UNIT - 07

E commerce

The term e-commerce is an abbreviated term for ‘electronic commerce’, which refers to the process of
undertaking business transactions over internet. Mostly this process performed through e-commerce portal.

E commerce portal Web portal

A web-portal that is specially designed to host the A web portal is a web-based platform that
products and services details is called an ‘e-commerce collects information from several
web-portal’. different sources and streamlines them
into a single access point for information.
Features of e commerce portal
 Desired information at a single point
 Internal search engine,
 Personalised logins and emails to its regular visitors
 Online forums
 Payment gateway

Type of e-commerce portal

 Depending on the products and services available, e-commerce web-portals could be understood to be
‘Generic’ and ‘Specific’.
 Examples of generic ecommerce portals are ‘FlipCart’, ‘Amazon’, where one could buy any product,
ranging from furniture to flowers.
 On the other hand ‘Big Basket’ could be termed as a specific e-commerce web portal as the customer
can order for only grocery related products on this web portal.

E-Commerce Software
An e-commerce software typically ensures that the entire commercial cycle of buying and selling over the
Internet is conducted smoothly, both for the buyer as well as the seller. All e commerce activities are
undertaken and managed using specially designed ‘ecommerce software’ that serves as its ‘driving force’.

E-Commerce APIs
All e-commerce related technologies and features are connected to each other using Application
Programming Interfaces (APIs). APIs are ready-to-use, computing interfaces/software intermediaries that
help to exchange information from one feature to another, from one software to another, from one platform
to another.

M-Commerce and Multi-channel Commerce

All software features, that are available on an e-commerce web-portal are popularly accessible through
mobile-friendly application interfaces , called apps ( a common abbreviation for Applications).
Multichannel commerce extensively employs e-mails and social media as their digital marketing channels.
Similarly, sales could be carried out by a seller using either a webportal alone or coupled with a physical,
brick-and-mortar store outlets too. The whole purpose of multichannel commerce is to interact in multiple
ways with the buyers.

Emerging Technologies in e-Commerce

These online accounts are not just routinely programmed but are mostly personalised and contextualised
for each individual, using advance programming features provided by Artificial Intelligence (AI) / Machine
Learning (ML) techniques. Further with gradual advent, e-commerce web portals now also employ other
emerging technologies like Augmented reality (AR), Virtual reality (VR), Block chain and many more. The
purpose of employing emerging technologies in an e-commerce web portal is to provide its customers with
an enhanced user experience (UX) and comfortable user interface (UI).

Internet based business ecosystem that comprises of an e-commerce web-portal, e-commerce software, e-
commerce ‘app’ and ecommerce APIs permit various buyers and sellers to undertake a business transaction
comfortably and securely, is referred as ‘e-commerce’.

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 Difference between App based and web based business
Parameters App based business Web based business
Devices Used Handheld devices such as Smart phones and Computers Laptops
tablets
Internet Connectivity Mandatory Mandatory
Requirement
Reachability With push messages (notifications). app based In web based business reach is
business reach large number of customers, limited.
even when they are on the go
Platform Web Store and native Apps (Play store in Web stores
Andreid and App store in Apple)
Payment Gateway Mobile banking, net banking Credit/Debit Net banking. Credit/Debit card
card Wallets. COD Wallets, COD
Mobility Mobility is high as customers can buy and Mobility is low as customers can
make transactions from anywhere, anytime as buy and make transactions on
long as internet connectivity is there. their computers and laptops
Privacy and Security There are lot many privacy and security Web based business is more
issues related with app based business. than App based business
Installation of malware on mobile is one of
the major concem while shopping online
using mobile app

TYPES OF E-COMMERCE
This classification is based on the nature of their transactions, as described below:

Blockchain: A block chain is a

digital record (distributed
ledger), which is made to store a
list of transactions (called
‘blocks’). Each block has
different feature which contains
a link to the previous block, a
timestamp, and data about the
transactions it represents.

B2B: Business-to-Business Model

 In business-to-business (B2B) type of e-commerce
system, companies that are involved in the supply
chain, such as a manufacturer selling a product to a
wholesaler, the wholesaler selling the product to a
retailer, all come together to conduct business with each
other using a common portal.
 Example: Indiamart, Alibaba, Jiomart, Amazon
Buisness, Udaan, TradeIndia etc.

