Advantages and Disadvantages of EMI

Today, we live in a world where it is almost next to impossible to lead a normal life unless you have bank account oozing with cash. Leading a luxurious is far beyond the capabilities of a common man. In such troubled times, EMI seems to be the only savior. EMI an abbreviation for Estimated Monthly Installment, helps you pay for the expensive products you have purchased in parts. However, that’s not the only benefit of having an EMI option. Here are some plus and minus points of EMI.

Advantages:

• Power to Buy- EMI gives you the power to buy items you otherwise would not be able to purchase. EMI has made buying luxurious items an effortless and affordable task for people whose salaries are insufficient to meet their needs. It has made people capable to afford something that is beyond their reach. This type of payment has not only proved to be beneficial for the common man but has also contributed to the success of traders who trade with such expensive products.

• Afford High Priced Items- EMI gives consumers the freedom to afford an item beyond their monetary reach by giving them the option to pay in installments. This proves to be advantageous for them especially when it come to purchasing a home, car or other expensive items like gadgets, home appliances and accessories.

• Pay in Installments- EMI confers users with the liberty to pay a small fixed amount every month. This makes it easy for them to afford daily life commodities without burning a hole in their pockets. Moreover, many banks charge a very minimal charge as interest for most EMI schemes especially for commodities like air conditioner, mobiles and other gadgets. 

Disadvantages: 

• Long Term Debt- EMI is a long term debt as one has to pay the installments till they finish paying off the principal amount. Some loans such as home loans can to be paid for as long as 20 years. In such cases, the user is bound by these loans for a long period of time restricting his freedom to buy other luxurious items. Moreover, the payee ends up paying more than the principal amount he requested for due to the interest rates levied on them.

• May Not Have Early Payment Option- Most banks that propose EMI schemes do not offer an early payment option even if the payee can afford to pay the principal amount early. This can prove to be setback for the payee as he/she will end up paying more than the principal amount due to the interest charges though he has the money to end this process all at once.

• Serious Consequences- Skipping an EMI may lead to various grave consequences like repossession of the purchased item, foreclosure, penalties and strict legal action. Many banks that offer EMI schemes observe strict regulations regarding skipping of EMIs. Consumers are suggested to read the terms and conditions before applying for such schemes to avoid losing the mortgaged item or facing legal actions which will cause more problems. 

5 Worst Security Mistakes Mobile Payment Users Commit

It seems like wallet is a fictitious word today. Many people have forsaken the traditional norm of carrying a wallet laden with hard cash these days. Instead of carrying currencies people prefer using plastic money or prepaid services like mobile wallets at present. The popularity of these forms of payment chiefly mobile payment raises questions regarding the security of their users. Although users are sentient of the measures that need to be followed to ensure their safety, here are 5 worst security blunders people often commit worldwide when it comes to mobile payment services.

• Misplacing Your Mobile- This is one of the most universal gaffe people commit worldwide. Losing a phone due to callous behavior and theft is cited as few of the most common reasons that pose a threat to the security of the user. While one cannot help a phone from getting stolen one can surely download apps that lock applications, help to secure vital information when in anonymous hands and help to locate a stolen phone.

• No Back Up Data- Another ordinary habit found among mobile users which many are aware of is most users either do not back up their mobile data frequently or do not back up important data and contacts at all. Backing up your data on a CD or a drive minimizes the risk of losing vital information in case of a theft or any other cause. 

• Using Unreliable WI-FI- Often people use WIFI that can be accessed without password from an unreliable source just to save some extra money on their internet tariff plans. This can prove to be very hazardous as malicious hackers can access your crucial details and exploit it at any given time.

• Applications That Encroach Your Privacy- Many smartphone users use applications that invade their privacy and use their delicate information. Smartphone users are advised not to use such applications as majority of them intrude your privacy and misuse delicate information.

• Allowing People To Use Your Phone- Customers often complain about abusage after they handed their phones over to someone else to use it. Sharing your device or letting someone use your device is cited as one of the most foolish act done by any user.  

