FASTag & Fraud Risk – Awaiting the Road to Safer Datafication!

The road ahead for India of developing a toll-operate-transfer model has an optimal FASTag implementation at its core, coupled with a robust data-forward centralised system. FASTag – the government of India’s electronic toll collection mechanism – is made official since 15 January 2020. While the government cited a lack of availability of FASTag tags as a reason behind yet another delay in granting it an officially mandating subscription obligation for car owners, the pertinent issue that stares in the eyes of the policymakers is concerning the UPI (Unified Payment Interface) subscriber data safety.

It has been reported that in certain instances, the notorious digital fraudsters have succeeded in applying novel ways to meddle with people’s UPI PIN data, access to which the fraudsters gain via manipulative means – acting on the pretext of simplifying for the potential registrants the online (afresh) FASTag registration.

On a couple of occasions, reports have surfaced revealing the modus operandi used by fraudsters wherein they pretend to be calling from either of the registered partner banks; sharing via SMS a fake link to a (deceitfully titled) online form seeking such sensitive subscriber details as FULL NAME, registered mobile number, UPI PIN data, etc. on the pretext of FASTag wallet activation.

It is vital for the FASTag subscribers at this stage to realise the fact that such baseless registration means proposed and pitched by fraudsters are not the official platforms introduced by the NPCI (National Payments Corporation of India) to register for FASTag access. Be mindful that FASTags can only either be self-activated via the MyFastag app or can be activated by visiting the designated (partnering) bank branches nearby.

Therefore, readers should clearly understand that no FASTag subscription or activation formalities are officially carried out on phone calls. Likewise, there is simply no need for sharing any PIN or password in such fraudulent online forms. Clicking on any fictitious SMS links received from doubtful sources should strictly be avoided. Kindly also be advised that there also exists an alternative of registering for NHAI Prepaid wallet which is rechargeable and can be paired with FASTag to initiate safe payments.

As per an Economic Times report, around 6.4 crore FASTag transactions, valuing Rs. 1,256 crore, got processed in December 2019, compared to 3.4 crore transactions valuing Rs. 774 crore in November – as per the FASTag transactions’ data released on January 1, 2020 by the National Payments Corporation of India. Considering the magnitude of transactional volume and the monetary value, it’s vital to sensitise people regarding a safer FASTag navigation pathway especially in its initial years of the rollout; for ensuring safety in the subsequent payment phases, a robust security protocol of NPCI already exists in the form of the Fraud Risk Management mechanism.

Decoding FASTag: How National Electronic Toll Collection (NETC) Works?

The National Payments Corporation of India (NPCI) has built the RFID-enabled National Electronic Toll Collection (NETC) program poised to fulfil the electronic tolling needs of the transport market of India. For the same objective, NPCI now offers a national interoperable toll-payment solution that also inculcates within its scope the offering of clearinghouse services for settlement of disputes. Within its spectrum of offering ‘Interoperability’ (applied to NETC system), it includes a common set of procedures, business rules and technical specifications allowing a customer to utilise their FASTag as a payment mode on either of the toll plazas, regardless of the specifics of the acquirer of the toll plaza.

The various objectives of NETC FASTag are: i. creating a compatible and interoperable toll-collection ecosystem to use nationally. ii. through a simple and robust framework, increase transparency and efficiency in transaction processing. iii. achieving the sub-goals of the Government of India of electronification of retail payments, reducing air pollution via decreased toll plaza congestion, plummeting fuel consumption and promoting cashless transactions, enhancing audit control via user account centralisation

NETC – the technical ecosystem on which the FASTag is based – supports multiple issuers and acquirers authorised for the NETC program. The transaction request from the Toll Plaza is sent to the Acquiring System for transactional validation, and it then moves further so as to finally reach the NETC Switch. The NPCI routes these transactions to the relevant Issuer Bank for debiting the tag-holder account. During the entire process, a particular transaction travels through an 8-step (LEGs) process.

The NETC transaction process flow emanates at the Toll Plaza System (capturing the FASTag data, viz. Tag ID, TID, Vehicle Class, etc.) and travels through the Acquirer Bank for processing, which then sends a request to the Online Switch & Mapper (i.e., the NETC validation mechanism that responds with such details as Vehicle class, VRN, Tag Status, etc. – upon an absence of the Tag ID in NETC Mapper, a response is issued stating that the Tag ID isn’t registered). Following the receipt of a Tag ID validation from the NETC Mapper, the acquirer host calculates the relevant toll fare and emanates a debit request to the NETC system. Then the NETC system switches the debit request to the relevant issuer bank for debiting the customer account.

