<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-8-6.webp" alt="M2P Fintech" title="" id="9lksxlzsk" width="100%" height="528">It’s been 3000 years. Not a single day passes without the usage of money.Be it physical or digital, the movement of money signifies value and hope to the millions involved. Money transfer operators, banks, and <a class="link" href="https://m2pfintech.com/blog/fintech-101-discover-the-3ws-of-fintech/">fintechs</a> have played a remarkable role in enabling seamless money transfer in a quick, secure, and convenient manner.<h2 class="heading-node" id="19yqmhede" style="text-align: justify">Shift from Cash to <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">Cashless</a></h2>Money was not always fancy as crisp notes and lightweight coins three thousand years ago. It had a humble beginning taking the form of cowrie shells, rail stones, farm produce, and livestock to be used as exchange. Slowly precious metals like gold, silver, and copper were used in trade. Then cash in the form of metal coins and currency notes came into prevalence.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Infographic-1.webp" alt="M2P Fintech" title="" id="zrmpc1bbw" width="100%" height="1321">Today, the world has transitioned from cash to a <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">cashless economy</a>. <a class="link" href="https://m2pfintech.com/blog/payment-cards-design-made-simple-heres-what-you-need-to-know/">Payment cards</a>, QR codes, contactless modes, cryptocurrencies, and <a class="link" href="https://m2pfintech.com/blog/central-bank-digital-currency-cbdc-101-a-primer/">digital currencies</a> are hogging the limelight as they are super convenient, simple, and secure ways of moving money and making payments.<h2 class="heading-node" id="2421" style="text-align: justify">Evolution of Money Transfer</h2>Changes in customer expectations, the need for enhanced experiences, and the growing cyber security issues demanded an evolution in money transfer. Payment apps, digital wallets, wearables, and real-time payment platforms are doing their best in fulfilling this quest by enabling quick, simple, and secure Peer to Peer (P2P) and Peer to Merchant (P2M) transfers and payments.Curious to know when and how money transfer began?Here you go.<h3 class="heading-node" id="d1f6" style="text-align: justify">Hawala</h3>The hawala system is the oldest form of money transfer that dates back to the 8th century. Known as the “money transfer without money movement,” it was actively used in India, the Middle East, and South Asia.Heavily based on trust between hawala agents, the transfer is usually done without any promissory notes. The hawala agents could be friends, family, or trusted acquaintances who settle debts between parties with cash, property, or services.Here’s how hawala works.The sender gets in contact with a hawala dealer A to transfer money to another country. As soon as the money, commission, and beneficiary details are shared, the sender receives a unique secretive code. Then the hawala dealer A contacts dealer B from the recipient country. Dealer B then delivers the amount to the designated receiver after revealing the secretive code. The unique code will reconfirm if the receiver is the right individual or not.The hawala system is still in use as an alternative to the remittance channels and traditional banking systems.<h3 class="heading-node" id="cfd9" style="text-align: justify">Wire Transfer</h3>Next in line was wire transfer, the electronic mode to transfer money through a global network. It was known for its fast, irreversible, foreign, or domestic electronic money transfers. In the 19th century, Western Union was the first money transfer operator to introduce wire transfers.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Infographic-2-V2.webp" alt="M2P Fintech" title="" id="8tw76fb9s" width="100%" height="661">Here the sender had to reach out to the office with the money, and the operator would send a message and ‘wire’ those funds to the destined location. Codes and passwords were used between the parties involved to ensure security. Soon wire transfer became an integral part of moving or exchanging money internationally, and it still is.<h3 class="heading-node" id="750d" style="text-align: justify"><a class="link" href="https://m2pfintech.com/blog/payment-cards-design-made-simple-heres-what-you-need-to-know/">Payment Cards</a></h3>Metal money was the first precursor to the present-day cards. It was issued by Western Union in 1914. A few years later, in 1928, the Charga-plate was introduced in the US, which was offered by merchants to their regular customers. They became popular among the department stores, as they could issue cards on their own. These were the first transactional cards in history.Later in the year 1946, John C. Biggins of Flatbush National Bank of Brooklyn introduced the “Charg-It” card, which allowed people in a two-square-block radius to charge purchases to the bank. Charg-It was an easy way for consumers to use the card at multiple businesses. Merchant however had to leave sales slips with the bank.Then came the Diners’ Club card in 1950, which was the first