B2C: Business-to-Consumer Model

 This model of e-commerce is understood to be the
process where a company or business sells their goods,
services and products directly to the buyer using
Internet.
 The buyer has the liberty of browsing through the
Internet to filter, check and view products and then
order them.
 After receiving an order, the company proceeds to
process and send the order directly to the buyer.

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 Examples: Amazon, Flipkart, Myntra, LimeRoad, Pepperfry, Shopclues, 1mg, Snapdeal, Paytm Mall,
Firstcry, etc.

C2B: Consumer-to-Business Model

 Unlike ‘B2C’ model, it is a type of commerce
where consumers themselves provide goods,
services and products to an organization (or
business).
 Another version of this model; in this version,
the consumer create and utilize their own social
media profiles (blogs etc) to link back to the
product sold on the company's ecommerce website / web portal, thereby consumers facilitates the sale
of company’s products and are usually rewarded by these companies for doing so.
 Examples: Jobportals like Monster.com, TimesJobs.com etc, marketing websites such as Google
Adsense, Commission junction, A food blogger, A tech blogger, Social media users who fill out surveys
on Survey Junkie or promote products and services.

C2C: Consumer-to-Consumer Model

 This form of e-commerce is understood to be a
model where consumers sell goods, services and
products to another consumer using web
technologies and the internet.
 This model comprises the selling of a wide range
of products including movable assets and
properties.
 Examples: Olx, Ebay, payments companies
include Venmo, Paypal, and Zelle.

B2G: Business-to-Government Model

 Business-to-government, also known as business-
to-administration, refers to trade between the
business sector as a supplier and a government
body as a customer.
 This kind of e-commerce refers to the situation
where businesses conduct commerce with the
government; it is essentially a part of the ‘B2B’
model.
 The business network provides a platform to businesses to bid on government opportunities such as
auctions, tenders and application submission and so on for various services etc.
 “Government e-MarketPlace -GEM” portal by Government of India, is an example of the same.

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 Industrial Internet of Things (IIoT): Industrial Recommendation Engines: A
Internet of Things (IIoT) is similar recommendation engine is a tool that filters
interconnected network particularly in the data by using algorithms and suggesting
industrial context, where all the instruments popular products for customers. These
have sensors and are interconnected with each engines will suggest items which the
other. customer may probably purchase.

C2A: Consumer-to-Administration Model

 The model refers to the e-commerce process
followed by the consumers when interacting
directly with the government agencies.
 This may be in the form of payments, information
access requests or feedback to various agencies
among other things.
 Examples of ‘C2A’ models include e-government applications such as payment of utility bills including
electricity and water, tax payments, health insurance payments made using web and mobile
applications.

P2P: Peer-to-Peer Model

 P2P model is essentially a networked model of commerce
without any intermediary. It is therefore a distributed
platform enabling different individuals to partake in
transactions with each other without an in-between third
party.
 This model of network arrangement is different from the
client server model where communication takes place from
the central server.
 The absence of a ‘third party’ may increase the risk of service not being delivered, service being of poor
quality, delay or refusal of payment as well as exploitation of asymmetric information.
 Another variation of ‘P2P’ models could be without any economic transactions for buying and selling,
but simply provide a platform or individuals to interact for various ends.
 Some examples of ‘P2P’ services are open-source software, online marketplaces, crypto currency and
Blockchain, ridesharing line OLA, Uber, Rapido and so on.

D2C: Direct-to-Consumer Model

 Direct-to-consumer refers to selling products in a
straight line to customers, bypassing any third-party
retailers, wholesalers, or any other middlemen.
 D2C brands are usually sold online only and
specialize in a specific product category.
 Example: Online website of various companies like
Realme, Lava etc

Nonbusiness and Government

 The E-Commerce applications in government and many non-business organizations are on the rise.
Several government agencies have been using E-Commerce applications for several years, including the
Department of Defense, Internal Revenue Service, and the Department of Treasury.
 Universities are using E-Commerce applications extensively for delivering their educational products
and services on a global scale.
 Not-for-profit, political, and social organizations also use E-Commerce applications for various activities,
such as fundraising and political forums.
 These organizations also use E-Commerce for purchasing (to reduce cost and improve speed) and for
customer service.

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Organizational (Intrabusiness)
 Organizational or intrabusiness E-Commerce involves all the E-Commerce related activities that take
place within the organization.
 The organization intranets provide the right platform for these activities. These activities may include
exchange of goods, services, or information among the employees of an organization.
 This may include selling organization products and services to the employees, conducting training
programs, offering human resources services, and much more.