The Issuer host then debits the linked tag holder account and sends an SMS alert to the tag holder. It also sends the response message to the NETC system. Upon failing to send the response within the defined TAT (Turn-Around-Time), the transaction is considered as Deemed Accepted. The response is then notified to the acquirer host for notifying the respective toll plaza system.

FASTag is LIVE! Buy, Activate, Recharge, & More Info

FASTag

Introduction: The Policy Brief

The National Payments Corporation of India (NPCI) and National Highways Authority of India (NHAI)-introduced National Electronic Toll Collection (NETC) mechanism, FASTag – having an embedded chip and antenna – is now live. Operational at 604 toll plazas across national and state highways (click here for the full list), w.e.f. 15 Dec. ’19 (although initially the roll-out of FASTag was scheduled for 1st Dec. ’19 – per the letter sent by the Ministry of Road Transport and Highways to the NHAI), FASTag enables automatic collection of toll charges. The government then decided to provide enough time for vehicle owners to switch to FASTags – hence the deferred extension.

Dubbed to be the leading disruptor on India’s national highways, FASTag was first envisioned in 2014. All cars, jeeps, vans, buses, trucks and, commercial and private off-road vehicles that pass the toll booths on national highways will now pay FASTag-enabled toll. The FASTag payments at national highways are incentivised with a cash-back scheme of 2.5% – for eligible customers – until March 31, 2020. FASTag is also poised to facilitate seamless traffic monitoring and fitting policy revisions.

Previously, only a single hybrid lane was to be allotted at every toll plaza having FASTag and other modes of payment – facilitating passage and monitoring of over-dimensional or over-sized vehicles. Depending on the traffic situation at high-traffic volume fee plazas, not over 25% ‘FASTag lane of fee plaza’ were planned to be temporarily converted to hybrid lanes – per the instructions given earlier by the ministry to the NHAI.

At this stage, it was to be ensured that the minimum number of the declared FASTag lanes be converted into hybrid lanes for the time being. Further, a minimum of 75% lanes of every fee plaza were to remain declared and operational as FASTag lanes so as to incentivise the vehicles carrying FASTag.

The One Nation One Tag – FASTag ensures interoperability via cashless electronic processes at toll booths. According to the Memorandum of Understandings (MoUs) that the states and the highways authority signed, the states’ are poised to receive 50% of the capital expenditure (capex) for the toll infrastructure construction.

Buying FASTag

Buying FASTag is possible by visiting any of the Point-of-Sale (PoS) locations at Toll Plazas or PoS outlets of the NETC Member Banks or their distribution agents or their Sales offices. Otherwise, FASTag can also be availed by applying online at the respective issuer bank’s website or by visiting this NHAI portal link. If you have bought FASTag from Amazon, you will need to download the MyFASTag App and link it to your bank account.

Activating FASTag

  1. Do-It-Yourself Activation: FASTags don’t have banks assigned in advance as they are (bank) neutral at the time of buying from a POS terminal or online platform. The online FASTag can be activated by yourself when you enter vehicle details in the ‘My FASTag’ mobile app. There also exists the flexibility to link the FASTag with any of your current bank accounts via the My FASTag Mobile app. The NHAI Prepaid wallet facility is also offered in My FASTag mobile app for you to load money and get your toll fee debited from the prepaid wallet as against getting it debited from your bank account directly.
  2. Activation by Certified Bank Branch: Alternatively, you can also buy FASTag at the closest certified bank branch and can then link the FASTag with your current bank account.

Document Submission for FASTag

A customer is required to submit the following documents along with the application form for FASTag:

  1. Signed FASTag application form, given by issuer bank that customers must fill and submit to the bank.
  2. Registration Certificate (RC) of the vehicle.
  3. Passport size photograph of the vehicle owner.
  4. KYC (Know Your Customer) documents as per the category of the vehicle owner.
  5. A valid driving license.
  6. Vehicle image (optional).