real <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit card</a>. Called a Charge Card, its cardboard form gained massive popularity and acceptance among users. It charged merchants a 7% fee on every transaction and delivered one monthly bill on dining expenses to the cardholders.A decade later, the turning point in card transactions happened. Banks introduced ATM machines. After this move, cards were used at ATMs to withdraw cash and make deposits.In the early 90s, credit card adoption in India was slow. People who travelled to foreign countries were the only ones to use the Diners cards in India in the 1960s. It nearly took 15 years for the Diners card to reach 8,000 registered users in India.In 1980, the Central bank of India brought in credit cards in association with Visa and Master Card. As a result, debit and credit cards became the dominant source for non-cash payments, which retailers and consumers readily accepted.<h3 class="heading-node" id="4276" style="text-align: justify">SWIFT Transfer</h3>In 1973, SWIFT transfers came into existence. They were typically wire transfers but done via the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network. This global messaging network helped improve the speed, transparency, and consistency of payments. It changed the perception of how the credit system worked and became a globally recognized provider of secure financial messaging.<h3 class="heading-node" id="f5e7" style="text-align: justify">Growth of Online and Mobile Money Transfers</h3>In the late 90s and early 2000s, electronic deposits, <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">digital remittances</a>, and mobile money transfers became prominent. The following payment systems facilitated money transfers from anywhere, anytime, without any hassles.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Illustration-NEFT-V2.webp" alt="M2P Fintech" title="" id="llvfslid3" width="100%" height="661"><ul class="list-node" id="4rj8aja12"><li><a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a></li></ul>Introduced by the National Payments Corporation of India (NPCI) and the RBI in 2015, <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">the Unified Payment Interface (UPI)</a> is an easy way to transfer money in real-time from one bank to another. Here, the UPI ID acts as the virtual payment address, and UPI PIN is the security password to authenticate the transaction. These are only two things required to transfer money. UPI eliminates the need to enter complex bank account details to initiate a money transfer.<ul class="list-node" id="u29byozm5"><li>IMPS</li></ul>Immediate Payment Service is an instant fund transfer service and can be simply defined as NEFT+RTGS. It ensures real-time interbank funds transfer in the Indian banking system provided by banks. The cap on transaction limit is set very low to avoid fraudulent complaints. In order to make an IMPS transfer, you just need to know the destination account holder’s IMPS id (MMID) and their mobile number.<ul class="list-node" id="nix10ovkr"><li>RTGS</li></ul>The ‘Systemically Important Payment System,’ Real Time Gross Settlement (RTGS) System was introduced in 2004. It is a secure electronic fund transfer system that provides real-time online settlements for bank transactions across the country.<ul class="list-node" id="h04bgsk39"><li>NEFT</li></ul>National Electronic Fund Transfer (NEFT) was introduced in 2005 and soon became one of India’s prominent electronic fund transfer systems. It is the most secure way of transferring funds from one bank account to another. Here, the funds are transferred using the Reserve Bank of India’s NEFT infrastructure, which is a nationwide payment system facilitating safe and secure transactions all over the country.Now, this is not all. There are several other money transfer modes that involve virtual and cryptocurrencies. We’ll cover them in subsequent articles.Feel we’ve missed out on something. Let us know in the comments below.<h2 class="heading-node" id="2754" style="text-align: justify">The road ahead</h2>Newer technologies and <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API-based</a> tech stacks are paving the way for quicker, robust, hassle-free money transfer processes. Banks and money transfer operators leverage fintech partnerships to enable great remittance experience, cut costs, and manage backend integrations and tech infrastructure. Robust security verifications and <a class="link" href="https://m2pfintech.com/blog/why-is-risk-based-authentication-rba-critical-for-banks/">risk management systems</a> promise a secure, real-time flow of money across borders.Want to know more about digital money transfers? Write to us at&nbsp;<a class="link au md" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a><a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Tale of Money Transfers: From Hawala to One-click Remittances