Dimension of e commerce
Eight different dimensions of e-commerce are shown:
Ubiquity
E-commerce is ubiquitous i.e. it can be accessed from
everywhere and at anytime. It is not restricted to any physical
space and makes it possible to shop anytime, anywhere using
any electronic device (laptop/desktop/mobile phone/tablet)
having internet connectivity.

Global reach
The technology has eliminated the national boundaries. In e-
commerce businesses, potential market size is almost
equivalent to the global population.
Universal standards
The technical standards of the Internet, and therefore the
technical standards for conducting e-commerce, are universal
standards—they are shared by all nations around the world.

Information richness
Refers to the complexity and content of a message. The richness enabled by e-commerce technologies allows
retail and service merchants to market and sell "complex" goods and services that previously required a
face-to-face presentation by a sales force to a much larger audience.

Interactivity
Technology allows for two-way communication between merchant and consumer. Interactivity allows an
online merchant to engage a consumer in ways similar to a face-to-face experience.
Information density
The total amount and quality of information available to all market participants, consumers and merchants
alike. E-commerce technologies reduce information collection, storage, processing, and communication
costs. At the same time, these technologies greatly increase the currency, accuracy, and timeliness of
information—making information more useful and important than ever. As a result, information becomes
more plentiful, less expensive, and of higher quality.

Personalization/customization
The targeting of marketing messages to specific individuals by adjusting the message to a person's name,
interests and past purchases (personalization). The technology also permits customization—changing the
delivered product or service based on a user's preferences or prior behaviour. Given the interactive nature
of e-commerce technology, much information about the consumer can be gathered in the marketplace at
the moment of purchase.

Social technology
Traditional mass media technologies were broadcasts-like, only allowing one-to-many communications. E-
commerce technologies have the potential to invert this standard media model by giving users the power to
create and distribute content on a large scale, and permit users to program their own content consumption.
E-commerce technologies provide a unique, many-to-many model of mass communication.

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ADVANTAGES AND DISADVANTAGES OF E-COMMERCE
Advantages Disadvantages
The e-shop is open 24 hours a day, 7 days a When ordering a product online, it often takes longer
week. delivery time and more shipping charges.
Customers don't need to stand in queues of Repaying your online purchase may be more difficult
stores. than buying a traditional store.
Larger product selection. Online shopping will not be able to measure goods.
Possibility to shop from anywhere. Money security of the customers depend on their own
vigilance.
Attractive discounts are offered. Lack of privacy.

Advantages-
 Accelerated buying process for saving time: It helps the consumer choose from a wide range of
products by making available goods from other chained stores as well, widening the net of available
goods as well fast forward the process to process payments. These processes also aid in reducing travel
and delivery time of the products.
 Personalised store as per Consumer preference: each user is introduced to a different first page based
on their location and advanced search for conducting a purchase. The consumer's history of purchases
also reflects in the personalized experience of online commerce. This allows consumers to avail special
services like benefits and discounts due to their loyalty, order history and so on, hence fulfilling customer
expectations.
 Reduce recurring cost while hiring virtual support resources: the outsourcing of tasks to different
countries or employees for use to many other e-commerce businesses. This makes the presence of a
company possible in multiple locations possible at a fraction of the cost of physical presence.
 Customers retargeting is easier: Retargeting a customer is a key part of retaining a customer base.
Below are some of the techniques which can be used to retarget customers:-
 It is a good strategy to share a coupon when customers leave the checkout page.
 By sending emails which are pitching upsell and cross-sell.
 By redirecting the consumer to the desired web page or targeted advertisement based on
Consumer data.
 Easier to encourage an impulse buy: Impulse buying plays on the psychological behaviour of humans
where some of us have personality traits that encourage impulse buying. It is often because of the urge
to feel good, and at the same time the attempt at deriving emotional value from certain products makes
them feel good; or things that have an emotional value.
 Reviews Available: The review system allows the consumer to make decisions as well as pass judgement
on a wide range of variables.
 Detailed information available for the consumer: All consumers are always seeking detailed insights
into the product they are interested in as it aids them in making an informed decision.
 Quality service at reasonably low operation cost: E-Commerce plays an important role in reducing
the cost of operations significantly by eliminating a significant part of that expense as the business does
not have to rely on a physical presence to provide quality service.
 Quick and affordable marketing: E-commerce provides a cost effective way to businesses for marketing
anything effectively. Some pointers for understanding marketing techniques are listed below:
 Availability of quality content for attracting the customers, it is an important factor for being more
visible or noticeable in the market.
 Creative marketing videos explaining the product and services for better understanding.
 Social networking is important for asserting one's presence everywhere and helps in the development
of popularity for a product.
 Employing different tricks to reach the customers, which is easy through digital marketing
techniques.
 E-Commerce has flexibility with 24/7 service capability: Ecommerce is powerful than conventional
stores and retail spaces as it allows the service to consumer 24/7. It is not only the capability of providing
a shopping option round the clock, E-Commerce also helps consumers with chat support, provide
recommendations and identify products being sought by the consumer at any time and place.