Recharging the FASTag

Recharging the FASTag account is possible in the denomination of Rs. 100. The maximum amount of recharge is decided depending on the type of vehicle and account link to FASTag. In case the FASTag has previously been linked with your bank account, loading money individually in a prepaid wallet will not be necessary. Although, maintaining enough balance in your FASTag-linked bank account to allow for toll payments is necessary. NHAI prepaid wallet can be recharged via different channels, viz. payment via cheque or via UPI or debit card or credit card or NEFT or Net Banking.

  1. Limited KYC FASTag account holders can’t have a balance of over Rs. 20,000 in their FASTag prepaid wallet. The monthly reload limit is Rs 20,000.
  2. In full KYC FASTag account holders aren’t permitted to have over Rs. 1 lakh in their FASTag prepaid wallet (no monthly reload cap exists).

Recharging a FASTag via the BHIM UPI app is also possible – although, buying FASTag via the BHIM UPI app isn’t possible.

Know FASTag – The NextGen Smart Electronic Toll Collection System

NHAI (National Highways Authority of India) has introduced FASTag – a program for Electronic Toll Collection (ETC) on Toll Plazas on National Highways. FASTag is a simple to use electronic toll collection system. FASTag is a refillable tag that allows automatic deduction of toll charges – making it swift to pass the toll plazas. The Indian Highways Management Company Limited (IHMCL – a National Highways Authority of India incorporated company) and National Payment Corporation of India (NPCI), are executing the FASTag program in cooperation with the Toll Plaza Concessionaires, FASTag Issuer Agencies, and Toll Transaction Acquirer (certified banks).

FASTag

With FASTag, stopping for the cash transaction at toll plaza is now passé. Linked to a prepaid account that is used for deducting the applicable toll amount, the FASTag uses Radio-Frequency Identification (RFID) technology. It is affixed on the windscreen of the vehicle after activating the tag account. Touted to be a fitting solution to make the hassle-free trip on national highways a reality, FASTag is currently operational at 180 toll plazas across national and state highways of India.

FASTag, currently, can be bought from official Tag issuers or (22) certified Banks via various channels like Point-of-Sale (POS) at National Highway toll plazas, and even on the e-commerce platform, Amazon. Having a validity of 5 years, after purchasing FASTag, you will need to recharge or top-up it only as required. It offers an almost non-stop movement of vehicles all the way through toll plazas. The convenience of FASTag-enabled cashless payment of toll fee with nation-wide interoperable ETC Services has numerous advantages.

The FASTag benefits are as follows: 1. Saves Fuel and Time. 2. SMS alerts for toll transactions, low balance, etc. 3. Online recharge (via Credit Card / Debit Card / NEFT/ RTGS or Net Banking). 4. No need to carry cash – ease of payment. 5. Web portal for customers. 6. Reduced air pollution. 7. Reduced use of paper. 8. Minimised instances of toll payment hassles. 9. Enhanced highway management via analytics. 10. Toll plaza management made easy. 11. Eased central monitoring.

FASTag adoption was initially voluntary. However, starting 15th December 2019, FASTag adoption is mandatory – it’s applicable to all categories, kinds, makes and types of vehicles. FASTag is useable for as long as they are legible at the toll plaza and are not tinkered. However, it should be noted that using one FASTag is possible only for one vehicle.

FinTech 2.0: What’s Next for Financial Inclusion?

A new era of financial inclusion has begun with the FinTech ecosystem getting considerably ingrained in the financial services. The overall objective of FinTech is to serve the financial demands of those segments of the population which were so far marginalised from the core priority segments of traditional financial services. In this way, FinTech contributes to the furtherance of financial inclusion.

The next generation FinTech startups are introducing innovative solutions powered by affordably costing technology, leading to strategic partnerships forming between traditional banks and FinTech players. With this, we are also witnessing new digital products or exclusively digital banks. The necessary efforts needed from the Government were in the form of intervention are: i. via development and operationalisation of FinTech policies. ii. launch of smart cities, portals for instant approval of loans for small and medium scale enterprises (SMEs), etc.

The FinTech wave 2.0 wave is spread in two phases: i. 2014-2018. ii. 2018-2020. The first phase (2014-2018) was meant to develop alternative, disruptive, technologically powered business models across multiple segments (having financially underserved as its target segment). The second phase (2018-2020) has as its focus the creation of a cost-efficient and sustainable FinTech ecosystem. The target objective of the second phase is reducing cost of access to financial services for the next 500 million.

