into the compelling need for XDE in B2B space.<h2 class="heading-node" id="bd0d" style="text-align: justify">Breaking complexities</h2>Most of us have had frustrating experiences with mobile or web-based applications. One classic example is the company-mandated software we use to make expense claims. Imagine the last time you went on an HR portal to make an expense claim. The maze of forms, confusing terms and unnecessary steps makes you want to give up on even hoping for a refund. The next time you think about reimbursement, it feels like it’d be easier to spend your own money or give up on the expense altogether.B2B applications such as these have the potential to deliver huge value but are difficult to unlock. In simple terms, they are feature rich but complicated to use. Most B2B products are notorious for lousy user experience (UX) and lack customer support, even for common tasks. Though B2C products started out the same way back in the nineties, today their designs are more customer-centric, evolved, and matured.To break the complexities in the B2B design, the focus needs to shift towards “Experience Design” from just providing pure tech solutions.<blockquote class="block-node" id="mlljz4lwk">Offering a reasonably good user experience is now a basic necessity and not a luxury anymore.</blockquote><h2 class="heading-node" id="ecd9" style="text-align: justify">What is experience design?</h2>Experience design is the process of crafting products, services, and interactions that create enhanced experiences for users. The design should focus on solving customer problems, eliciting positive emotions, and driving repeated usage and references.<h2 class="heading-node" id="9007" style="text-align: justify">Why B2B companies lag behind in XDE ?</h2>Most B2B products have still not prioritized experience design. Some of them were built when the internet was in its infancy, and the technology required to provide rich experiences was non-existent.In the race to acquire customers, more focus is often given to features over experience during product development. To deliver quick go-to-market speed, product teams usually develop and code without a concrete experience design in hand. In most common cases, product teams are fully comprised of engineers and technology lovers and the product is solely built by them. Their focus is to ensure that the product provides many features and is functionally reliable.In cases where product teams try to understand user needs, usually, they tend to believe in “we know our customers” and rely on good intentions to set the direction for the product. The gut feeling makes some product teams skip user research, thus failing to dig deeper into user needs and goals.This happens due to a common misbelief that bringing UX to development adds time, effort, and resources to budgets. Other challenges B2B companies often face are getting access to users, the right resources, or acquiring the required data.<h2 class="heading-node" id="e281" style="text-align: justify">Do B2B companies not care about UX at all?</h2>Of course, they do! The good thing is that most B2B companies care about offering a good product experience. But tend to stay away from focusing on UX because of the above reasons. These days very few companies seem to not have overlooked the value of UX. However, even when companies are partially convinced about the need for good design, they don’t practice it actively or tend to procrastinate.<h2 class="heading-node" id="df7f" style="text-align: justify">Need to prioritize experience design</h2>Prioritizing experience design is now more important than ever, as business (B2B) buyers are also everyday users of consumer (B2C) digital products that, as a general rule, deliver a great experience. From the perspective of user expectations, the lines between B2B and B2C are getting increasingly blurry.Users spend an average of 6 hours daily online, constantly surfing the web and making decisions using consumer websites or mobile applications. This gives them the opportunity to compare any design with other services. Thus, even an average user is accustomed to high levels of experience, and this leaves them in a position to judge UX critically.Products with bad user interfaces and experience have difficulty meeting basic metrics like task experience, engagement, clarity, and satisfaction. The end result is loss of trust and loyalty, which takes a toll on brand value and is irreversible. Brands that earn a bad reputation find it very expensive to improve.<h2 class="heading-node" id="fd50" style="text-align: justify">Experience design, a strategic investment</h2>People who believe ‘XDE is expensive’ need to understand that including UX design in product development simply means a shift in investment that ultimately leads to more efficient project timelines. Through an upfront investment in prototyping solutions, testing them with users, and then iterating on the designs before development, a company can avoid expensive rework after the product is built.