India Goes the Mobile Way

India is a developing nation that is progressing with time. Like most emergent states it is embracing technology. One such recent hi-tech development welcomed by open arms in India is mobile banking. Though introduced a couple of years ago globally, it has gained popularity over the years owing to various features like being easily portability, enhanced usability and security. However, there is much more than these features that has added to success of this form of payment. Here are some of them.

They are Cheap and Instantaneous- Mobile banking services are economical as compared to Credit Card payment gateways and PayPal for traders. Hence, they are a preferred form of payment compared to others. Moreover, mobile payments are also immediate which means it can be used right away after transfer unlike cheques or demand drafts that take minimum 3 days to transfer.  Attributing to these characteristic more than 40 million mobile users have registered themselves for mobile banking services.

They are Safe and Secure- When a payment is done through the medium of a cheque there is a possibility that the cheque may bounce due to insufficient funds in the bank account of the account holder or faulty signature. Mobile payment eliminates all such prospects as the payment is instant and is deducted from the funds existing in the account. Likewise, it also eliminates the problem of stacking up liquid cash to make payments as it can be used to make both small and big transactions.

They are Convenient- Mobiles are portable and user-friendly. Carrying a mobile is much more convenient than carrying wads of cash. Carrying cash can pose a threat to the security of the person handling it. Services such as Mobile banking and mobile wallet eradicate the chances of being robbed or attacked by assailants. Checking balance amount and keeping a tab on transactions is also an easier task via the mobile phone. Therefore, around 5-7 million users use mobile banking facilities regularly. 

They are easy to Access- As a matter of fact, customary banking has a lot of limitations as in no bank functions 7 days a week, there are restrictions in terms of timings and one has to stand in long queues to deposit or withdraw money. Mobile banking compared to this has no restraints; it can be accessed for transactions and can be monitored at any time, any day be it Monday, Saturday or Sunday, from any corner of the world without any interruptions which gives it an edge over standard banking.  

Credit Card Payment Gateways - Making Life Easier

Attributing to services such as credit and debit card payment gateway offered by service providers to online trading sites, paying through credit card and debit card is a growing fad today. Approximately every person who starts a new bank account today opts for a credit or debit card due to its simple and less time-consuming user process. Paying through credit and debit card is a facile process as compared to paying through a cheque or any other form of payment with the exception of cash payments. Though traders who are more on a face-to-face basis with their patrons find it more appropriate to accept cash payments, merchants who are based online find card payments more feasible.

Card payments are a quicker and economical process as compared to options like Cash On Delivery for traders who are based online. Hence dealers who trade through the medium of online trading platforms opt for payment service providers who offer services such as payment through credit or debit card. Credit and Debit card payments are advantageous for both the dealer and their patron. If this form of payment is inexpensive and faster in comparison to cash payment for the traders, it is also beneficial for their clients as this process is less prolonged and effortless. In addition the shopper does not have to dread stacking up liquid cash for fear that they need to pay a hefty amount for the merchandise they purchase.

Furthermore payment made in the form of credit and debit cards is much safer for both the merchant and their customer as it curtails the probability of fraudulent dealings. It is a time-saver, as neither the trader nor the shopper has to go through the ordeal of standing in a large queue waiting to withdraw or deposit the amount. Payments are completed in a jiffy in a matter of few seconds and it takes less than two days to complete the entire procedure which is also inclusive of debiting the amount in the trader’s account. Hence attributing to its alacrity and enhanced usability, online trading platforms prefer debit and credit card payment gateways than other methods of payment. 

THE DAWN OF ELECTRONIC MONEY

Payment methods are broadly classified into two types. Exchanging and Provisioning. In provisioning a third party must be involved from one party's account to another party. This is where Electronic Payments, more commonly known as Plastic Money comes into play.

Credit card, debit card, instant money transfers, and recurring cash or ACH (Automated Clearing House) disbursements are all electronic payments methods. Electronic payments technologies are magnetic stripe card, smartcard, contactless card and mobile handset. Mobile handset based payments are called mobile payments.

