Alternate Payment Methods for a Contactless Delivery Experience


Rini Sinha   | Senior Product Manager

May 04, 2021

Payment Methods for a Contactless Delivery
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2020 was a challenging year for both customers and retailers but also introduced us to new opportunities. For one, it accelerated the pace of the long-pending digital adoption!

Individuals who were once sceptical of going cashless, totally abandoned cash transactions. According to the article published by The Times Now, cash transactions saw a 50% drop amid the pandemic.

Not only customers, but businesses too underwent a transformation. Today, you can see every small and big retailer, be it your local sabzi wala or a chai ki tapri, or a clothing retail chain, each of them accepts at least one digital mode of payment. (UPI and QR codes have been ruling small businesses). No wonder, the year-on-year growth in UPI transactions stood at 73% in February 2021.

Today, businesses can opt for more than one contactless payment method to offer a more flexible and convenient experience. Allow me to help you understand some of these contactless payment methods in detail.

UPI Payment

UPI a.k.a. Unified Payment Interface, has achieved a new milestone and has transcended last year’s record. In January 2021 alone, UPI processed 2.3 billion transactions worth Rs. 4.3 lakh crore.

Remember how we only used to pay our maid and / or cook in cash? Today, many are making use of various UPI apps to credit salary even to our house help. Now apply the same in a retail/ service scenario, from your local gardener to paan wala or even your local grocery store to large consumer durable store, all have started accepting UPI payments. In fact, at Ezetap, we observed a 300% jump in UPI payments volume in October 2020 as compared to pre-covid months in 2020.

There are three ways of accepting UPI payments - dynamic QR code, static QR code, and VPA handle. Let's explore those:

1. Static QR Code

Static QR codes come encoded with the name of the merchant and his bank details. The code cannot be edited and is therefore called static. It is made one time, and remains common for the retailer thereafter. It is usually made available to the customer via a display, like a printed sticker or a sheet. The customer can scan it and enter the payment amount, followed by password to make the payment. Upon authorisation, the payment is directly sent to the merchant's account. 

Use Case: It is ideal for small merchants who want to readily accept quick digital payments via a contactless method. They can get started by generating a code, printing it, and sticking it at the counter to accept payments.

In this form, the retailer has zero control over the payment amount and thus cannot edit/ check the same. Thus this way is prone to more errors. For the same reason, it does not work well in large establishments, with high volume of transactions since manual errors and reconciliation can bring in many operational inefficiencies. 

For those, we have other advanced methods as listed below.

2. Dynamic QR Code

As the name suggests, this QR code is dynamic in nature. The merchant or his agent has to generate a dynamic QR code for every transaction using the payment app on their phone, or POS device. This code has the merchant name, bank details, and the transaction amount, and is thus, unique to every transaction. The customer has to simply scan and authorise the payment. Here, the customer does not have to enter the amount manually, since it is already fed in the Dynamic QR code

This method offers additional convenience to the customer and adds a level of efficiency to the process by eliminating manual errors due to wrong amounts entered by the customer. The QR code is generated via a payment software and can be displayed via a dedicated display screen at counter, via POS device at counter or on an Android mobile phone via the app. 

Use Case: For in-store payment acceptance at large format retail stores, restaurants, pharmacies, testing labs, hospitals, a dynamic QR code payment can be done. It is also useful for payment acceptance at the customer’s doorstep for all logistics, delivery and e-commerce companies, Government Municipal Corporations, utilities. It is important to note that the government has made it mandatory for huge retail enterprises to print dynamic QR codes on the invoice.

3. VPA Handle

UPI payments can also be accepted without a QR code but directly via a VPA (Virtual Payment Address) handle. You do not have to ask for the receiver's account number, IFSC code, account type, bank name, etc. You can simply accept payments by sending a payment request to the customer, by entering their virtual payment address in your payment software. The VPA address which looks like xyz@abcbank. A single merchant can have multiple VPA, the VPA is tied to the person’s bank account via a specific app.  

A better way to accept payments is to ask for the customer's VPA and send a payment request onto their VPA. This request contains the name of the establishment, payment details and has  the establishment’s bank details encoded in the request. The customer has to open the app, to which the VPA handle belongs and authenticate the UPI transaction.

Use Case: Nearly any merchant who has UPI payments, can accept payments via customer’s VPA. It is preferred mode in online/customer initiated transactions, where customers can themselves add their VPA and send a request to themselves and close the transaction via the app/ website. This is a great fit for all e-commerce websites and apps.

NFC Cards

You all may have noticed WiFi symbols imprinted on some credit/ debit cards - these are NFC cards, or cards which can work on Near-Field Communication. This simply implies that your credit or debit card allows tap and pay transactions. Though it’s called ‘tap and pay’, no physical touch is needed. If you want to make transactions within Rs. 5000, all you need to do is place the card a few inches away from a contactless-enabled POS device and the transaction will be processed. For an amount above INR 5000, a secure PIN entry is needed. 

This mode of payment is gaining momentum amongst customers since it eliminates the concept of PIN codes and authorisation esp for small-ticket purchases, giving them faster payment and checkout experiences. 

Use Case: Every business can and must equip themselves with this mode of payment. If you already accept card payment, enabling this NFC payment method is the easiest! All you need to do is contact your payments provider and ask them to replace your outdated POS with a NFC enabled swiping machine.

SMS Pay

SMS Pay is a way of accepting payments through a text message. The merchant shares a text message to the customer along with a ‘Pay Now’ link. When the customer opens that link, he / she will land on a payment page and can complete the transaction remotely by multiple digital payment options like netbanking, e-wallet, UPI, debit / credit card, and more.

Bulk SMS Pay is a feature that allows large establishments to push SMS pay links to multiple customers in one go, requesting them to make payments for their Pay Later/ Pay by Cash deliveries.  Delivery companies can push SMS in the mornings, on the day of the delivery and ensure that payments are received prior to deliveries.

Use Case: SMS Pay has been widely used by e-commerce companies like Amazon and PharmEasy. They are useful for Delivery, Logistics, E-commerce, Insurance as well as Education businesses.

Due to COVID-19, not only retailers, but also customers across all ages—millennials, Gen Z and Gen X understand the aforementioned payment methods. Contactless payments not only provide the finest experience to the customer, but also ensure a streamlined and an efficient payment process for your company and employees.

We, at Ezetap, offer end-to-end technology for payment solutions. To know more about Contactless Payment Solutions, contact here. We will help you with a tailored payment experience specifically suited to your business requirements.

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