<h2 class="heading-node" id="03b6" style="text-align: justify">Fasten development, satisfy users</h2>A clearly defined UX process can speed up development by providing developers with well-defined and tested requirements and style guides. Rather than building and fixing a product, solutions can be created, rapidly tested, iterated upon and validated, and then developed with confidence.Developers can work faster because they don’t have to guess what it should look like since all their deliverables are clearly illustrated and documented.A well-designed product will undoubtedly result in higher user engagement, greater system efficiency, and satisfied customers.<h2 class="heading-node" id="bf29" style="text-align: justify">Align business goals and user needs</h2>UX designers should always strive to create a strategic user-centered design plan that enables them to understand and connect the overall strategy with the business goals and user needs while maintaining a positive balance between them. The plan should help establish active collaboration between cross-functional teams, a core requirement for any product to become successful.<h2 class="heading-node" id="bf18" style="text-align: justify">Boost loyalty, engagement, and sales</h2>User’s experience in business apps is as important as the value they deliver. The importance given to high-quality user experience (UX) is increasing exponentially, not just in the B2C context but in B2B as well. B2B companies find great user experience a powerful instrument to increase customer loyalty, engagement, and sales.And good UX doesn’t happen by accident.<blockquote class="block-node" id="ue5bqe39k">It is always a result of careful planning, diligent research, analysis, investment of time and money, and continuous improvement.</blockquote>Want to know more about implementing UX in your products?Write to us at&nbsp;<a class="link au mn" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a><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.

Elevating B2B Experience Design

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/BlogBanner_for-medium.webp" alt="M2P Fintech" title="" width="100%" height="358">Sustainability is broader than climate change. It is about building a society where upcoming generations can thrive. Today, the world is at a crucial juncture where sustainable decisions with long-term benefits are the need of the hour. The global movement toward building an agile, resilient economy has gathered pace. The financial services sector and worldwide regulators play a vital role in enabling a buoyant society by leveraging innovations and regulations in sustainable finance.Every year, the United Nations Climate Change Conference, otherwise known as the Conference of Parties (COP), gathers to deliberate solutions to climate change risks and access progress. Sitting at the heart of the hydrocarbon industry, the UAE has been elected to host COP28 in 2023. The nation’s investments in energy diversification and its highest level of climate ambition have resulted in the opportunity to accelerate economic growth, job creation, gender equality, and youth empowerment. The UAE has always encouraged financial ecosystems driven by technological advancements blended with climate-smart solutions. As a burgeoning fintech hub, the UAE is set to spearhead the quest for sustainability.<h2 class="heading-node" id="721f" style="text-align: justify">UAE’s commitment to sustainable finance</h2>As a global financial center, the United Arab Emirates acknowledges the role of sustainable finance in achieving economic growth, climatic goals, and energy diversification objectives. Subsequently, Abu Dhabi Global Market (ADGM) launched the UAE Sustainable Finance Working Group (SFWG) in 2019. The stakeholders include the UAE ministries, regulatory authorities, and other government bodies responsible for developing ecologically sustainable finance policies. In November 2021, the SFWG released a public statement of its commitment to sustainability objectives by adhering to the Net Zero by 2050 strategic initiative and establishing sustainable finance policies.Sustainable finance is a cornerstone in empowering the UAE and broader stakeholders to attain net-zero emissions targets. The Dubai Financial Services Authority (DFSA) and the Financial Services Regulatory Authority (FSRA) in Abu Dhabi are leading the way in accelerating the expansion of sustainable finance in the UAE. They are set to foster a thriving ecosystem for sustainable finance by enabling private capital investments. This is expected to improve the financial system’s stability, boost transparency, and achieve long-term sustainable development benefits.