Electronic payment systems are software systems that enable online credit/debit/cash/smart card processing. Via an electronic payment system, users can browse an online catalog and purchase items online through automated online transactions. Launching an e-commerce website ultimately improves the way of doing business, increases level of sales, expands business to local and foreign markets and improves relationships with existing customers.

Advantages:

• Speed and Convenience: Consumers can find what they want to buy and purchase it quickly.
• Flexible Payment Arrangements- Electronic payments are also flexible. Many payment schedules allow for later billing or payment installments using a third-party vendor. Business websites typically give several options for customers to buy using a credit card, debit card or even a direct transfer from a bank account. This also allows several types of transactions that are only available online, such as peer-to-peer electronic transfers.

Disadvantages:

•  Security- The flexibility that e-payments enjoy can also create security hazards. Malware and other hacking attempts can track keystrokes in order to copy account passwords and access payment information. Online databases can be hacked and important information can be stolen. Money can be stolen from online accounts.
• Payment System Collision- Since online payment systems are new and global in their perspective, problems can occur when it comes to applying them to all e-commerce businesses. Some types of payment that customers are used to depending on may not be available in other countries, even when purchasing online from those countries is an option.

PAYMENTS SYSTEMS THROUGH THE AGES III

Fiat Money:

In earlier times, currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. As per modern definition, most of the world's paper money is fiat money. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation. If people lose faith in a nation's paper currency, the money will no longer hold any value.

Fiat money originated in 11th century China and its use became widespread during the Yuan and Ming dynasties.

Advantages:

• Convenience- Paper money comes in many denominations, which allows you to carry large amounts of legal tender without having to move large, bulky forms of money. It takes up little space and is widely recognized as a note of value that can be traded for any goods or services.
• Economical- Not only is paper money small and transportable, but it also is much cheaper to produce than the value it may represent.
• Can Be Created At Will- Unlike any other store of wealth, paper money can be printed at will of the Government Body. If there is a need, such as in times of a national emergency or monetary deflation, the bureau can print and release as many bills as needed to resupply the population with paper money.

Disadvantages:

• Inflation- Conversely, printing too much paper money as required to sustain moderate growth can lead to high rates of inflation. As the number of legal notes increases, the value of those notes decreases because more dollars are chasing relatively fewer goods and services, which causes prices to rise.
• Confidence- If public confidence fades because of high national debt or political turmoil it can ensue chaos where goods and services will be traded only in kind, meaning paper money can become practically useless.
• Fragility- Paper money is susceptible to accidental tearing, shredding, burning and being run through the laundry. 

PAYMENTS SYSTEMS THROUGH THE AGES II

Commodity Money:

Commodity money is money whose value comes from a commodity of which it is made. Commodity money consists of objects that have value and can be used as money. Since payment by commodity generally provides a useful good, commodity money is similar to barter, but is distinguishable from it in having a single recognized unit of exchange.

Examples of commodities that have been used as mediums of exchange include gold, silver, copper, peppercorns, large stones (such as Rai stones), decorated belts, shells, alcohol, cigarettes, cannabis, candy, barley, etc. These items were sometimes used in a metric of perceived value in conjunction to one another, in various commodity valuation or price system economies.

Commodities often come into being in situations where other forms of money are not available or not trusted. Various commodities that were used in pre-Revolutionary America include wampum, maize, iron nails, beaver pelts, and tobacco.

Advantages:

• Commodity Money serves an additional purpose. For example, gold can be turned into jewelry, while cigarettes can be smoked. This gives the holder added options; he can either use or spend the money.
• It may be possible to acquire money that wasn't previously in circulation. For example, if gold is used as commodity money and somebody discovers more of this metal, he or she may be able to get more value from its role as money than from its role as a base for jewelry.