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Disadvantages:
The various disadvantages of E-Commerce are discussed below:
1. Lack of personal touch: One of the thing that play a huge role in consumer satisfaction is the ability to
personally view and touch any product. It is an important factor when it comes to customer satisfaction as
even the best detailed, expressed and explained products can fail to convince and attract the consumer.
2. Unsure about the quality: When it comes to purchasing products online, it is difficult for the consumer
to determine its quality. It is also common knowledge that there has been malpractice when it comes to fake
reviews to artificially boost sales and of a low quality or faulty product.
3. Late Delivery: One of the assurances of businesses practicing Ecommerce is the delivery time of the
product. There are a whole range of issues that can arise when it comes to the delivery of the purchased
product; hence businesses avoid giving exact delivery dates and try providing windows for the same. Many
times, this results in the consumer waiting for the product for more than the assured period of time.
4. Difficulty in purchasing some products: Some precious products such as gold and customised products
like made-to-order furniture (because of measurement issues) are difficult to be purchased online . Trust is
an important factor when it comes to these products, and the lack of ability to verify them physically could
serve as a hindrance in purchasing such products online.
5. Site crash issues: There is still some uncertainty when it comes to the functioning of servers and the
availability of round the clock and quality internet service. This can create a lot of hindrance from sales
perspective, and can result in loss of consumers as they might have to wait for an unspecified period of time
to proceed with transactions.
6. Cybercrime and Data privacy issues: Last but not the least, ecommerce is prone to cyber security
threats as well as data breaches typical to the cyber world. E-commerce web portals than any other online
information, as these sites/portals store users’ data including financial and other personal details of the
buyers and the sellers. Hence there is a constant challenge of securing this data from a wide range of security
challenges including malware, hacking, ransom ware as well as misuse of personal sensitive information /
preferences for targeted marketing / campaigning etc.

E banking
Electronic banking is a form of banking in which funds are transferred through an exchange of electronic
signals. It is also known as electronic funds transfer (EFT) and basically uses electronic means to transfer
funds directly from one account to another.

E-banking has certain advantages over the traditional banking system, as stated below:
• It provides 24 hours, 365 days a year services to the customers of the bank.
• It lowers the transaction cost.
• It inculcates a sense of financial discipline and promotes transparency.
• Customers can make the transactions from anywhere-anytime.

EFT (ELECTRONIC FUND TRANSFER)

Electronic funds transfer (EFT) is an electronic method for transferring funds from one account to another
either within a financial institution or across multiple institutions, by using computer-based systems,
without the direct intervention of bank staff. Various types of e commerce are
 NEFT
 IMPS
 RTGS
 UPI

NEFT (National Electronic Fund Transfer)

 National Electronic Funds Transfer or NEFT is the most commonly used online payment option to
transfer money from one bank account to another.
 Usually, salary transfers by companies are done using NEFT.
 The funds are transferred on a deferred settlement basis, which implies that the money is transferred in
batches.
 There is no maximum limit but this depends from one bank to another.
 The money can be transferred only during the bank working days.

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RTGS (Real Time Gross Settlement)
 Money can be transferred from one bank to another on a real-time basis using Real Time Gross
Settlement or RTGS method.
 There is no maximum transfer limit, but the minimum is Rs. 2 lakhs.
 The transactions are processed throughout the RTGS business hours. Usually, the amount is remitted
within 30-minutes.
 It costs a little more than NEFT.

