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.

India on the World Bank Global Findex

The World Bank Global Findex

The Bill & Melinda Gates Foundation-funded Global Findex (GF) database is the benchmark for “Measuring Financial Inclusion and the FinTech Revolution.” Published first in 2011 by the World Bank (WB), the Global Findex is the comprehensive global database depicting the adult behaviour pertaining to saving, borrowing, payments, and risk management. The Global Findex data is collated in association with Gallup, Inc. (a global analytics and advice firm), comprising detailed survey insights of over 150,000 adults in 140 economies. The latest Global Findex is the 2017 edition (published in April 2018), including revised indicators on reception to and utilisation of official and casual financial services. Also included is the new data on the utilisation of FinTech (mobile phones and the internet to initiate financial transactions).

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FinTech Valley: The Vizag Agenda

FinTech Valley Vizag (launched in Visakhapatnam on 17 December 2016) is a global FinTech Ecosystem focusing on converging finance and technology for generating massive growth prospects via industry facilitators, exceptional infrastructure, and innovative entrepreneurship. It is an ambitious initiative of the Government of Andhra Pradesh (India) to endorse business infrastructure, and draw investors and MNCs to open offices in the state. In September 2016, the Chief Minister of Andhra Pradesh released the ambitious document titled ‘Sunrise Andhra Pradesh Vision 2029’ carrying the blueprint of the growth trajectory for the state.

Endeavouring to be a “happy and globally-competitive society” by 2029, the Andhra Pradesh state, as stated in the vision statement, envisages transforming into an inclusive, accountable, and competitively innovative society. Initiating structural transformations and committing to sustain high economic growth, the state government of Andhra Pradesh placed FinTech as the epicentre of focus to create an ecosystem of digital banking, financial analytics, cybersecurity, and blockchain (database) technology. Among the various promising initiatives taken under the auspices of the FinTech Valley Vizag, the two initiatives pertaining to the FinTech ecosystem are: 1. The Andhra Pradesh – Purse mobile wallet offering 13 mobile banking and 10 mobile wallets for transactions. 2. The Marpu Nestam—an incentivised setting of agents for educating people on digital financial literacy.

Following the FinTech Spring Conference (March 2017) and Blockchain Business Conference (October 2017), the successful 5-day Vizag FinTech Festival (22—26 October 2018) directed towards GovTech (technological advances fostering invisible government, visible governance), BankTech (future of banking, investments and payments), InsurTech (technology enablers in insurance), EmergeTech (emerging technologies: AI, Cybersecurity, Blockchain, IoT, & Big Data), and Financial Inclusion (increased access to financial services for the underserved) was organised to set the good governance and inclusive growth agenda right for 2022. According to J.A. Chowdary, Special Chief Secretary & IT Adviser to the Andhra Pradesh government, under the auspices of the Vizag FinTech Festival, 25 out of a total of 40 startups were shortlisted for participating in the finale of $1-million FinTech Challenge.

Notably, the Andhra Pradesh government’s accord with FinTech Association of Hong Kong is aimed at utilising Hong Kong’s FinTech ecosystem and developing an Andhra Pradesh—Hong Kong entrée for FinTech startups and knowledge transfer.

Given the incumbent and future ambience of FinTech ecosystem in India—with 1 billion smartphone users by 2020, FinTech market projected to reach $2.4 billion, 600+ operational FinTech startups, massive growth potential in digital banking, government support (Startup India initiative), and a CAGR of 22%—such promising initiatives like the FinTech Valley Vizag should also be modelled in other promising IT & Financial hub states such as Karnataka, Maharashtra, and Gujarat. An entire ecosystem of such promising initiatives can lead to winningly achieve the aspired financial inclusion objectives. This milieu can make the dream of India ideally transforming into a digitally smart nation a resounding reality.

India in the Global Microscope for Financial Inclusion 2018

Introduction

The Global Microscope report released periodically by the Economist Intelligence Unit gauges the enabling environment for financial inclusion (furthering the objectives of the Sustainable Development Goals) considering 5 diverse categories (government and policy, stability and integrity, products and outlets, consumer protection, and infrastructure) and 55 countries. The 2018 research report witnessed the model development of the key enablers of financial inclusion. It also saw the inculcation of the indicators on digital financial services to the research methodology. The Global Microscope report essentially discusses the key growth topics of the developing economies: consumer protection, enabling environment, financial inclusion strategy, policy, regulation, and government initiatives, and trends. The Microscope assesses the regulatory and policy environment to which the key players in the financial inclusion domain are exposed to: banks, NBFCs, digital money issuers, and cross-border payment companies. The vital contributions of inclusive insurance, financial agents, FinTech firms, and credit information companies (CICs) are also examined.