<h2 class="heading-node" id="e565" style="text-align: justify">Sustainable fintech alliance</h2>The MENA Fintech Association (MFTA), the leading voice and nexus of the Fintech community in the region, launched the Sustainable Fintech Alliance to foster MENA Fintechs in becoming leaders of sustainable approaches. MFTA aspires to help its members embrace and integrate sustainability as part of their organizations’ culture and values and create positive impacts in the wake of the increasingly acute environmental and social challenges.M2P is one of the founding partners of MFTA alongside Mastercard, Checkout.com, Codebase Technologies, YAP, Marshal, BPC, Taptap Send, and GPS. The partners are in collaboration with Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), and The London Institute of Banking and Finance MENA (LIBF). Together, the Alliance believes in harnessing the technological revolution and innovation to redesign financial services to reinforce sustainability.<h2 class="heading-node" id="5512" style="text-align: justify">Sustainability framework</h2>Sustainable finance is considered a strategy to facilitate projects that mitigate and manage threats associated with the broad range of environmental, social, and governance (ESG) risks.Against this backdrop, the DIFC devised a general Sustainability Framework to address existing gaps and challenges related to mainstream sustainable finance practices. It also seeks to augment the demand and supply of sustainable finance products and low-carbon, climate-resilient investment projects.The four strategic pillars underpinning the framework are Social, Environmental, Governance, and Government Alignment. The framework is designed to scale up the development of a business environment for diversified and innovative sustainable finance products. Another strategic intent of the framework is to empower the mobilization of private capital towards environmentally sustainable and climate-resilient investments.<h2 class="heading-node" id="a3fe" style="text-align: justify">M2P’s allegiance to sustainability</h2>As an earnest member of the MFTA, M2P is committed to implementing credible and transparent sustainability initiatives across global operations. Our team is constantly striving to innovate programs that are commensurate with the local culture, tradition, and governmental policies. We believe this will help us embrace the finesse of the Sustainability Framework and positively contribute toward the United Nations’ Sustainable Development Goals (SDGs) and Net Zero pledges.To mark our first step on the road to sustainability, we launched the “Better Half Program”, exclusive to our Indian offices. This program extends a hand to women who aspire to resume their careers after a break.<h2 class="heading-node" id="ec41" style="text-align: justify">Better-Half Program, a positive social impact</h2>We at M2P believe in creating a positive social impact by giving a chance to women looking to return to the workforce after a break. The break could be for any reason. We respect their choices and feel they deserve the opportunity to develop their careers.Recognizing the unique challenges women in India face after taking a career break, we launched the “Better Half Program.”- a formal employment program that helps women restart their careers and ease into professional life, starting with half a day’s work duration.Helping women hone their skills and be prepared for ‘Better’ career prospects and ‘Half’ a day of work is the rationale behind naming the program ‘Better-Half’. The better-half program facilitates a smooth re-entry to a full-time job through a gradual ramp-up of work hours.M2P is the world’s first company to make half-a-day work mainstream with benefits.Better-Half is a carefully curated program to restart one’s professional journey. Those selected are expected to contribute 5 hours in a day, making us the first company to make half-a-day work mainstream. The program is packed with all benefits that accrue to a person seeking full-time employment, including formal upskilling and participation in ESOPs.In addition, the program offers access to on-the-job projects, learning opportunities, and the possibility to work in a multi-disciplinary team. It extends community support, and those selected are mentored by experienced managers culminating in a chance to convert into a full-time role at the end of 12 months or whenever the participant decides to convert.<h2 class="heading-node" id="e9cc" style="text-align: justify">Fusing sustainability into fin and tech</h2>With over 1000 M2Peers globally, we aim to drive sustainable value through our digital products and effective ESG practices. Our vision and persistent efforts have enabled our customers to make headway toward a cashless ecosystem that fosters a financially inclusive society. We believe in investing transparent and consistent effort towards positive climate change, people advocacy, gender equality, racial diversity, and much more.Want more insights into our sustainability efforts? Write to us at&nbsp;<a class="link au mf" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a><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.

