by Susheel Rao | May 30, 2023 | Culture & Money, Slider
What is UPI?
The National Payments Corporation of India (NPCI) created the Unified Payments Interface (UPI), a ground-breaking payment system. Launched in 2016, UPI has transformed the way people in India transfer money, make payments through UPI payment apps, and conduct digital transactions. UPI provides a seamless and instant transfer of funds between different bank accounts, enabling users to send and receive money through their mobile phones with ease.
Understanding How UPI payment apps make money?
UPI payment apps serve as intermediaries between users and their respective banks, facilitating secure and convenient transactions. While these apps offer their services for free to end-users, they generate revenue through various sources. Let’s explore these revenue streams in detail:
Merchant Payments:
UPI payment apps enable users to make payments to merchants, both online and offline, using their smartphones. These apps charge a nominal fee, usually a percentage of the transaction amount, as commissions, which vary between apps but are typically around 1% of the transaction value. The increased use of these by merchants has been driving this revenue stream’s rapid growth.
Value-Added Services:
UPI payment apps often offer additional services beyond basic fund transfers. These value-added services include bill payments, mobile recharges, ticket bookings, mutual fund investments, insurance premium payments, and more. Service providers offering these services often partner with UPI apps and pay a commission or transaction fee to access the user base of these apps.
Cashbacks and Incentives:
To encourage usage and promote user engagement, UPI payment apps provide cashback offers and incentives to users. These incentives are funded by sharing a portion of the commission earned from merchants or service providers. By offering cashbacks, discounts, or rewards, UPI apps attract new users and encourage them to make more transactions.
Advertising and Partnerships:
They are a relatively minor source of revenue for UPI payment apps. However, they provide an additional revenue stream that can help offset the costs of developing and maintaining the app. UPI payment apps typically show targeted ads to users based on their transaction history and other data. These apps collaborate with brands, merchants, and service providers to showcase targeted advertisements or promotional offers to their users.
UPI payment apps pay a small platform fee to the NPCI for utilising the UPI infrastructure. This fee contributes to the revenue of the NPCI, which operates and maintains the UPI ecosystem. The platform fee may vary depending on the volume and value of transactions processed by the UPI app.
Transactional Costs and Revenue Implications:
While UPI payment apps generate revenue through the aforementioned sources, they also incur certain transactional costs that impact their profitability. These costs include:
Transaction Processing Charges:
UPI payment apps may need to pay a small fee for every transaction they process. The banks charge this fee in exchange for providing the UPI infrastructure and settlement services. The transaction processing charges can vary based on the transaction volume and the partnership agreements between the UPI app and the banks.
IT Infrastructure and Security:
Maintaining a robust IT infrastructure and ensuring the security of transactions are crucial for UPI payment apps. They invest significantly in technology upgrades, cybersecurity measures, and compliance frameworks to protect user data and prevent fraudulent activities. These investments in infrastructure and security contribute to the overall operational costs.
Customer Acquisition and Marketing:
To expand their user base and increase adoption, UPI payment apps engage in aggressive marketing campaigns and customer acquisition initiatives. These activities involve substantial marketing budgets and promotional expenses. While they contribute to revenue growth in the long term, they also impact short-term profitability.
Conclusion
UPI payment apps have a robust revenue-generation model. One of the biggest challenges facing UPI payment apps is competition. There are currently several apps available on the market like Gpay, PhonePe, India’s very own Bhim UPI and many more hence the competition is expected to intensify in the coming years due to the rising popularity of UPI . This could lead to a decline in transaction processing charges and commissions from merchants as app developers try to attract more users by offering lower fees.
by Susheel Rao | May 29, 2023 | Savings
As a college student, managing your finances and saving money might be difficult, but with the correct mentality and tactics, you can reach your financial objectives. You may get advice on how to properly save money from this detailed guide. To prepare yourself for a solid financial future, keep in mind that the key is to create excellent financial habits early in life.
The following tips will help you save money as a student:
1. Track your expenses
To clearly understand your cash flow, start by keeping track of your everyday costs. You may use this to find places where you can cut costs and save money. Use a simple notepad or benefit from budgeting tools that may help you keep track of your spending. In India, some of the most well-liked budgeting applications are:
2. Create a Budget
After you have a clear understanding of your spending, establish a budget that is in line with your financial objectives. The 50/30/20 rule is a helpful formula for creating a budget. Adapt it to your own requirements as a student.
50% for necessities, which include things like rent, utilities, food, and travel.
30% for discretionary costs: Set aside this sum for extras like entertainment, hobbies, and dining out.
20% of your income should be set aside for investments, an emergency fund, and savings.
