Innovative solutions to promote digital payments in India. How we can leverage aadhar and use Fintech to increase financial literacy.

1. Citi Case Challenge
Team Victorious Secret | XLRI Jamshedpur
E
ducate
ncourage
volve 1
Citizen
Aadhar (UIN)
Wallet
Karan Chhabra Vinamrata GandhiAnurodh Tak

2. Wallet types
• Closed
• Semi Closed
Semi Open
• Open
Due to guidelines set, closed
and semi closed use increased
over the time
Government Policies
Payment Settlement System Act 2007
Empowers the RBI to issue directives.
Empowers the RBI to regulate & supervise
payment systems by determining
standards & calling for information, regular
reports, documents etc.
Empowers the RBI to audit and conduct on-
and off-site inspections of payment systems.
RBI Policies governing digital payments
Strict Know Your
Customer & Anti
Money Laundering
Regulations  Limited
peer to peer transfer
Two factor
verification
principle for
all digital
payments
The above policy led to increase
in prepaid & wallet instruments
Road MapCurrent Scenario
Suggestion 1:
Aadhar Wallet
Suggestion 2:
Payment Management
Banks
Merchants
Corporations
Government
Central
Bank
Individuals
Share of Operation Cost of Cash
Cost savings can be
attributed to the
various players in
the following
manner
Convenience
will increase
Improves Efficiency 
Greater Cost Savings
Accountability
issues will reduce
Transfer will be
transparent and leakage
Opportunities
Digital Wallet and Mobile Payment Services
Mobile as the Game Changer
Scope Limitations
• RBI’s idea of payment bank
will boost remittances &
banking for unbanked,
• Wallets act as intermediary &
make it convenient for
individual merchants
• RBI’s deliberation on two
factor authentication may
prove fatal.
• Mobile Transfer requires
purchase of Simcards of that
particular firm
Digital Wallet transactions grew
3 times between Feb-April 2015
Vodafone's user base of 170 mn,
only 1.5 mn are enrolled in M-Pesa
Payment
Management
Mobile Point of Sale
Solution for Online
Retailers and SMEs.
SMEs will also be
provided with host
of online services
that will cut cost,
improve efficiency
& reduce cash
transactions.
Aadhar Wallet
Wallet service that
will overcome the
limitations of
mobile payments.
It will be aimed to
solve payment
issues at the root
level with greater
reach.

3. For Organisation
Organization can have their
Aadhar wallet created by linking
their official bank accounts with
the wallet
The wallet can be used for:
• Receive payments from customers
• B2B transactions
• Payments to Government
This card can be used anywhere for payments by individuals.
Concept:
App for Smartphones
• Aadhar Wallet app will be
available on all mobile
platforms
• Users can add friends on
the app by entering 6 digit
unique user name for quick
transactions
Using Aadhar Wallet
Using Wallet through USSD
User can recharge wallet through
any medium (Cash, Net Banking,
Debit Card, etc.)
For Individuals
Every citizen with Aadhar
Card will have a virtual
wallet which will be linked
to their Aadhar card
number.
One Citizen  One Number (UIN)  One Wallet
A 6 digit unique username will be
developed for the individual who
registers for Aadhar card wallet.
This wallet can be accessed through
• USSD code (for all phones)
• App (for smartphones & Tablets)
• Through Aadhar Wallet Website
Eligibility Accessibility Convenience
Wallet Cards & Cash counters will
be available at SBI Banks for people
to put cash in their wallet as well
as reimburse the wallet amount.
Road MapCurrent Scenario
Suggestion 1:
Aadhar Wallet
Suggestion 2:
Payment Management
Objectives and Impact of Aadhar Wallet
• Solve the current reach gap.
• Complete replacement to
cash (open wallet compared
to current semi closed
solutions)
• No or very less dependence
on Private players.
• Bring people with no bank account
in the financial net by keeping
financial literacy at the forefront.
• Enable people to transfer safely &
affordably via their mobile phone.
• Digitization of payments at root
level.
Promote Financial inclusionOvercome Existing Issues
Step 1
Step 2
Step 3
Step 4
Dial Prescribed Code
Enter Username
Choose Action
Enter Password