How M2P Maps Sustainability with Finance?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/July-Blog-Banner-V3_1_Main-Banner.webp" alt="M2P Fintech" title="" width="100%" height="253">Artificial Intelligence (AI) has transformed the physics of financial services. It has altered centers of gravity, isolated vulnerable bonds, and changed traits that are imperative to building a successful business. The ability to leverage data to drive process and talent optimization, product performance, and personalized interactions is now considered critical to driving value and efficiency.By combining technology and robust data, AI delivers insight-driven decisions to resolve challenges. Financial services companies are becoming future-ready by harnessing the power of AI and Machine Learning (ML) to enhance operational efficiency, mitigate risk exposure, and customize product development, distribution, and customer experience.<blockquote class="block-node" id="ll5niu0xi">According to PWC reports, AI will boost global GDP up to $15.7 trillion by 2030 and 45% of total economic gains will arise from AI-driven product enhancements that stimulate consumer demand.</blockquote><h2 class="heading-node" id="fec6" style="text-align: justify">Growth Potential of AI in Finance</h2>Artificial Intelligence in the global financial technology market is expected to grow at <a class="link" href="https://www.prnewswire.com/news-releases/ai-in-fintech-global-market-to-reach-24-17-billion-by-2026--301615420.html">27.6% CAGR and reach $24.17 billion in 2026</a>. The growth projection is attributed to its ability to increase security and efficiency, personalize customer experience, automate services, and unlock several other growth opportunities.91% of financial services companies reported driving critical business outcomes by leveraging AI investments (Source: <a class="link" href="https://www.nvidia.com/content/dam/en-zz/Solutions/industries/finance/ai-financial-services-report-2022/fsi-survey-report-2022-web-1.pdf">Nvidia Report</a>). Here are the benefits they realized.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/July-Blog-Banner-V3_1_Benefits-of-AI-Chart.webp" alt="M2P Fintech" title="" width="100%" height="253">AI-led data analysis and reporting surpass human intelligence to cut costs, accelerate revenue, and optimize service quality and product efficiency. It creates operational efficiency, predicts customer preference, detects fraud, and plans market expansions. Although some industry voices expect AI to replace 9% of all jobs by 2030, fintech companies are optimistic that AI will expand their workforce by 19%.<h2 class="heading-node" id="21fd" style="text-align: justify">How AI Transforms Banking &amp; Fintech</h2>Millennial and Gen Z customers prefer newer and faster technology over traditional systems. AI-based products and services enable FIs to meet the demands of today’s digital-age customers. It helps them enhance user experience through customized products and services.Listed below are sample AI-enabled services that global banks use to enhance customer experience.· Smile-to-pay facial scanning to initiate transaction· Micro-expression analysis with virtual loan officers· Conversational bots for basic servicing requests· Humanoid robots in branches to serve customers· <a class="link" href="https://m2pfintech.com/blog/5-reasons-why-banks-need-behavioral-biometrics/">Biometrics </a>to authenticate and authorize· Machine vision and natural language processing to scan and process documents· Machine learning to identify risk patterns and cybersecurity incidents· Real-time transaction analysis for risk monitoringAI technologies augment the overall customer experience by offering personalized recommendations, insights, and suggestions. In short, AI powers banks, insurers, asset managers, and fintechs to outperform peers, boost customer lifetime value, and increase market share.<h2 class="heading-node" id="fb07" style="text-align: justify">Top 6 Use Cases of AI in Fintech and Banking</h2>Over 75% of businesses use high-performance computing (HPC), machine learning, and deep learning for AI applications. While retail banking and capital markets benefit from deep learning, fintech firms rely on machine learning for the use cases below.