The target segments of FinTech 2.0 for the urban regions are: migrants, domestic servants, micro-establishments, and small entrepreneurs; the target segments of FinTech 2.0 for the rural regions are: agricultural labourers, women, MSMEs, and small entrepreneurs. In terms of the formal credit system, the SME credit supply still stands at INR 17.9 trillion (as reported by Economic Times). While the industry stakeholders are initiating serious efforts to promote digital payments, not even 2% merchants have point of sale (PoS) based cashless payments infrastructure enabled in their system (as reported by Economic Times). Furthermore, in the context of India, there are 2 aspects that require a due consideration: (i) enhancing the accessibility of financial platforms using FinTech; (ii) examine probable risks that could be posed by FinTech implementation. 

Research indicates that firms have largely channelled their efforts towards specific customer transactions (e.g., digital payments, loans subscription, insurance products, mutual funds investing, etc. The mere transactional form of approach needs to elevate to a more promising relationship mode. This is to say that FinTech 2.0 needs to consider strengthening the financial health of the entire spectrum of the service recipients; beyond just specific transactions. A key metrics in this case can be the ratio of customer lifetime value (LTV) to customer acquisition cost (CAC). Digital finance is rightly poised to result in elevated financial inclusion, growth of financial services to non-financial sectors, and in facilitating the reach of basic services to individuals—given that close to 50% of people in the developing world now own a mobile phone (World Bank, 2014). With FinTech 2.0 on anvil, we can expect a “seamless specialisation” across core elements of the value chain wherein different providers collaborate to deliver cheaper and simplified propositions to their customers.

Gig Economy & the Next Wave of FinTech and Banking Innovation

The Gig economy sector – a free-market system hosting temporary positions, wherein organisations contract with independent workers for engagements usually having a shorter-term – encompasses all the characteristics of a promising financial services opportunity. The sector accounts for a levelheaded income and volume – millions of professionals forming a largely unserved market. Truelancer reports that while the global freelancer market stands at $2-3 billion (growing at an annual rate of 14%), India, in its current phase of gig work development, accounts for $1 billion of the global market. As of 2019, India accounts for 15 million freelancers in its gig economy workforce actively offering their specialised services on independent contracts in IT and programming, HR, finance, marketing and sales, design, animation, content management, and academic writing industries. TeamLease reports that an estimated 56% of fresh employment in India is getting created by the gig economy companies, incl. the blue-collar and white-collar workforce. 

The alarming irony of the gig economy in India, however, is the fact that the engaged workers are not receiving any social security, insurance, etc. As a result, there is a looming danger that it might just widen the already pervasive and unregulated informal labour base of India – since economists are of the view that in India, 35% of the workforce has been associated with casual labour. The gig economy sector of India is also perhaps one of the most financially underserved areas. It is so because traditional financial firms follow stringent credit policies and they haven’t yet recognised flexible work sector and the opportune nuances of other new-age professions, for e.g., a freelance home chef, traditionally isn’t eligible to avail a loan from a bank. Also, as for the investment front, products like systematic investment plans (SIPs) do not offer flexibility or lenient terms in regards to the regularity of payment. A real-time analysis of freelancers’ credit capacity can allow lenders to “de-risk” gig worker loan application, if two core parameters of borrower evaluation are satisfied – “capacity to pay” (a borrower’s capability to repay) and “willingness to pay” (a borrower’s tendency to pay – admit that even people who earn hefty money aren’t at all times dependable and creditworthy).

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New Payment Methods Helping the Gig Economy

Lots of jobs – fast pay! It’s time to redefine the Gig way!

India spearheads the global Gig Economy with a 24% share of the online labour market, according to Oxford Internet Institute’s ‘Online Labor Index’ – also, as per a Truelancer Freelancer Survey, around 1.5 Cr people in India are working independently in different Gig Economy sectors, reports Inc42. Around 72% of all gig projects were in large corporate and professional services in 2018-2019, reports Economic Times. 

The statistics presented above project a promising picture of the future of the Gig Economy in India. The Gig Economy has been fuelled by an elevation in the requirement of on-demand workers, jobs having a short-term nature, and an incursion of independent and migrant workers. This gives rise to the replacement of full-time employees by independent contractors and freelance workers.