Disadvantages:

• Risk of Volatility- While commodity money typically has less volatility during turbulent economic developments; commodity money can still lose value. For example, both gold and oil are valuable commodities. However, the prices of both gold and oil undergo increases and decreases over time. Thus, the risk of volatility still exists with commodity money.
• Lack of Divisibility- Commodity money is typically not as divisible as traditional paper money. For example, you can divide dollars into quarters, nickels, dimes and pennies. However, you may have a difficult time dividing a bar of gold into small denominations needed to make everyday purchases.
• Bandwagon Ups and Downs- Commodities also suffer from the bandwagon effect. The bandwagon effect is that the price of commodities may rise and fall with the whims of the general population.
• Value- Another problem with commodity money is assessing the value of items purchased with the commodity money. Measuring the exact amounts of value of commodity money is not easy, and therefore, it is difficult to manage your wealth using commodity money.

PAYMENTS SYSTEMS THROUGH THE AGES - I

Though electronic payment is a recent form of payment, imbursement in all is not a novel concept, it existed ever since the existence of mankind where man exchanged goods to acquire goods of his choice. This article will decipher the modes of payment that existed since ages.

Barter System:

'I'll give you 5 stone axes. You hunt for me a mammoth.'

The above line is a clear demonstration of bartering- A direct trade of goods and services. Bartering as a system clearly defines that Exchange is the only vital necessity in a transaction.

The simplest and oldest form of payment is barter, the exchange of one good or service for another. In the modern world, common means of payment by an individual include money, cheque, debit, credit, or bank transfer, and in trade such payments are frequently preceded by an invoice or result in a receipt. However, there are no arbitrary limits on the form a payment can take and thus in complex transactions between businesses, payments may take the form of stock or other more complicated arrangements.

In law, the payer is the party making a payment while the payee is the party receiving the payment.

As times progressed, slowly, a type of prehistoric currency involving easily traded goods like animal skins, salt and weapons developed over the centuries. These traded goods served as the medium of exchange even though the unit values were still negotiable. This system of barter and trade is spread across the world, and it still survives today on some parts of the globe.

Advantages:

• It is a simple system free from the complex problems of the modern monetary system.
• The problems of international trade, like foreign exchange crisis and adverse balance of payments, do not exist in the barter system.
• Personal and natural resources are perfectly utilized to meet the requirements of the society without involving any wastage.

Disadvantages:

• Absence of common measure value
• Money plays an important role in a monetary economy thus being helpful in measuring their values against each other. This role might be absent in a barter economy.
• Invisibility of certain goods
• A barter transaction cannot occur if an individual wants to buy a certain amount of goods but only has single invisible unit of another good which is worth more than what the individual wants to obtain.
• Lack of standards for deferred payments.

6 Things People Using Net Banking Need To Know

Net Banking is the new way out to all tribulations these days. Be it transferring funds, making transactions for purchases or bill payments, net banking is the one-stop answer for all finance associated distress that once consumed a person’s precious time and energy. Net banking has opened a new arena for people giving way to devices to make banking transactions, shunning
the old practice of standing in long serpentine queues for hours. Though net banking has a series of benefits it might prove to be a nuisance if not used cautiously. Here are some net banking tips you need to be acquainted with and follow as a consumer

1. Passwords- Never use your date of birth, phone number, mobile number or any other information linked to you that is simple to guess as your password. By no means should you stick to using the same password for ages. Always change your password as frequently as you can. One is suggested to not use the same password for more than a period of 3 months.

2. Do Not Share Your Details- Do not share your login id and password with any person as there are a probability of your account being mishandled when the information is out in public. Also do not transact on websites that inquire for your login id and password as there are chances that it could be a scam. The best payment gateway will never request for such delicate minutiae as they follow the customer security guidelines in their dealings. Never shop on an e-commerce gateway that asks for your password as it may possibly come from an unreliable source.

3.      Detach the Internet Connection When Not In Use- Always disengage your internet connection and detach the plug from the socket when not in use. Keeping your internet connection active when not in use increases the likelihood of your computer getting hacked by malicious sources. This can result in hackers accessing your delicate information and misusing it too.