<ol class="list-node" id="mglp0g4e6"><li>Transaction Fraud Detection</li><li>Conversational Chatbots</li><li>Robo-Advisors — Portfolio Optimization</li><li>Regulatory Intelligence</li><li>Credit Decisioning</li><li>Algorithmic Trading</li></ol>Transaction fraud detectionFinancial firms leverage AI and ML to identify, investigate, and mitigate transaction fraud, <a class="link" href="https://m2pfintech.com/blog/how-to-combat-money-laundering-2/">money laundering</a>, and <a class="link" href="https://m2pfintech.com/blog/crack-the-kyc-jigsaw-ease-onboarding-compliance/">KYC</a> discrepancies efficiently. Analyzing large datasets and user behavior, AI can decode risk factors and help reduce chargebacks, fake accounts, spam, account takeovers, and any other <a class="link" href="https://m2pfintech.com/blog/prevent-cnp-frauds-with-pci-3ds/">CNP</a> frauds in real-time. The fraud detection use case is critical in banking, card transactions, insurance, and lending platforms, to name a few.Conversational chatbotsChatbots and virtual agents fall under the conversational AI use case. They are quite different from conventional chatbots. By leveraging Natural Language Processing (NLP) and Machine Learning (ML) processes, they can understand customer intent, troubleshoot issues, and make small talk based on context. In financial companies, they can be used to collect customer information, deliver support, resolve queries, and redirect escalations to customer service representatives. These chatbots can be used across multiple channels and can deliver support via audio, video, and text.Robo-advisors — portfolio optimizationBuilding a strong financial portfolio is critical to maximizing returns on investments. Optimizing the portfolio helps balance the risk-to-reward ratio. AI-enabled Robo-advisors use predictive analysis to foresee future returns by analyzing the trends in the financial market. Investment companies can use this feature to make data-driven decisions that increase sales, optimize resource utilization, and improve operational capabilities. Robo-advisors are less priced options than conventional financial advisors. Even novices can drive value from investments with the help of Robo-advisors.Regulatory intelligenceThe banking and fintech sector must constantly update operations to stay compliant with governments and regulators. Using AI-led automation, compliance obligations are simplified, streamlined, and automated. The personalized, role-based dashboards provide regulatory intelligence for data-driven decisions at a lesser cost and time. Finance companies can stay up to date on compliance status and keep abreast with the latest regulations.Credit decisioning engineAI-based credit scoring can help expedite the assessment of creditworthiness and lending decisions. AI-led credit scoring models analyze real-time indicators such as current income, employment opportunities, and potential ability to earn, in addition to credit history, transaction patterns, work experience, and online behavior. This enables a sensitized and customized credit score assessment and inclusive lending decisions.Algorithmic tradingTrading is all about making profitable transaction decisions. AI-driven algorithmic trading uses pre-trade analytics and trading strategies to make lucrative transactions and groom efficient traders. Assimilating its own data using machine learning methods, AI-based algorithmic trading delivers real-time forecasts based on the analysis of price change patterns, currency values, global indices, raw materials, and other macro/micro indicators. It is super accurate in detecting market anomalies and helps reduce operational and trading risks.Now, these are not all. Apart from the use cases discussed above, AI can also help automate and expedite <a class="link" href="https://m2pfintech.com/blog/steps-in-credit-underwriting-why-using-an-alternative-source-of-data-and-behavior-metrics-will-be-of-help/">underwriting</a>, customer acquisition, and marketing optimization.To know more about the use of AI in banking and fintech, write to us at&nbsp;<a class="link au nr" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a><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.