4. Process Flow
Sender Receiver
Aadhar Wallet
Banks
Cash
Recharge
Wallet
Transfer Money
to registered
Wallet user
Vendors
Bills
Shopping
Government
Payments
Registers
for Wallet
Opportunities Identified
Travelling
Petrol Stations & Hotels
Auto Rickshaw & Taxis
• Drivers get their Wallet activated
when they get their license number.
• Wallet number to be displayed inside
for commuters to pay directly.
• Organisation wallet to be issued.
• Wallet number to be displayed for
payment process.
• Government offices should have
wallet activated for payments.
• Fine to be directly paid to wallet 
help reduce micro level corruption
Benefits for Government
Government Payments
Government fees
• Increased transparency & control
• Lower Costs & increased incentive
to save
Execution Phase Wise Launch
Aadhar Wallet will use the existing
physical infrastructure of SBI (14000+
branches & 43000+ ATMs) for wider
reach.
Aadhar Wallet Cards will be issued at
request which can be used for
withdrawing money in Wallet at SBI ATMs
Road MapCurrent Scenario
Suggestion 1:
Aadhar Wallet
Suggestion 2:
Payment Management
Citi will manage the payments
transaction for the wallet.
(Implementation of online
infrastructure required for the wallet
implementation)
Integrate with Banks for various inter
bank transactions
Implemention
Back End Front End
6
months
22
months
30
months
36
months
Launch
Service
Creating
Awareness
about Wallet
Making the service mandatory in
government controlled payment
areas (Transport, Bills & Fines, etc.)
Metros
Top 20
Non Metros
Pan
India

5. • Financial consumer protection
framework for segments with
weak financial capability
• Foster the development of
innovative business models by
private players
• Progressive KYC – Tiered
documentation requirements
• Use of Jail Inmates for Data Entry
• Payments banks systems are
costlier than the corresponding
payment via internet banking.
• Difficult to increase prices even
at the cost of decreasing
operating margins.
Marketing Challenges
Small retailers may
not be well verse
with technologies &
thus may avoid using
the Aadhar card for
payments.
The product will be
limited to people with
mobiles phones.
Mobile penetration in
India is still only 70%
(2014 data).
Poor recipients and
those living in remote
areas might not be
familiar with a card
linked digital payment
system.
Operational Challenges
• Payments in government
offices made mandatory
through Wallet.
• Collaboration with Private
players (Telecom operators
for USSD implementation,
etc.) for use of Aadhar wallet as
the only payment option
• Public Distribution System
linked to Aadhar card
Customer
experience
Product
design
Consumer
Education
Role of Government• Instances of Fake Aadhar Cards
in India.
• Necessary to have safeguard
plans to protect against fraud
and cyber-attacks with
emergency contingency plan
• Limitations due to lack of 100%
coverage of habituated areas
under mobile network
• The GoI defines a set of rules
and regulations before setting
up a payment bank (Payment
Settlement System act 2007)
• Less private & hard to track
payments would not be
preferred by some to personal
gains/corruption.
• This can become a political issue
that individual political parties
will handle in a different manner.
• Not all Indians have Aadhar
Card.
• Government should pre-
establish KYC account opening
and documentation
requirements
Sticky prices Physical Infrastructure
Political economy issues
Lack of Aadhar Card
Policy Limitations
Fake Aadhar Card
Road MapCurrent Scenario
Suggestion 1:
Aadhar Wallet
Suggestion 2:
Payment Management

6. Swipe on delivery
Online Shopping Empowering the SMEs
Direct Transfer:
m-wallet
payment gateways
• RBI regulations (e.g., mandatory 3d secure
password in card payments), made the
process of card payment time consuming.
• A Semi-closed wallet used where needs
cannot be fulfilled by a Payment Gateways
(P2P transfer, recurring payments, etc.)
• Linking will provide best of both worlds.
Allow customers to pay through
debit cards on delivery of items.
This will have two fold benefits:
• Increase Convenience  No
need to look for or withdraw
cash when item is received.
• Reduce cash payments and
transactions
Providing Backend Payment Management System
Mobile Point of Sale Payment Solutions
Payment application will
be managed on cloud
cutting down tremendous
support maintenance cost.
Provide cheaper & convenient payment solutions.Aim
Benefits
Current POS payment
solutions are costlier &
deter SMEs to make
investments.
Perfect solution for mobile
merchants with no fixed
place of business, doing
business on the move.
Integrate easily with
existing solutions &
environments for greater
service, experience.
Friendly & simple design
provided making it usage
friendly for merchant and
consumers.
Lower total cost
of ownership
Mobility &
Ease of Use
Centralize cloud
based application
Flexible software
development
User Interfaces
Encourage Online Payments
Promoting online payments instead of
CoD on e-commerce sites.
Change Consumer Behaviour while
shopping & reduce cash transactions
Benefits to the companies
Reduces cost of
Cash collection
& cash handling
Increased flexibility to
customers  High
retention  High CLTV
Escrow account & invoice
lending capabilities for SMEs
registered on Online Marketplace
Incorporate cloud invoicing-
better estimates of Cloud flows
Tablet PC to be
provided to SMEs
at subsidized
rates by the
payment
partners.
Improving Financial Literacy for
SMEs & promoting B2B payments
by enabling faster transfer.
Road MapCurrent Scenario
Suggestion 1:
Aadhar Wallet
Suggestion 2:
Payment Management
Providing Mobile Point of Sale Solutions for SMEs &
Online Retailers