3. Prepare Meals at Home:
Since eating out might be expensive, think about preparing your meals at home. Make a shopping list, plan your meals in advance, and purchase products in bulk. Along with helping you save money, this will promote better eating practices.
4. Use public transportation
If at all feasible, use the bus or train instead of hiring a car or using a ride-sharing service. In general, public transit is less expensive and uses less gasoline.
When making purchases, seek out sales, compare costs, and choose inexpensive substitutes. When appropriate, refrain from making impulsive purchases and think about purchasing used products.
6. Examine student discounts
Take advantage of the discounts that many companies and services provide to students. Students may get exclusive discounts at several stores, eateries, theaters, and public transit networks. To get these advantages, keep your student ID card with you.
7. Take into consideration online savings accounts
Research the online savings accounts provided by renowned Indian banks. Comparing these accounts to typical savings accounts, they often provide higher interest rates. Choose a product after doing your research that provides reasonable interest rates and practical features.
8. Start investing
While conserving money is important, investing may eventually help you increase your wealth. Since you can be a student with limited resources, it’s crucial to start off modestly and make secure investing decisions. Think about investing in fixed-deposit accounts or low-risk mutual funds. Before making any investment choices, get the advice of a financial professional or do an in-depth study.
9. Recommendable Finance Applications
The following finance applications are available in India on both the Play Store and the App Store and may be used to properly monitor and manage your finances:
An effective list for investing and saving
- Utilize budgeting tools like Money Manager Expense & Budget and others mentioned to keep track of your spending.
- Construct a unique budget using the 50/30/20 guideline.
- Research cost-effective purchasing possibilities and prepare meals at home.
- Use public transit as opposed to a private vehicle or a ride-sharing service.
- Whenever possible, take advantage of student discounts.
- Open a savings account with a trustworthy bank.
- Start investing in fixed-deposit accounts or low-risk mutual funds.
To save money, you must be determined and disciplined. By using these tips and making them part of your daily routine, you can build good money habits that will help you through college and beyond.
by Susheel Rao | May 26, 2023 | Culture & Money, Slider
The Unified Payment Interface, popularly known as UPI, is a real-time payments system that enables you to make instant money transfers. The National Payments Corporation of India developed UPI, a mobile app-based payment system that enables quick money transfers between two bank accounts.
Since its April 2016 introduction, UPI has seen tremendous development in India. In this blog, we’ll talk about the history of UPI, why it’s so popular in India, and how it affects the country’s economy.
The history of UPI
Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) were the two main payment systems in use in India prior to the introduction of UPI. RTGS debuted in 2004 and NEFT in 2005, respectively. Even though these payment methods were well-liked at the time, they had certain drawbacks. Money transfers through NEFT required at least two hours, and RTGS had a minimum transaction threshold that made them challenging for smaller transactions.
The National Payments Corporation of India (NPCI) developed the concept of Unified Payment Interface (UPI) to get around these restrictions. UPI first went live in April 2016. UPI initially struggled with acceptance since there were so few banks and payment applications that supported the interface. However, as more banks and fintech businesses became aware of its potential, the situation quickly altered. The number of UPI transactions soared from 21 million in December 2016 to a staggering 8.65 billion as of March 2023.
Why is UPI so popular in India?
There are several reasons why UPI is popular in India, but the major one is that it provides a smooth payment experience. Customers may make payments instantaneously without having to input their bank information, an IFSC code, or any other credentials each time. They may instantly make payments with only a UPI ID or account number.
The simplicity of UPI usage is another factor in its popularity. Customers may use UPI to make payments on their mobile devices, and the app’s user experience is inviting. The app’s availability in a variety of languages makes it simple for users who are not fluent in English to use.
Additionally, since UPI is an open system, any bank or supplier of payment services may connect their products with UPI. Customers may easily integrate various bank accounts and complete purchases without switching between different payment applications thanks to this.
UPI’s Economic Impact on India
UPI has had a significant impact on the Indian economy. It has transformed the payments sector and made it simpler for consumers to send money online. The following are some ways the UPI has influenced the Indian economy:
Financial Inclusion:
In India, UPI has been a key factor in advancing financial inclusion. It has given people from all walks of life, including those without conventional bank accounts, access to a digital payment platform. Users who use UPI may easily complete transactions on their smartphones by connecting their accounts to a variety of payment applications. Due to their increased ability to engage in the official financial system, millions of individuals are now less dependent on cash transactions.
Small Businesses and MSMEs:
UPI has been a blessing for MSMEs and small companies in India. It has decreased the cost and complexity of accepting card-based payments and done away with the requirement for conventional point-of-sale (PoS) devices. Small companies can now take payments straight into their bank accounts thanks to UPI-enabled applications, which makes it simpler to monitor transactions, manage finances, and spur development. As a consequence, corporate productivity has grown and financial digitalization has expanded.
