Ever since Prime Minister Narendra Modi announced demonetization of higher old currency notes, Paytm has been exploiting the opportunity at a breakneck speed to capture and disrupt a large part of the market with its e-wallet.
Recently, the online payments company launched a feature for its mobile wallet app that allows shopkeepers to accept payments via credit cards and debit cards. The app was an immediate hit amidst much fanfare. This latest feature is supposed to eliminate the need for a physical point-of-sale (PoS) terminal or a card swipe machine.
How does point-of-sale (PoS) system work?
Point-of-sale (PoS) system allows merchant transaction via credit and debit cards. The POS component interacts with the Card component to obtain necessary credit card information to complete a sale. Hence with Paytm’s new App POS, merchants will be able to accept debit and credit cards using the App without having to buy a card swipe machine.
Paytm’s POS is limited to those merchants who have a smartphone, a working Internet connection and the app
Below describes its step by step process:
* After generating the bill, the shopkeeper will give his/her smartphone to the customer to enter the card details.
*After a user has a typed in their card details, Paytm takes them to the bank’s website for the two-factor authentication
* Customer will then get an OTP (One Time Password) on their device.
* The generated OTP will have to be entered in the shopkeeper’s device. Thus, the transaction is complete.
* Essentially, a user will have to rely on the bank’s network for the transaction to get through.
According to Paytm, POS transaction is more cost-efficient and simple.
Paytm will charge a transaction fees for this till December 31. However, for credit card transactions, it will charge 2 per cent merchant fee. They will also have to self declare themselves as a business on Paytm, give bank account details, and then start accepting all debit and credit cards.
While the economy is grappling with currency crunch, transactions on Paytm mobile wallets have more than doubled.
The Paytm founder and Chief Executive Vijay Shekhar Sharma on Thursday said by 2020, the target is to have 50 crore Paytm Bank accounts. The company claims to be signing up close to 40,000 merchants. For this, it has tied up with Citibank.
Some industry experts have voiced concerns that in backdrop of the surge in traffic on digital payments systems of wallet companies, there could be flaws in security features, as an outcome of the firms’ eagerness and haste to expand systems.
However, downplaying concerns about security, Paytm said, card details are not stored in Paytm app nor on Paytm servers, hence there is no security threat as such.