IMPS (Immediate Payment Service)

 An IMPS sends instant payments. The money is transferred instantaneously through mobile phones
using this interbank electronic fund transfer service.
 User can make the transactions 24x7x365 across banks including all weekends and bank holidays.
 The money can be transferred using phones, ATMs, Mobile Money Identifier (MMID) and internet
banking.

Key Differences between NEFT, RTGS and IMPS

Basis NEFT IMPS RTGS
Speed of settlement Half hourly Real-Time Real-Time
Maximum transfer value No Limit INR 200.000 No Limit
Minimum transfer value No Limit No Limit INR 200.000
Charges No Charges Charges decided as per No Charges
the bank for each
transaction
Timing 24x7, 365 Days 24x7, 365 Days 7 am IST- 5 pm IST (On
all working days for
banks in India)

UPI
 Unified Payments Interface is an instant real-time payment system developed by National Payments
Corporation of India facilitating inter-bank transactions.
 The interface is regulated by the Reserve Bank of India and works by instantly transferring funds
between two bank accounts on a mobile platform.

National Automated Clearing House, or NACH

India National Automated Clearing House, or NACH, introduced by National
Payments Corporation of India, is a centralized clearing service that aims at providing interbank high
volume, low value transactions that are repetitive and periodic in nature.

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What’s the Difference Between EFT and ACH?
 ACH transactions happen on an electronic funds transfer network called the Automated Clearing House.
All ACH payments are EFT payments, but not all EFT payments are ACH payments. An ACH payment
must pass through the Automated Clearing House network.
 ACH payments are typically used for direct payments like payroll direct deposits and recurring payments
user make each month to companies for your utilities and rent. Unlike debit and credit card EFT
transactions that happen in real time, ACH payments are processed in batches each day and can take
one to four days to complete. Larger banks can often process ACH payments faster than smaller banks.

VIRTUAL CURRENCY
 The term came into existence around 2012, when the European Central Bank (ECB) defined virtual
currency to classify types of “digital money in an unregulated environment, issued and controlled by its
developers and used as a payment method among members of a specific virtual community,” according
to Bitcoin News Virtual currency can be defined as “an electronic representation of monetary value that
may be issued, managed, and controlled by private issuers, developers, or the founding organization”.
 Such virtual currencies are often represented in terms of tokens and may remain unregulated without
a legal tender. The virtual currency is akin to a coupon.
 Examples

Difference between Digital, Virtual, and Crypto Currencies

 Digital currency is the overall superset that includes virtual currency, which in turn includes crypto
currencies. Compared to virtual currency, a digital currency covers a larger group that represents
monetary assets in digital form.
 Digital currency can be regulated or unregulated. In the former case, it can be denominated to a
sovereign currency that is, a country’s central bank can issue a digital form of its fiat currency notes.
On the other hand, a virtual currency often remains unregulated and hence constitutes a type of digital
currency.
 Crypto currencies like bitcoin and ethereum are considered to be a part of the virtual currency group. A
crypto currency uses cryptography technology that keeps the transactions secure and authentic, and
also helps to manage and control the creation of new currency units. Such crypto currencies exist and
are transacted over dedicated Blockchain-based networks that are open to the common public. Anyone
can join and start transacting in crypto currencies.

E payment
 An electronic payment (e-payment), in short, can basically defined as paying for goods or services on the
internet or through gateway to pay amount. It includes all financial operations using electronic devices,
such as computers, smartphones or tablets. E-payments can be made in many ways, like credit or debit
card payments or bank transfers.

 The basic characteristics of e-payment system are applicability, ease of use, security, reliability, trust,
scalability, convertibility, interoperability, efficiency, anonymity, traceability, and authorization type.

Difference between Traditional Payment and E-Payment

S. PARTICULAMS TEARSINRIAL PAYMENT E-PAYMENT
NO.
1 Usage Use Traditional Medium to Use advance technology to
communicate communicate
2 Circulation Traditional payment is realized E-payment introduces digital
through physical circulation such as circulation to realize information
cash circulation, bill transfer and transmission, so all means of e-
bank exchange. payment are digitalized
3 Requirement Uses traditional medium to Requirement network and other
communicate between parties related software to work
4 Intervention Needs human intervention to settle Uses advance technology to handle
these processes all the transaction process that
requires money engagement such as
money transfer

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What is a Payment Gateway?
 A payment gateway is an online application (characteristically used in ecommerce) that conducts
payment authorizations for merchants, electronically based businesses (e-businesses).
 Payment gateways are the “middle man,” handling business between merchants and customers serving
in a position that steadily withdraws the funds for a transaction from customers and deposits them into
merchant's bank account.
 Payment gateway is essentially a bridge or connection pathway between the customers and the relevant
financial institution.