How is AI Changing the Financial Industry? Top 6 Use Cases in Fintech and Banking

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/Creatives-for-Debit-Cards-blog_1M-1.webp" alt="M2P Fintech" title="" width="100%" height="284">Debit cards are a very critical part of the payment ecosystem. As of January 2022, there were over 940 million active debit cards in India. Averaging a transaction value of 3.5 trillion Indian Rupees per month, the volume is much higher than that of credit cards.Highly secure, debit cards are super easy and convenient to use. All you need to do is enter the PIN (Personal Identification Number) or tap the debit card for quick cashless transactions. As the debit cards are linked to bank accounts, they use existing account balances, so there is no question of falling into debt or paying interest charges. In fact, you can also keep track of spending and maintain a record of all your expenditures.<h2 class="heading-node" id="b7bd">What are debit cards?</h2>Debit cards are payment cards that are linked to bank accounts. They are issued by banks and NBFCs to individuals and corporate entities. And can be used for in-store and online payments, fund transfers, and cash withdrawals. The amount required for transactions must be in the cardholder’s bank account at the time of the transaction and will be transferred directly from that account to the recipient’s account in real-time.Here are the key components of a debit card.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/Creatives-for-Debit-Cards-blog_3M.webp" alt="M2P Fintech" title="" id="5csx15muw" width="100%" height="284"><h2 class="heading-node" id="da17">Types of debit cards</h2>Banks and NBFCs issue different types of debit cards. They are classified based on payment platform, technology, and usage.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/Creatives-for-Debit-Cards-blog_2M.webp" alt="M2P Fintech" title="" id="tae1ugzin" width="100%" height="284"><h3 class="heading-node" id="9d76">Payment platform</h3>·&nbsp;Visa Debit Card-Debit cards that use the VISA card network·&nbsp;MasterCard Debit Card-Debit cards that use MasterCard network·&nbsp;RuPay Debit Card-Debit cards that use the RuPay network established by the NPCI (National Payments Corporation of India)<h3 class="heading-node" id="4bba">Technology</h3>·&nbsp;Contactless Debit Card&nbsp;-Debit cards that are encrypted with Radio Frequency Identification (RFID) or&nbsp;<a class="link au mn" href="https://m2pfintech.com/blog/nfc-payments-simplifying-payment-space/" rel="noopener">Near-field communication (NFC)</a>&nbsp;technology are contactless debit cards. There is no need to hand over the card at the POS terminal physically. Just a wave or tap will do.·&nbsp;Chip &amp; Pin Debit Card- Debit cards inbuilt with a chip that helps store and transact data in an encrypted format are called Chip &amp; Pin debit cards. Transactions happen here with the help of a PIN (Personal Identification Number).·&nbsp;Magnetic Stripe Debit Card- Debit cards that come with a magnetic band that is swiped past its reading head while a transaction takes place is a magnetic stripe card.<h3 class="heading-node" id="7b59">Usage</h3>·&nbsp;Prepaid Debit Card-&nbsp;Prepaid debit card is pre-equipped with a fixed amount of money to spend and can be reloaded if required.·&nbsp;Virtual Debit Card-&nbsp;This is a digital debit card that helps pay for online purchases. They can be used through mobile banking applications.·&nbsp;Disposable Debit Card- This is a virtual debit card that can be created instantly. They are most suited for one-time online transactions.·&nbsp;International Debit Card-&nbsp;This debit card is used to make payments and cash withdrawals overseas.·&nbsp;Business Debit Card- Corporate entities can provide debit cards to their employees to make business purchases and cash withdrawals.<h2 class="heading-node" id="f613">RBI directive on debit cards</h2>Effective 1 July 2022, RBI brought in the following regulations for debit card issuance. Banks and NBFCs must strictly adhere to the directives.· Non-banking financial companies (NBFCs) can issue debit cards virtually or physically after obtaining approval from the RBI.· Banks shall only issue debit cards to customers holding savings/current accounts. Issuance of debit cards to cash credit/loan account holders is prohibited.· Banks shall not force customers to avail the debit cards. However, if a customer does not want a debit card, they cannot be denied other services from the bank.