7. Road MapCurrent Scenario
Suggestion 1:
Aadhar Wallet
Suggestion 2:
Payment Management
Challenges Overcoming Challenges
Execution
As for 'traditional' terminals, the favourite technology for allowing credit card transactions is by
using the Chip, but in order to 'honor all cards', even the ones that only have the magnetic stripe,
Mobile POS solutions have to enable transactions for all types of Cards
• Providing the basic devices for small
scale merchants for M POS usage
• Maintaining control over device
function, tracking the device’s location,
and linking device data to surveillance
camera data address fraud & device
misuse.
• Providing Risk assessment matrix
provides with a framework through
which to approach solutions uniquely
suited to their business and customers.
Several Operational, Technical and Regulatory Challenges.
Process Flow
Card is swiped, dipped,
or tapped & the data
is encrypted
Merchant pairs
card reader with
mobile device
Merchant
downloads app
& registers
Merchant
opens app &
inputs amount
Cardholder enters
PIN or signs to
verify themselves
Authorization &
response back
to merchant
Merchant inputs
email/ mobile no.
for e-receipt
Cardholder leaves
with purchased
goods/ services
Model | Role of Citi
Payment
Network
Acquirer Payment
Facilitator
Merchant
• Supplies the Mobile POS solution (hardware &
software), branded in corporate colors & logo.
• Responsible for marketing, sales, onboarding,
risk management and support activities
• Settles funds to each merchant individually
Implementation
Launching
Solution
Onboarding
Merchants
Driving Activation
& Usage
Providing
Support
Measuring
Success
Limited features
in comparison to
conventional POS
terminals
Consumer-grade
smartphones & tablets are
not built with strong
security features.
Processing
payments over a
volatile wireless
network
Being a relatively new
technology, development
of a regulatory
framework is uncertain

8. Build/upgrade national infrastructure to
support a state-of-the-art payments industry
Develop standards for payments related
information
Build market ACH to capture lower-value
transactions that will allow the electronic
payments market to scale up more flexibly and
to operate 24/7.
Appoint a national champion for electronic
payments
Phase 1: Strengthening the Base
Leverage momentum to
push for the
digitization of the
payments industry.
Phase 3: Digitization
Build an exclusive structure to
co-ordinate transition to
electronic payments. Engage
and align all the stakeholders
Phase 2: Fighting Cash
Pay salary and social benefits
either through bank account
or Aadhar card wallet
Reducing cash pay outs
Save huge costs in terms of
infrastructure. Also, promoting
electronic payments will
reduce chances of thefts and
reconciliation costs
Promoting remote
collections of bill payment
Create combination of
incentives and legal obligations
to use e-cash. In long run helps
curtailing checkout time
Discouraging cash
usage at point of sale
Creating Exclusive
payments council
Three Point Agenda
• Policy reforms for the SMEs to
encourage set up of cashless
transaction services  Tax
Savings
• Starting with middle class,
followed by the rural,
implementation of the wallet will
be effective
• Social development
• Becoming
technologically
advanced
• Reaching out to the citizens
through the means of mass
media – offline and digital
• Inducing behavior change
through operant method –
rewards for use cashless
transaction
Educate Encourage Evolve
Road MapCurrent Scenario
Suggestion 1:
Aadhar Wallet
Suggestion 2:
Payment Management
E
ducate
ncourage
volve
Promote adoption of
electronic bill
presentment and
payment
To promote
digitization we
need to:
Evolve users by providing
support and development
for changing behaviour
Encourage users by
incentivising them
Educate masses regarding
the digitization