<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-8-6.webp" alt="M2P Fintech" title="" id="9lksxlzsk" width="100%" height="528">It’s been 3000 years. Not a single day passes without the usage of money.Be it physical or digital, the movement of money signifies value and hope to the millions involved. Money transfer operators, banks, and <a class="link" href="https://m2pfintech.com/blog/fintech-101-discover-the-3ws-of-fintech/">fintechs</a> have played a remarkable role in enabling seamless money transfer in a quick, secure, and convenient manner.<h2 class="heading-node" id="19yqmhede" style="text-align: justify">Shift from Cash to <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">Cashless</a></h2>Money was not always fancy as crisp notes and lightweight coins three thousand years ago. It had a humble beginning taking the form of cowrie shells, rail stones, farm produce, and livestock to be used as exchange. Slowly precious metals like gold, silver, and copper were used in trade. Then cash in the form of metal coins and currency notes came into prevalence.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Infographic-1.webp" alt="M2P Fintech" title="" id="zrmpc1bbw" width="100%" height="1321">Today, the world has transitioned from cash to a <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">cashless economy</a>. <a class="link" href="https://m2pfintech.com/blog/payment-cards-design-made-simple-heres-what-you-need-to-know/">Payment cards</a>, QR codes, contactless modes, cryptocurrencies, and <a class="link" href="https://m2pfintech.com/blog/central-bank-digital-currency-cbdc-101-a-primer/">digital currencies</a> are hogging the limelight as they are super convenient, simple, and secure ways of moving money and making payments.<h2 class="heading-node" id="2421" style="text-align: justify">Evolution of Money Transfer</h2>Changes in customer expectations, the need for enhanced experiences, and the growing cyber security issues demanded an evolution in money transfer. Payment apps, digital wallets, wearables, and real-time payment platforms are doing their best in fulfilling this quest by enabling quick, simple, and secure Peer to Peer (P2P) and Peer to Merchant (P2M) transfers and payments.Curious to know when and how money transfer began?Here you go.<h3 class="heading-node" id="d1f6" style="text-align: justify">Hawala</h3>The hawala system is the oldest form of money transfer that dates back to the 8th century. Known as the “money transfer without money movement,” it was actively used in India, the Middle East, and South Asia.Heavily based on trust between hawala agents, the transfer is usually done without any promissory notes. The hawala agents could be friends, family, or trusted acquaintances who settle debts between parties with cash, property, or services.Here’s how hawala works.The sender gets in contact with a hawala dealer A to transfer money to another country. As soon as the money, commission, and beneficiary details are shared, the sender receives a unique secretive code. Then the hawala dealer A contacts dealer B from the recipient country. Dealer B then delivers the amount to the designated receiver after revealing the secretive code. The unique code will reconfirm if the receiver is the right individual or not.The hawala system is still in use as an alternative to the remittance channels and traditional banking systems.<h3 class="heading-node" id="cfd9" style="text-align: justify">Wire Transfer</h3>Next in line was wire transfer, the electronic mode to transfer money through a global network. It was known for its fast, irreversible, foreign, or domestic electronic money transfers. In the 19th century, Western Union was the first money transfer operator to introduce wire transfers.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Infographic-2-V2.webp" alt="M2P Fintech" title="" id="8tw76fb9s" width="100%" height="661">Here the sender had to reach out to the office with the money, and the operator would send a message and ‘wire’ those funds to the destined location. Codes and passwords were used between the parties involved to ensure security. Soon wire transfer became an integral part of moving or exchanging money internationally, and it still is.<h3 class="heading-node" id="750d" style="text-align: justify"><a class="link" href="https://m2pfintech.com/blog/payment-cards-design-made-simple-heres-what-you-need-to-know/">Payment Cards</a></h3>Metal money was the first precursor to the present-day cards. It was issued by Western Union in 1914. A few years later, in 1928, the Charga-plate was introduced in the US, which was offered by merchants to their regular customers. They became popular among the department stores, as they could issue cards on their own. These were the first transactional cards in history.Later in the year 1946, John C. Biggins of Flatbush National Bank of Brooklyn introduced the “Charg-It” card, which allowed people in a two-square-block radius to charge purchases to the bank. Charg-It was an easy way for consumers to use the card at multiple businesses. Merchant however had to leave sales slips with the bank.Then came the Diners’ Club card in 1950, which was the first real <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit card</a>. Called a Charge Card, its cardboard form gained massive popularity and acceptance among users. It charged merchants a 7% fee on every transaction and delivered one monthly bill on dining expenses to the cardholders.A decade later, the turning point in card transactions happened. Banks introduced ATM machines. After this move, cards were used at ATMs to withdraw cash and make deposits.In the early 90s, credit card adoption in India was slow. People who travelled to foreign countries were the only ones to use the Diners cards in India in the 1960s. It nearly took 15 years for the Diners card to reach 8,000 registered users in India.In 1980, the Central bank of India brought in credit cards in association with Visa and Master Card. As a result, debit and credit cards became the dominant source for non-cash payments, which retailers and consumers readily accepted.