TYPES OF PAYMENT GATEWAYS

The four different types of payment gateway are:
 Hosted Payment Gateway
 API-hosted Payment Gateway
 Self hosted Payment Gateway
 Local bank integration Payment Gateway

Hosted payment gateway

 A hosted payment gateway is a payment processing solution where a third-party service provider hosts
the payment system for businesses, post which user integrate the payment system onto users websites
or mobile application. Example: Amazon Pay, Vodafone mPesa, JioMoney, Freecharge, Airtel Money, Ola
Money, PayZapp and Mobikwik

API-hosted payment gateway

An API-hosted payment gateway is a payment gateway that processes payments through an Application
Program Interface (API), thereby enabling customers to stay on the merchant’s website throughout the
checkout experience.
Example- Rozerpay

Self-hosted payment gateway

A self-hosted payment gateway is a solution that empowers businesses to effectively and securely maintain
full control over the entire payment process. With the self-hosted approach, merchants manage and execute
payment transactions directly within their infrastructure, ensuring a secure, customized and accountable
payment journey. Example: Shopify Payments are examples of self-hosted payment gateways, and both are
powered by Stripe.

Local Bank integration gateway

Local bank integration gateway is a payment processing solution that enables businesses to integrate with
local banks to facilitate online payments, ensuring seamless and region-specific transaction processing. This
primarily serves as an entry-level solution with limited features, often lacking capabilities for returns or
recurring payments. Example:

Automatic Teller Machine (ATM)

ATM is an electronic device which is operated by customer himself to make withdrawals, deposits and other
banking transactions.
All banks offer ATM facility to their customers. ATM allows customers to complete basis transactions without
the help of branch representative.

Credit Card: Meaning

 Payment using credit card is one of most common mode of electronic payment.
 Credit card is a plastic card with a unique number attached with an account. It has also a magnetic
strip embedded in it which is used to read credit card via card readers.
 When a customer purchases a product via credit card, credit card issuer bank pays the amount and
customer has a certain time period after which he/she can pay the credit card bill.
 It is usually credit card monthly payment cycle.

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Debit Card: Meaning
 A Debit Card is a plastic card that can be used instead of cash when making purchases.
 Debit cards free customer to carry cash, cheques and even merchants accepts debit card more readily.
 The amount is immediately transferred directly from the cardholder's bank account when performing
any transaction.

Difference b/w Debit and Credit Card

Debit Card Credit Card
Transaction Limit Associated with your bank Work as a short term borrowing
account instrument
Repayment requirement No repayment required Repayment of used fund within
stipulated period
Penalty No penalty Interest after due date & penalty
on non payment
Credit score Does not impact credit score Over dues, non payment & dues
settlement can negatively impact
the credit score
EMI facility You can't buy items on EMI Transaction Limit

E-Cheque (Digital Cheque)

An e-Cheque is an electronic document
which substitutes the paper check for online
transactions. Digital signatures (based on
public key cryptography) replace
handwritten signatures.

E-Money
Electronic money refers to money that exists
in banking computer systems that may be
used to facilitate electronic transactions.
Although its value is backed by fiat currency
and it can be exchanged into a physical form.
E-money is primarily used for electronic
transactions.
E money is stored and transferred
electronically through a variety of means a
mobile phone, tablet, contactless card (or
smart cards).
 Electronic money is currency that is
stored in banking computer systems.
 Various companies allow for transactions to be made with electronic money, such as Square or PayPal.
 The prevalence of electronic money has led to the diminishing use of physical currency.

Smart Cards
Smart card is a chip based card. In simple layman's words, a smart card is the card with which we can
exchange the data, store it and manipulate data.
It performs all functions of magnetic strip cards like ATM Card, Debit and Credit Card etc.
Examples of Smart cards
 Used as payment cards like credit/debit cards. These are issued by commercial companies or banks.
 Hospitals use these cards to store patient details.
 EBT (Electronic benefits transfer) cards are used for the distribution of government benefits.
 Smart cards are used by educational institutions, government authorities etc for access control.