· Banks should develop a comprehensive debit card issuance policy and get approval from their boards and RBI. Subsequently, banks must roll out debit cards per this policy.· Banks must provide options for disabling/blocking the form factor via internet/mobile banking, IVR, SMS, and/or other modes.· In place of plastic debit cards, Scheduled Commercial Banks can issue other form factors after obtaining explicit consent from the customer.In addition to the above regulations, RBI stated, “It will not preclude the banks from linking the overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana accounts with a debit card.”<h2 class="heading-node" id="1f7e">Why banks and NBFCs issue debit cards?</h2>Issuing debit cards provides several benefits to banks and NBFCs. Key advantages are listed below.· Improve customer retention and engagement· Increase review through— Higher cross-selling opportunities— Contextual conversion of transactions into pay later loans· Removes NPA issues, as no interest or repayment charges are levied· Promotes digital transactions and&nbsp;<a class="link au mn" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/" target="_blank" rel="noopener ugc nofollow">financial inclusion</a>· Holds a moral compass on enabling accountability, budgeting, and spending within means<h2 class="heading-node" id="8bec">Issues in legacy card issuance platforms</h2>Gone are the days when banks issued debit cards using legacy infrastructure platforms. While the issuer’s focus is on catering to the needs of a versatile demographic with quick and customized card programs, legacy platforms are a huge hurdle. The legacy systems limit the agility and flexibility required to scale up multiple use cases, customize personalized card experiences, and quick go-to-market speed.It takes several months or even a year to set up a card program, which causes a lag in launching the product. Thus, businesses suffer from increased cost and effort and grapple with the ability to offer consumers the best digital card experience.<h2 class="heading-node" id="6462">Modern APIs to simplify debit card issuance</h2>An&nbsp;<a class="link au mn" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/" target="_blank" rel="noopener ugc nofollow">API</a>-first card issuing platform helps issuers develop unique debit card solutions customized to consumer expectations and business needs. The platform is hosted on a cloud infrastructure that accommodates scaling, as the Application Programming Interfaces (APIs) are amenable to changes in business logic and new use cases.<h2 class="heading-node" id="97ab">Boost GTM with our debit card ecosystem</h2>Using our API-based card platforms, issuers can go to market(GTM) with a full-fledged debit card program within weeks. We provide a holistic debit card ecosystem that encompasses everything right from applying for&nbsp;<a class="link au mn" href="https://m2pfintech.com/blog/the-bin-migrationpreparing-for-8-digit-bins/" target="_blank" rel="noopener ugc nofollow">BIN</a>, card issuer processing, identifying a card printer and fulfillment supplier, mobile wallet&nbsp;<a class="link au mn" href="https://m2pfintech.com/blog/how-does-payment-tokenization-work/" target="_blank" rel="noopener ugc nofollow">tokenization</a>, and a payment scheme contract. We also possess our own card switch on the issuer side (for routing transactions) and&nbsp;<a class="link au mn" href="https://m2pfintech.com/blog/why-is-risk-based-authentication-rba-critical-for-banks/" target="_blank" rel="noopener ugc nofollow">ACS</a>&nbsp;system (authentication gateway), which are features most other API providers do not have.Issuers can build a unique customer experience using custom controls, unique data-based transaction authorization, and issue virtual and disposable cards. APIs also help drive actionable, real-time transaction data to drive insights and program improvements.We power comprehensive program management that cuts across core issuing, processing, technology with mobile-first API-based infrastructure, and back office operations that include recon and chargeback processing. We also provide support for marketing and customer service via a chatbot interface. All these programs are quite flexible, so issuers may opt-in based on their level of readiness and level of complexity in card processing, technology, operation, risk management, and customer service.Want to know more about debit card issuance?Write to us at&nbsp;<a class="link au mn" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a><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.