<h3 class="heading-node" id="4276" style="text-align: justify">SWIFT Transfer</h3>In 1973, SWIFT transfers came into existence. They were typically wire transfers but done via the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network. This global messaging network helped improve the speed, transparency, and consistency of payments. It changed the perception of how the credit system worked and became a globally recognized provider of secure financial messaging.<h3 class="heading-node" id="f5e7" style="text-align: justify">Growth of Online and Mobile Money Transfers</h3>In the late 90s and early 2000s, electronic deposits, <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">digital remittances</a>, and mobile money transfers became prominent. The following payment systems facilitated money transfers from anywhere, anytime, without any hassles.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Illustration-NEFT-V2.webp" alt="M2P Fintech" title="" id="llvfslid3" width="100%" height="661"><ul class="list-node" id="4rj8aja12"><li><a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a></li></ul>Introduced by the National Payments Corporation of India (NPCI) and the RBI in 2015, <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">the Unified Payment Interface (UPI)</a> is an easy way to transfer money in real-time from one bank to another. Here, the UPI ID acts as the virtual payment address, and UPI PIN is the security password to authenticate the transaction. These are only two things required to transfer money. UPI eliminates the need to enter complex bank account details to initiate a money transfer.<ul class="list-node" id="u29byozm5"><li>IMPS</li></ul>Immediate Payment Service is an instant fund transfer service and can be simply defined as NEFT+RTGS. It ensures real-time interbank funds transfer in the Indian banking system provided by banks. The cap on transaction limit is set very low to avoid fraudulent complaints. In order to make an IMPS transfer, you just need to know the destination account holder’s IMPS id (MMID) and their mobile number.<ul class="list-node" id="nix10ovkr"><li>RTGS</li></ul>The ‘Systemically Important Payment System,’ Real Time Gross Settlement (RTGS) System was introduced in 2004. It is a secure electronic fund transfer system that provides real-time online settlements for bank transactions across the country.<ul class="list-node" id="h04bgsk39"><li>NEFT</li></ul>National Electronic Fund Transfer (NEFT) was introduced in 2005 and soon became one of India’s prominent electronic fund transfer systems. It is the most secure way of transferring funds from one bank account to another. Here, the funds are transferred using the Reserve Bank of India’s NEFT infrastructure, which is a nationwide payment system facilitating safe and secure transactions all over the country.Now, this is not all. There are several other money transfer modes that involve virtual and cryptocurrencies. We’ll cover them in subsequent articles.Feel we’ve missed out on something. Let us know in the comments below.<h2 class="heading-node" id="2754" style="text-align: justify">The road ahead</h2>Newer technologies and <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API-based</a> tech stacks are paving the way for quicker, robust, hassle-free money transfer processes. Banks and money transfer operators leverage fintech partnerships to enable great remittance experience, cut costs, and manage backend integrations and tech infrastructure. Robust security verifications and <a class="link" href="https://m2pfintech.com/blog/why-is-risk-based-authentication-rba-critical-for-banks/">risk management systems</a> promise a secure, real-time flow of money across borders.Want to know more about digital money transfers? Write to us at&nbsp;<a class="link au md" 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.

Tale of Money Transfers: From Hawala to One-click Remittances

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/banner-1.webp" alt="M2P Fintech" title="" width="100%" height="529">On April 7, the Reserve Bank of India made several key announcements concerning <a class="link" href="https://m2pfintech.com/blog/disruptive-business-enablers-prepaid-payment-instruments-ppis/">Prepaid Payment Instruments (PPIs)</a> at the Monetary Policy Committee (MPC) meeting. These measures could potentially impact the banking/FinTech sector and bring about changes in Digitalization and <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">Financial Inclusion.</a><h2 class="heading-node" id="04b0" style="text-align: justify">Interoperability of digital wallets is now mandatory</h2>All full-KYC PPIs and Payment Acceptance Infrastructure must be compulsorily interoperable.<a class="link" href="https://m2pfintech.com/blog/why-payments-interoperability-is-a-must-for-todays-generation/"> Interoperability</a> through <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a> among digital wallets was already achieved by RBI back in 2018, but it wasn’t a very widely used method for payment transfer. Now to extend the reach of digital rails, interoperability through UPI or otherwise, has been made a mandatory feature.<h2 class="heading-node" id="b0ff" style="text-align: justify">Increase in permitted outstanding balance</h2>A payments bank can now raise the limit of the end-of-day balance to INR 2 lakhs (previously INR 1 lakh). This move is to incentivize PPIs to move to a <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">full-KYC</a> structure and interoperability. The new move is expected to encourage financial inclusion of a wider customer base.<h2 class="heading-node" id="eda2" style="text-align: justify">Cash withdrawal from digital wallets</h2>Digital wallet holders can withdraw cash from their prepaid wallets at ATMs and/or swipe to pay at retail establishments. Previously, cash withdrawal was allowed only for full KYC PPIs issued by banks. The recent move brings uniformity among PPI players and bolsters the banking infrastructure, particularly in underserved areas. Bringing wallets at par with Bank Accounts in terms of service offering.<h2 class="heading-node" id="d9bb" style="text-align: justify">RTGS and NEFT enablement</h2>It is proposed that PPI issuers, card networks, White Label ATM operators, and Trade Receivables Discounting System (TReDS) can now take membership in CPS (Centralized Payment Systems) and access Real-time gross settlement (RTGS) and National Electronic Funds Transfer (NEFT). It was previously restricted to banks. This move is expected to improve the services of PPI issuers to their customers and minimize settlement risk.