Cashless Economy:
UPI has significantly contributed to India’s goal of a cashless society. UPI has influenced individuals to stop using cash by providing a quick and safe digital payment alternative. UPI’s ease of use and widespread merchant acceptance have given customers the confidence to accept digital payments for routine purchases, further lowering their reliance on cash.
Government Initiatives:
Governmental Initiatives: In India, UPI has played a significant role in a number of governmental initiatives. Direct transfers of subsidies, pensions, and other benefits to residents’ bank accounts have been made easier because of the integration of UPI with government programs like Direct Benefit Transfer (DBT). Millions of Indians have benefited from this by reducing leakages, ensuring transparency, and streamlining the execution of social programs.
Increased Tax Collection:
The government is now better able to collect taxes because of UPI. Instant tax payments are possible using UPI, and the government can more effectively trace the transactions.
Conclusion
Unified Payment Interface (UPI) is well-liked throughout the nation because of its usefulness, user friendliness, and game-changing effects on the Indian economy. From its humble beginnings, UPI has become a powerful instrument that has accelerated financial inclusion, empowered small businesses, stimulated a cashless economy, supported government programs, and facilitated commercial operations. Even with its pros and cons, UPI has altered the way that millions of Indians conduct business and opened the door for a technologically empowered India as a result of its straightforward transaction capabilities and widespread adoption. As the country grows and progresses much further, UPI is poised to play a significant role in defining the path of digital payments in the country.
by Susheel Rao | May 25, 2023 | Investment
One of the smartest choices you can make for your future is to start investing in your early 20s. With a long-term plan, you have the chance to get a big return on your investment. However, it can be challenging to know where to begin with the wide range of investment possibilities. In this piece, we’ll explain how to spend, how to set financial goals, and how to use different tools to build an investment portfolio that fits your needs.
Defining Your Financial Goals
It’s essential to decide your financial goals before you start investing. What do you hope to accomplish with your investments? Do you intend to put money aside for a down payment on a home? repay student loans? Retirement? You can start creating an investment plan that fits your financial goals once you have a firm understanding of them.
Investors have access to a wide variety of financial tools, each of which has certain advantages and hazards. Among the most well-liked investments are:
1. Stocks:
By acquiring stock, you get a minor stake in an organization. While stocks have the potential to offer big rewards, they also carry a significant amount of risk.
2. Bonds:
Governments or firms get loans in the form of bonds. Compared to stocks, bonds can offer a more consistent return, but they also have smaller potential gains.
3. Mutual Funds:
A mutual fund is a collection of securities like stocks, bonds, or other financial instruments. You can invest in various stocks or bonds at once, and a qualified investment manager is in charge of managing them. Mutual funds can offer diversity and skilled management, but they also have fees.
4. Exchange-Traded Funds (ETFs):
ETFs hold a variety of equities or bonds, just like mutual funds do. But they are traded on a market like stocks, which means they can be bought and sold throughout the day. In general, ETFs are more affordable than mutual funds.
5. Real estate:
If you want to keep the property for a long time, real estate can be a rewarding investment. But it takes a big investment up front and can be hard to run.
What exactly is the 50/30/20 rule?
The 50/30/20 rule is a great guide for figuring out how much of your money to put towards each aspect of your financial life. According to the guideline, you should allocate 50% of your income towards essential costs (such as rent, food, and utilities), 30% towards expenditures (like entertainment and hobbies), and 20% towards savings and reducing your debt.
There are also the following investment choices:
1. Public Provident Fund (PPF):
PPF is a government-sponsored savings program that provides returns that are tax-free. With a 15-year lock-in period, the investment qualifies as a long-term option.
2. The Pension Fund Regulatory and Development Authority (PFRDA):
The PFRDA which is in charge of the National Pension System (NPS), is a retirement-oriented investment option. It provides tax benefits as well as a low-cost investment choice.
3. Gold:
Due to its reputation as a safe-haven asset, gold is a well-liked investment choice in India. Physical gold, gold ETFs, and digital gold are ways to invest in gold.
4. Fixed Deposit:
A fixed deposit is an investment that provides a return that is guaranteed. Although the returns are often smaller than those of other investing strategies, the risk is similarly lower.
5. Robo advisors:
These are digital platforms that employ algorithms to build and manage investment portfolios in accordance with your objectives and risk tolerance. A robo advisor has minimal costs, diversity, and accessibility as advantages.