Debit Card Issuance 101 - All You Need To Know

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/MicrosoftTeams-image-3.webp" alt="M2P Fintech" title="" width="100%" height="447"><a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">Neobanks</a> have led to tectonic shifts in every corner of the financial services market. The market embraces a new player almost every day with a prime intention to simplify financial services to meet the ever-evolving expectations of the digital-age customers.According to recent reports, some of the most prominent players in the market see over 140% year-on-year growth in their customer base. However, growth does not necessarily translate into profits. Even after more than five years in business, a large number of neobanks are operating at a loss.Globally, the neobank market continues to grow swiftly. But the real question is, how many of these banks will succeed and be sustainable?We have our very own Devang Mehta, Vice President of Business Development spill the beans on what makes a neobank successful. Devang delves into the pros and cons of the current business model and offers insightful strategies on how to refine vision and value propositions that will help build a neobank that is both profitable and sustainable.Being an avid neobanker and fintech enthusiast himself, he is certain that neobanks are here to stay and have a long way to go. He also shares his vision of a neobank that works like your relationship manager on the phone.Here are key nuggets from Devang’s wisdom.<h2 class="heading-node" id="852f" style="text-align: justify">What are the wins?</h2>First off, neobanks enable online transactions round-the-clock, 365-days. They offer easy, convenient, and on-the-go services. Users can transfer funds instantly at any time, from anywhere, without worrying about bank working hours/days. The business model is usually transparent and delivers real-time notifications detailing the reasons for the charges and penalties incurred by the customer.They have low operational costs due to the absence of physical branches, minimal credit risks, and fewer regulations. Thereby, customers benefit from lower prices and higher interest rates. With its lean business models and superior technologies, neobanks greatly emphasize customer orientation by offering personalized services and products.<h2 class="heading-node" id="eae8" style="text-align: justify">Where do neobanks fall short?</h2>Generally, neobanks operate on an exceptionally low margin as they tend to offer competitive low-cost pricing, higher deposit rates, and incentives to increase their customer base. With no revenue-generating products such as credit cards and loans, neobanks fail to make a profitable and sustainable enterprise. Having no solid revenue model is one of the biggest downsides of a neobank business.Building trust with the customers of the legacy bank is another key challenge for neobanks. The customers feel traditional banks are safe and reliable compared to the new-age banking technology. Although neobanks put forth quick, accessible, and round-the-clock services, a significant share of customers uses neobanks as their secondary account.Aside from the above, lack of standard regulatory framework, superlative customer expectations, and cost involved in the technology and development are some of the challenges that neobanks face.<h2 class="heading-node" id="2ba2" style="text-align: justify">Quest for profitable and sustainable neobanking - The “why” and “what”</h2>Devang believes the quest for a profitable and sustainable neobank starts with two questions:<ol class="list-node" id="gbcty8qf5"><li>Why do you want to create a neobank?</li><li>What do you want the neobank to be known for?</li></ol>Today’s consumers are presented with a gamut of financial services to choose from. Potential customers are keen to know what problems you are solving for them. A compelling vision for your neobank will make the right customers see how your “why” aligns with their pain points, goals, and objectives. “What” your neobank is will help you tap into the right customer segment to fulfill your purpose.For example, assume you are packing your bags and moving to another continent for a successful educational or career experience. It is one thing to assimilate the new environment but being tugged into a totally unfamiliar ecosystem for essential services and financial assistance like banking or debit card usage can knock you sideways.Imagine, you receive a sim card, a bank account, a checkbook, a debit card, and perhaps even insurance as your onboarding kit. Wouldn’t that be the ultimate welcome kit?That’s exactly how Devang envisages a neobank that caters to students, blue-collar job holders, and working professionals. Drawn from his experience as an expatriate, he aspires to build a neobank that offers quick and seamless financial services to immigrants arriving in a new country.Understanding your “why” and “what” will form the fundamental principle of your neobank’s vision. Once you have a clear conception of your vision, you must support it with comprehensive planning based on:<ul class="list-node" id="fmgvwr81y"><li>A defined target customer segment</li><li>Regulatory compliance in the respective market</li><li>Data protection/localization</li><li>Application with customer-friendly UI/UX</li></ul>Devang highlights that beta testing is paramount and the key to boosting the performance of a neobank application. Unfortunately, most players fail to include beta testing in their development life cycle in a rush to go to the market soon.Though neobanking is the perfect example of how convenient banking can be for users, it is still in its nascent stage. Whether you are an incumbent or a new player, agility and responsiveness to market trends are critical to surviving in an increasingly crowded digital financial services ecosystem. Therefore, it’s extremely imperative to understand, analyze, and constantly refine your vision to carve out your place in the market. The key is to remember what you want to achieve and why.Check out our blog on&nbsp;<a class="link au lg" href="https://m2pfintech.com/blog/7-steps-to-start-a-neo-bank-from-scratch/" rel="noopener">how to start a neobank</a>&nbsp;for step-by-step guidance.Curious to know how you can create a powerful vision and value proposition for your neobank? Write to us at <a class="link au mv" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a>.<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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