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G20, India, & Financial Inclusion: En Route to 2022 Summit

Introduction: The Milieu

The 1990s witnessed the advent of microfinance at the mainstream in international development policies. There was a prime focus on market development by private financial firms. As the decade of the 2000s approached, the ambience of state legitimacy (via policies and strategies of financial inclusion) made its way. The warranted summoning of government interference is owing to the (still incumbent) ailing realities shaped by the worrying existence of social and geographical inequalities, gender biases, etc. With this stance, financial inclusion is envisioned as an instrument to establish, transform, and reinforce state institutions. The deployment of financial inclusion (social) policies in India is meant to facilitate access to marginalised (susceptible) populations of afresh rights and inclusivity. Also, such social policies having financial inclusivity agenda at the core could also promote the incoming of new alternatives to organise the behaviour of recipient (fragile) segment of the society.

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FinTech Adoption, Financial Inclusion, & The Next Regulatory Challenges

Introduction to FinTech

Investopedia defines FinTech as: “new tech that seeks to improve and automate the delivery and use of financial services. At its core, FinTech is utilised to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilising specialised software and algorithms that are used on computers and, increasingly, smartphones.”

Ernst & Young’s (EY) definition of FinTech is as follows: “FinTech: organizations combining innovative business models and technology to enable, enhance and disrupt financial services.” EY also states that its FinTech definition also encompasses, apart from early-stage start-ups and new entrants, a reference also to scaling firms, growth-stage firms, and non-financial services firms. The uniqueness of FinTech stems from the nature of its characterisation and the market conduct regulation (of the firms), collectively to which it’s (the FinTech industry) subjected owing to the fact that it manages assets, incomes, wealth, retirement funds, and salaries of people subscribing from all walks of life (for this reason, FinTech’s mass-adoption-rate and financial inclusion matters, to ensure a holistic growth of the financial services industry and its stakeholders).

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New Payments Tech: What’s The Future of Credit Cards in India

A banknote (legal tender) is a bank issued negotiable promissory note payable on demand to the bearer. The banknotes replaced the former exchange mechanisms (gold and silver) for availing goods and services. The advent of first plastic card was in 1951 in Franklin National Bank for its loan customers in New York. In India, Andhra Bank commenced the usage of credit cards in 1981. In India the late 1990s and early 2000s witnessed the general perception with regards to using credit cards for daily transactions filled with safety concerns (fear of losing money by card misuse or financial fraud). However, that is not the case anymore as in the present times the average Indian consumer has at least 2 credit cards coupled with a welcoming attitude towards availing finance on credit. As reported by the Reserve Bank of India, the data figures for issued credit cards as of March 2018 are 37.4 million as against 29.8 million issued credit cards in March 2017. Whereas in March 2008 the figures were 28 million cards. Continue reading “New Payments Tech: What’s The Future of Credit Cards in India”

P2P Lending & Conventional Banking: A Complement or Competition?

What is P2P Lending?

Peer-to-peer (P2P) lending or crowdlending is a sort of debt financing that facilitates borrowing and lending money for the individuals without resorting to the intermediary services offered by an official financial institution. P2P lending eliminates the erstwhile existence of middleman from the loaning process. Categorised as a type of crowdfunding, P2P loans offer personal unsecured loans to individuals and small businesses intending to subscribe to educational loans, real estate loans, traditional personal loans, etc. P2P platforms provide a platform meant to match borrowers with lenders. Upon a successful matching, the parties (borrowers and lenders) decide on a rate of interest and the principal amount to be loaned. The P2P platform companies usually charge a fee to assist borrowers or lenders access or offer money. Online P2P lending is an emergent industry with the promising potential to cater to the customer base so far left underserved by the conventional financial institutions. Continue reading “P2P Lending & Conventional Banking: A Complement or Competition?”

Trending Consumer Internet Firms Eyeing FinTech Services

The perception of consumers towards the relatively new facility of the mobile wallet is that of it being a next-generation payment alternative. The technology facilitates a totally seamless disbursement of payments through an electronic wallet, making cards or cash seem passé. The elevating smartphone diffusion having assisted the companies seamlessly communicate with their customers, has also led to the increasing volume of internet users (consumer segment) getting escalated into the network of content and commerce.

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Examining the Nuances of Credit Scores & Credit Risk in India

What is a Credit Score?

A credit score is essentially a determination of the capacity of an individual to repay the borrowed sum of money on credit. This statistic primarily mirrors the creditworthiness of a person wanting to access credit in the future. The credit rating agencies, or the Credit Information Companies (CICs), viz. Equifax (ECIS), CRIF High Mark, CIBIL TransUnion—the first CIC in India, and Experian, generally assimilate the required data on various determinants such as the duration of the credit subscription, repayment history, credit inquiry, etc., to determine the credit score statistic of the credit-seeking applicant. Continue reading “Examining the Nuances of Credit Scores & Credit Risk in India”