The boosting rise in peer-to-peer apps in a swerve of markets, viz. travel, accommodation, food delivery, etc. has contributed to legitimising the gig working economy. The workers in this economy of gig work are experiencing a paradigm shift in the nature of work and employment. As an outcome of this, new avenues and challenges for payment networks have arisen to accommodate the requirements of this workforce of the future.

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BON Credit: The Gig Workers’ Credit Destination

When referring to the developments in the FinTech space in India in the recent times, the one underlying issue that still remains to be addressed in its promising roadmap is the dire need to inculcate banking (& financial) services till the last mile of the population. With the World Bank’s Global Findex Report data stating that the number of adults above the age of 15 not having a bank account in India is 191 million – meaning that 1 in every 5 Indians doesn’t have a bank account. So, in essence, lack of financial inclusion exists – though, with FinTech, real possibilities exist. The historically limiting factor of the extent (reach) of financial services was initially attempted to be resolved via the offering of direct transfer benefits (DTBs) incentive – although, even with this their overall income wasn’t convincing enough to persuade them to subscribe to regular banking services.

However, the changing times have now made available speedy training programs even for the unskilled workers – making them, to some extent, a recruitable earning resource for the platform companies, such as Uber, Ola, Swiggy, etc. The global ride-hailing aggregator, Uber, for instance, provided skill development and driver training to the unskilled for bettering their livelihoods. One such initiative was taken by Uber in 2016 when it partnered with the NSDC (National Skill Development Council) and Maruti to train 1 million unskilled workers as drivers. The arrival of new work avenues led to the framing and implementation of discriminating work policies and dismal remuneration practices, repercussions of which weren’t in favour of the compelled informal workforce.

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FinTech India: Evolution, & Beyond

The government of India began liberalising the banking industry of India in the 1990s as it began introducing technology-led frameworks in the banking ecosystem. This also paved way for the then afresh banking technologies, viz. MICR, EFTs (electronic fund transfer), etc. However, these initiatives emanated majorly from the side of the government – and, hence, started lagging after a while. In her efforts to imitate the global banking and financial services’ developments, India also started embracing the startup culture to develop the financial technology (FinTech) space in the 2000s with the offerings centered on consumer-facing services.

The first development was the introduction of the banking correspondent (BC) meant to augment the penetration of financial services in rural India households. With this, the agents began having at their disposal the financial transaction apparatus that allowed BCs to provide an affordable alternative to setting up branches for financial institutions (FIs) in order to serve the rural people. This attracted FinTech startups like Eko and FinoPayTech to develop their service base with the BC model at its core. Then, prominent FinTech startups including Paytm, MobiKwik, Oxigen, etc. emerged in 2010 – when, payment services startups also began operating by offering mobile-wallets, e-bill pay, etc. Following this, various FinTech startups emerged essentially serving in segments such as personal finance and investment management, and lending. The interest of venture capital (VC) firms also peaked during 2014 and 2016 when the growth in investments (funding activity) in FinTech reached 40%.

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FinTech India: Uncertainty, Challenges, & More

The FinTech industry of India has been showing the sign of a promising future ahead as the government has also keenly embraced a digital future. However, the FinTech industry still has its own share of hurdles that require effective solutions. The apparent hurdles include the uncertain regulatory environment that impacts the business conduct of FinTech companies. For instance, September 26, 2018, Aadhaar ruling of Supreme Court (SC) preventing private companies from using the biometric data of Aadhaar affected the operating strategies of banking and financial services firms. With access to the Aadhaar data, firms could gain remote access to rural markets and urban poor segments affordably.

Following the SC Aadhaar ruling, technology firms are offered a feasibly safer alternative by the Unique Identification Authority of India (UIDAI – administrative authority of Aadhaar that also administers the (offline) citizen registry. Now, any entity that wishes to access Aadhaar numbers online will have to download either the new QR codes or XML (Extensible Markup Language) format from the UIDAI portal to access a 16-digit Virtual Aadhaar Card ID (VID) having a secured layer. Although, even within this framework, there’s the need of first downloading the XML file and gaining the OTP (one-time-password), all within an internet environment that’s already affected by the menace of (especially in the areas having remotely residing citizens) limited net connectivity and speed glitches.

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