Conclusion
Investing in your early 20’s can lay the foundation for a secure financial future. Before diving into the world of investments, it’s crucial to define your financial goals. Whether it’s saving for a down payment, paying off student loans, or planning for retirement, having a clear understanding of your objectives will help you shape your investment strategy accordingly. Each investment avenue comes with its own set of risks and rewards, so it’s important to conduct thorough research and consider factors like diversification, fees, and long-term growth potential. Additionally, it’s beneficial to follow the 50/30/20 rule to manage your finances effectively.
Remember, investing is a long-term commitment especially when you’re investing in your 20’s which means patience and discipline are key. Regularly review and rebalance your portfolio as per your changing financial circumstances and market conditions. By starting early, setting clear goals, diversifying your investments, and staying informed, you can position yourself for financial success and achieve your long-term aspirations.
by Susheel Rao | May 23, 2023 | Culture & Money
In our daily lives, financial literacy plays a crucial role and is an essential ability. Having the knowledge, talents, and skills to effectively manage financial resources is referred to as financial literacy. Understanding different financial concepts like budgeting, saving, investing, and debt management are necessary. Simply put, financial literacy means being able to make smart financial choices that are in line with your short-term and long-term financial goals.
To ensure financial stability and well-being in India, financial literacy has emerged as a crucial aspect. India, a country with a population of more than 1.3 billion, faces special issues that call for efficient financial management. The significance of financial literacy and the impact it might have on a person’s financial situation are therefore essential to comprehend.
Financial literacy enables individuals to better manage their finances and ensure their financial future. Today, financial literacy plays a key role in one’s financial health and success. People who are financially literate have a better understanding of how to handle their finances and are better able to make decisions depending on their financial circumstances.
The six principles of finance
These are closely related to the idea of financial literacy and play a big role in determining a person’s financial knowledge. Individuals can make better financial judgments by understanding these principles. They are:
1. Setting a budget:
A budget is a financial plan that assists individuals in setting financial goals and keeping track of their income and spending. Individuals can better handle their finances and prevent overspending by creating a budget.
2. Interest:
Knowing what interest is is crucial for making wise financial choices. Individuals must understand how interest rates function and how they might impact their investments and debt.
3. Inflation:
Inflation is the gradual increase in the price of goods and services. Understanding inflation is essential when making financial decisions because it can have an impact on the value of one’s money.
4. Risk and reward:
All investments have a certain amount of risk. Making wise financial selections requires a
thorough understanding of this risk and its possible reward.
5. Diversification:
Spreading investments across various asset types is referred to as diversification. By doing this, you can balance risk and reward while limiting your exposure to one particular form of investment.
6. Compounding:
The ability to generate interest on interest is referred to in the financial term “the power of compounding.” Making long-term financial decisions requires understanding this idea, which is essential.
What makes financial literacy important?
India confronts a number of obstacles in the area of financial literacy. Less than one-third of India’s population has financial education, according to a National Council for Applied Economic Research survey. Financial inclusion and economic growth are both significantly hampered by this lack of financial literacy.
- In addition to assisting individuals, financial literacy benefits society as a whole. It can support economic growth, lessen poverty and inequality, and advance financial stability.
- Financial literacy is especially important in India, where citizens are frequently uninformed of the rewards and risks of many types of investments. There are several predatory behaviours that prey on weak individuals who lack the knowledge to defend themselves. For instance, many people become victims of Ponzi schemes, which advertise speedy returns on investments but in reality are misleading.
- Additionally, the role that financial literacy plays in assisting individuals in planning for retirement is crucial. It is more important than ever to understand financial planning and investing for retirement in India, where the bulk of the population does not have a pension plan. A lack of financial knowledge can lead to poor planning, insufficient retirement savings, and eventually financial instability later in life.
- The Indian government has implemented a number of initiatives to increase financial literacy throughout the country in order to solve this problem. Financial literacy and access to financial services have increased thanks to programs like the Pradhan Mantri Jan-Dhan Yojana, which offers financial services to the unbanked population, and the Digital India campaign, which attempts to boost digital literacy.
- Along with these initiatives, a number of commercial groups and financial institutions in India have also stepped up to the plate to promote it. For instance, to encourage financial literacy among its clients and the general public, ICICI Bank, India’s largest private sector bank, has introduced a number of initiatives, one of them being “Money Multiplier.”
Conclusion
Financial literacy enables individuals to better manage their finances and ensure their financial future. In encouraging financial inclusion and economic prosperity, it plays an essential role. Individuals may make wise financial decisions that are in line with their financial goals if they have the knowledge, skills, and ability to manage their finances efficiently.
Everyone should have financial literacy since it is an essential skill. To ensure financial stability and well-being in India, it is crucial to promote financial literacy. Individuals can lay the groundwork for a financially secure future by understanding the six principles of finance and making wise financial choices.