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/image.webp" alt="M2P Fintech" title="" id="tbptd8z27" width="100%" height="529"><h2 class="heading-node" id="3a06" style="text-align: justify">What does it mean for the Banking sector and FinTech?</h2>Through these recent announcements, the RBI has opened up the extent of Banking services, to larger FinTech players. It is expected that this move will help relieve stress on traditional banks that cater to a wide base with limited legacy technology.FinTech players can take over the load, offer banking services (except credit offering) on par with traditional banks, and penetrate underserved areas of India. It will further increase the penetration of digital payments in the country especially the Tier-3 to Tier-6 centers. According to RBI, these new guidelines will promote the optimal utilization of Payment Instruments like wallets, cards, etc. as infrastructures such as PoS devices, ATMs, QR Codes and Bill-payment touchpoints are still scarce.Though banks will continue to handle the crucial aspect of lending, it will be interesting to see how PPIs, wallets, and other payment systems will now compete in the banking ecosystem. It will be an evolving process for Fintech companies who are partnering with the PPI license holders to issue co-branded prepaid cards for providing loans to their customers. The array of services that these FinTech’s offers will diversify and they will be able to ensure user satisfaction by providing <a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">Neo-banking</a>-like facilities.These announcements acknowledge the capabilities of FinTech players and the gaps in the system that they can effectively fill. This is also an endorsement of the enormous potential of the industry. It remains to be seen how payment companies ride this wave, innovate, and offer end-customers seamless payment experiences.<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.

RBI’s new guidelines for PPIs. How will it impact the FinTech industry?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-16.webp" alt="M2P Fintech" title="" width="100%" height="383"><blockquote class="block-node" id="taxe2h50t">UPI transactions clock 1.61 billion transactions worth Rs 2.98 trillion in AugustDigital payments up by 23% with transactions valuing at a record high of $113.4 Trillion</blockquote>Source- Business Standard<blockquote class="block-node" id="osu78ucl8">India will provide approx. 2.2% of the world’s digital payment by 2023 — Pwc &amp; PCI</blockquote>Amazing right! In the race between digital payments vs. cash, the former is definitely taking the lead. Right from a cash-dependent economy to cashless transactions, we slowly see the shift. This trend is now fueled by the pandemic, COVID-19. Starting right from cards to UPI, digital payments have taken over in both online and offline methods. Nevertheless, UPI payments are setting up a record high as 1.61 billion transactions.But this is not the first time that digital payments have seen a spike in our country. The history-defining move of Demonetization brought digital payments to the fore. Many opened bank accounts or started using their bank accounts for depositing their cash reserves. Incidentally, it also prompted many to dust their debit cards.Soon, several incentives and schemes were introduced to encourage this transition. Also, the year 2016 saw a significant milestone with the introduction of UPI in August. Coupled with the availability of the internet, digital payments had the right boost. Starting from grocery stores to street vendors, UPI, and other modes of digital payments had taken root.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-10.webp" alt="M2P Fintech" title="" id="ah9a6k969" width="100%" height="383">It was a great learning curve, with many technology players coming to the forefront. Innovating payments and user experience became a priority. But after a while, the spike plummeted as currency notes and coins rose in circulation.Now, the onset of the pandemic and nation-wide lockdown has made people embrace digital payments. The pandemic has also brought forth a two-pronged result where businesses are going digital, and some are losing their footing. But, the retail section seems to have stayed afloat by going digital. So, what took four years to adopt is now the norm within months of lockdown. With new customers on the rise, merchants are currently searching for tailored and localized payment solutions.COVID has pushed people to adopt online shopping where digital payments rule and cash on delivery is frowned upon. Even those who are tactile by nature are now supporters of online shopping. Online grocery shopping is now on an all-time high with e-commerce spearheading the cause.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-9.webp" alt="M2P Fintech" title="" id="s6b81zced" width="100%" height="383">So, it puts forth the question of how digital payments got back their spotlight?COVID has made people wary of physical contact, so digital payments were the only solution. Also, here are a few more points that answer the above question:<ol class="list-node" id="erdc35dw2"><li>It requires minimal or zero contact. Minimal contact if it is cards and zero contact if paying through UPI or mobile wallets.</li><li>You don’t need to carry a loaded wallet as right from cab drivers to popular stores, digital payments are available.</li><li>Forget rummaging around for change; your card or wallet will let you pay the exact amount.</li><li>It is there 24/7, and you don’t need to spend long hours outside the ATM standing in those social distancing circles patiently waiting for your turn.</li></ol>Recently, a study conducted by The Red Seer Consulting deduced that India’s digital payment will reach Rs.7,092 trillion by 2025. And that is not all; Digital payments are now the favored choice of the millennials. They have gone through a shift of reluctant usage to a must-have tool for every day.To know more digital payments write to us at <a class="link au mg" 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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