Five Tools To Go Cashless In This Demonetization Era For Merchants

Demonetization is driving Indians to go cashless. Following the recent ban of high denomination currency in India, the government is taking various measures to help individuals and merchants to ease a cash crunch faced due to the ban of Rs 500 and Rs 1,000 notes.

The currency ban has led several shop owners and small businesses to install and use new digital payment gateways.

Check out these five tools for to go cashless for merchants

Point of Sales machine

Credit card swiping machine or debit card swiping machine is also known as a Point of Sale (PoS) machine. To get a PoS machine installed the merchant needs to have a commercial establishment and a bank account, which will issue the machine.

The PoS machine is free of cost for the merchant, he or she is required to pay the bank a commission, or merchant discount rate, to the bank.

Since 2012, the Reserve Bank of India has round off the Merchant Discount Rate (MDR) on debit card payment at 0.75 percent of the transaction amount for value up to Rs 2,000 and 1% for transaction amount for value above Rs 2,000.

 

Electronic Wallets

With an E-Wallet, we can shop for products from airline tickets to the grocery without bothering about cards. Like the customer, the merchant would also need a smartphone with an active internet connection to set up the E-wallet account, and transfer the money to a bank account.

To accept payments on an electronic wallet, a merchant is required to self-declare the business to the wallet issuer to accept payments beyond Rs 20,000 per month.

After filling up the self-declaration the merchant can have a maximum of Rs 50,000 per month in the E-wallet, this can be transferred to the bank account. There is a limit on the amount of money that could be transferred from a wallet to the bank account. That limit is Rs 1,00,000 per month. However, if a Know Your Customer (KYC) is declared to the issuer, there would be no limit.

 

Unified Payments Interface (UPI)

UPI is a mobile payment system which allows you to do various financial transactions on your smartphone. Merchants can enroll with banks to accept payments using UPI.  Like in the case of a PoS machine, the merchant would require a current account with a bank to accept UPI payments. Individuals can send collect requests to other person or entity with "pay by" date to allow payment requests to be "snoozed" and paid later before the expiry date. As of now 30 banks have agreed to provide UPI services to their customers.

Unstructured Supplementary Service Data

USSD or Unstructured Supplementary Service Data means a real time or instant session based messaging service.  The USSD service allows every banking customer to access banking services with a single number across all banks - irrespective of the telecom service provider, mobile handset makes or the region. This method allows merchants to accept payments from those without a smartphone as well. Merchants  do not have to register separately with the bank to avail USSD service. They can directly start using the service.

Aadhaar Enabled Payment System (AEPS)

A smartphone and a finger-print scanner are needed to use AEPS. You have to link your account with your Aadhar number at a bank . The only inputs required to do a transaction using AEPS are, IIN (Identifying the Bank to which the customer is associated), Aadhaar Number and Fingerprint captured during their enrollment. Merchants can do many transactions at any AEPS point without any pin or password.  Account balance ,  Aadhar to Aadhar fund transfer, Cash withdrawal, Cash deposit , Purchase at Fair Price Shops with AEPS are the things we can do with AEPS.