4.      Keep a Tab on Your Account- Whether you know how much money you have in your account or not if you use your account for net banking and bill payment check your account as frequent as possible. Inform your bank immediately if there is a miscalculation of funds.

5.    Use A Licensed Anti-Virus Software- Always use a licensed anti-virus software even though it means spending few hundreds. Though there are various free versions of anti-virus software that are obtainable all over the internet they are not as half as effective in fighting viruses as licensed software. Update the software as per the update notifications to help it combat new viruses.

6.      Sign out- Last but not the least sign out of your account after use. Also do not forget to clear the cache and close your browser. Not signing out of an account correctly is cited as one of the chief reasons that lead to faulty transactions. 

RENEW- THE INNOVATION STORY IN PAYMENT TECHNOLOGY

Innovation is all about 5 vital steps that race in synergy with each other to RENEW life. Payment Technology is not a recent RENEW exercise. We have been witnessing this transition in history right from the time when man gave away the barter system and moved to coins, to paper exchange, to cards to finally today when we are merging the forces of new generation technology with the sheer brilliance of the human mind. I believe there have risen three Innovations that have appealed universally to a wider audience, right from the affluent business class to the small time baniya, the London School of Commerce graduate to the Manubai College pass out. For a simple reason. They fit into the RENEW design in every sense.

Innovation 1- Mobile POS: Conceptualized by Jack Dorsey and James Kevkelvy in the year 2006, Mobile Point Of Sales is a dongle that can be connected to a phone’s audio jack to enable credit/debit card swiping and further allow payments. In the past few years, nothing has really democratized the payments space as the simple dongle. This unique blend of mobile along with a dongle allowed any individual the freedom to collect payments electronically with being mobile. Thus springing a great number of use cases. People who are providing any kind of service can start accepting card payments technically, at a low cost. We shouldn’t be surprised that at some stage we would have our own bhajiwallas, paanwala, carpenters also accept card payments.

Innovation 2 - Interactive Voice Response (IVR) based Payments: Interactive Voice Response (IVR) has extended telephony and has been applied by businesses to help customers get into a self-assist model for availing services whether it is finding out balances or knowing the list of items. IVR technology works on a very humble principle. Almost every individual in our country is connected to voice technology through their handsets or desk phones. Keeping this significant detail in mind, IVR allows your customers to make payments over a phone call through agent assisted integrated / non-integrated IVR options or a fully automated voice driven menu option (both inbound as well as outbound). In a country like India with over 900 million mobile phone subscribers, an IVR  payments can truly push the case for electronification of payments as bulk of the consumers are aware and have access to telephones. The technology requires just a basic handset to dial out to a number of the merchant. Also customers need not provide the card details to a call center agent. They can comfortably enter the card details over a menu assisted dialing through IVR, which makes it completely secure.

Innovation 3- Interbank Mobile Payment Systems: Interbank Mobile Payment Service (IMPS) is one of the path breaking innovations created by National Payments Corporation of India (NPCI). It offers 24x7 instant interbank electronic fund transfer service. To avail IMPS, the bank customer needs to have just mobile banking enabled. Thereafter he/she can easily access his accounts to transfer funds to another account in any another bank in realtime. IMPS’s interoperability is the key factor that boosts its empowerment motto. Fund transfer through IMPS can be executed technically through any channel – whether it is Internet, IVR or mobile. Its reach to every economic zone is clearly unbeatable. In the last few years, most of the innovations have occurred around the mobile phone only. One innovation which was not mentioned was Near Field Communication (NFC), which has been piloted around the globe for quite some time. However, the biggest use case for this has been in transit and tolling. Ultimately whatever be the innovation, it is the customer who will decide what works and what doesn’t. Of course, in an increasingly stressed world, it does pay to be simple and it is the RENEW paradigm that works across technology barriers – Sundar, sasta, tikaao as we say in India.