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E-Purse (Digital Wallet)
 E-wallet is an online prepaid account where one can stock money, to be used when required.
 As it is a pre-loaded facility, consumers can buy a range of products from airline tickets to grocery
without swiping a debit or credit card.

NPCI and its various initiatives

National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and
settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association
(IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment
& Settlement Infrastructure in India.
NPCI has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies
Act 1956 (now Section 8 of Companies Act 2013
Initiatives by NPCI
RuPay RuPay is an Indigenously developed Payment System. RuPay supports the issuance
of debit, credit and prepaid cards by banks in India and thereby supporting the
growth of retail electronic payments in India.
All RuPay Cards will now have the functionality of NCMC which can enable low
value contactless payments (like transit, toll, parking, retail) using Offline
technology.
IMPS With Immediate Payment Service (IMPS), India has become the leading country in
the world in real time payments in retail sector.
NACH National Automated Clearing House (NACH), an offline web based system for bulk
push and pull transactions. NACH provides electronic mandate platform to register
mandates facilitating paper less collection process for the corporates and banks. It
provides for both account based and Aadhaar based transactions.
APBS Aadhaar Payment Bridge (APB) System is helping the Government and Government
agencies in making the Direct Benefit Transfers for various Central as well as State
sponsored schemes.
AePS To access these funds at door step & drive the financial inclusion in India, Aadhaar
enabled Payment System (AePS) has been introduced. To extend the convenience of
biometric to merchant payments, BHIM Aadhaar has been launched.
NFS National Financial Switch (NFS) is the largest network of shared Automated Teller
Machines (ATMs) in India facilitating interoperable cash withdrawal, card to card
funds transfer and interoperable cash deposit transactions among other value
added services in the country.
UPI Unified Payments Interface (UPI) has been termed as the revolutionary product in
the payment system.
Bharat Bill Bharat Bill Payment System is offering one-stop bill payment solution for all
Payment recurring payments in the categories Viz. Electricity, Gas, Water, Telecom, DTH,
System Loan Repayments, Insurance, FASTag Recharge, Cable etc. across India.
NETC National Payments Corporation of India (NPCI) has developed the National
Electronic Toll Collection (NETC) program to meet the electronic tolling
requirements of the Indian market, through a

TATHAGAT IAS ACADEMY 12

 PAI National Payment Corporation of India (NPCI) has launched an artificial intelligence
(AI) based chatbot, PAi, to create awareness around its products like FASTag,
RuPay, UPI, AePS on a real time basis.

IMPORTANT TERMS
Electronic Banking: E-banking is a form of banking in which funds are transferred through an exchange
of electronic signals rather than through an exchange of cash, checks, or other types of paper documents.
IFSC (Indian Financial System Code): IFSC is a unique eleven-digit number which is a combination of
alphabets and numerals given to a bank fora specific branch.
NEFT (National Electronic Funds Transfer): NEFT enables an individual electronically transfer funds from
any bank branch to any individual having an account with any other bank branch in the country
participating in the Scheme.
RTGS (Real Time Gross Settlement):RTGS is an electronic form of funds transfers where the transmission
takes place on a real time basis. In India, transfer of funds with RTGS is done for high value transactions,
the minimum amount being Rs. 2 lakh. The beneficiary account receives the funds transferred, on a real
time basis.
IMPS (Immediate Payment Service): IMPS is an instant payment interbank electronic funds transfer
system in India. IMPS offer an inter-bank electronic fund transfer service through mobile phones.
Virtual Currency: Virtual currency is termed as an electronic representation of monetary value that may
be issued, managed, and controlled by private issuers, developers, or the founding organization.
Automated Clearing House: An automated clearing house is a computer based electronic network to move
money between banks without using paper checks, wire transfers, credit card networks, or cash.
Distributed Ledger Technology: Distributed ledger technology is a ledger of any transactions or contracts
maintained in decentralized form across different locations and people, eliminating the need for a central
authority to keep a check against manipulation.

Radio Frequency Identification (RFID) refers to a A chatbot is a computer program that

wireless system comprised of two components: tags and simulates human conversation through
readers. The reader is a device that has one or more voice commands or text chats or both.
antennas that emit radio waves and receive signals
back from the RFID tag.

FASTag - FASTag are Radio-Frequency Identification (RFID) stickers which are affixed on the
vehicle windshield and enable the driver to make toll payments electronically while the vehicle
is in motion .

TATHAGAT IAS ACADEMY 13