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-7-11.webp" alt="M2P Fintech" title="" id="avpoofk1v" width="100%" height="661">Today’s consumers use mobile apps and ecommerce sites for their shopping needs. Right from festive shopping to weekly grocery needs, online is the place to go.In fact, the first online marketplace evolved in the 1990s to buy and sell used goods. And now it has become a necessity, given the current situation. Nevertheless, it paves the way for online fraud as well.Given the right code, anyone can hack and gain access to your card information and relieve you of your funds. So, the question remains: How to make online transactions&nbsp;much safer?Well, fret not! We have got you covered through Virtual Cards.What is a Virtual Card?Virtual cards are <a class="link" href="https://m2pfintech.com/blog/payment-cards-design-made-simple-heres-what-you-need-to-know/">payment cards</a> available only in the digital format. The 16-digit electronic cards come with a custom spending limit and can be instantly issued. They are usually valid for a short period.<blockquote class="block-node" id="qoe6auwbb">The specialty of virtual cards is that your debit or <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit card</a> number or primary account information is not shared with the merchant, thereby shielding you further.</blockquote>In India, virtual cards are limited to eCommerce transactions and can be used only once. However, globally, they are used for online and offline transactions and are available as single-use or multi-use cards.<img src="https://miro.medium.com/max/1400/1*oMH4iJh7mu7R7FfW25U1nw.png" alt="M2P Fintech" title="" width="100%" height="317">Available as a one-time use or as a recurring card<h2 class="heading-node" id="73a2" style="text-align: justify">How do virtual cards work?</h2>In addition to physical cards, banks also issue virtual cards, usually when the customer requests them.A customer who holds a primary account with a bank can apply for any number of virtual cards.To create a virtual card, you need to provide your name, existing debit or credit card number, and card limit. Upon successful OTP verification, you would be shown the cardholder name, virtual card number, expiry date, CVV, and card limit.When you purchase online using the virtual card, PIN and password are sent to your registered email or mobile number. The card will expire as soon as you complete the transaction, and the unused amount will be transferred back to your account.Suppose you haven’t purchased anything within the valid date, the entire amount will be refunded to your account.An extra layer of security and privacy<blockquote class="block-node" id="d0brlx9pn">For every online transaction, a new virtual card number is generated and provided to merchants.</blockquote><img src="https://miro.medium.com/max/1400/1*Kyo4Ll49opChIvJtk7eMRQ.png" alt="M2P Fintech" title="" width="100%" height="317">Even when the fraudsters access the temporary virtual card info, the primary card or the underlying account is not exposed.So, you need not worry about unauthorized charges or a hacker gaining access to your account. Moreover, you can freeze or cancel the virtual card and get your money back.How corporates achieve smarter ops with virtual cards?Melon is a consumer product company that sells trek cycles for adventurers. Meera heads the marketing team, and Krish leads the sales team. It’s no surprise that both the teams use a ton of SaaS subscriptions.It was month-end, and Meera was busy analyzing the marketing budget spends. She suddenly got a call from Rintu, reminding her to reimburse the travel expenses during their H.Q. visit.Another colleague pinged her to pay off the subscription fees. As Meera was quite busy, she shared her card info to them for reimbursement and renewal payment.<img src="https://miro.medium.com/max/1400/1*TeLOCkiZATW4mgqeS6Bq_g.jpeg" alt="M2P Fintech" title="" width="100%" height="317">Offer dynamic spend control and expense categorizationMeanwhile, she noticed that Krish’s teammates were paying their expenses using individual cards. She later learned from Krish that his team has partnered with its bank and a Fintech firm and initiated a virtual card program.<blockquote class="block-node" id="ol4xf6yj5">All team members had their own Digi cards, and Krish controlled the card’s spending limits. From trips to subscriptions, they had cards for each category.</blockquote>Meera thought virtual card as an excellent solution since it gave a 360° understanding of expenses. She discussed it with her team and implemented a new program.What makes virtual cards preferable?These programmable virtual cards offer intact visibility on spending, authorize transactions in real-time, and comes with increased security.Powered by <a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">open APIs</a> platforms, they have many defining features that give them an edge over traditional cards.<img src="https://miro.medium.com/max/1400/1*PslqLLEkZHT4K6liBJZo9A.png" alt="M2P Fintech" title="" width="100%" height="317">Virtual card featuresWhat does the future of virtual cards hold?In India, several banks have already collaborated with many fintech partners and have launched many invaluable programs. Globally, virtual cards have also experienced tremendous growth in the past five years and will continue to boom.P.S. For those keen on how virtual cards began, here’s a fun fact —&nbsp;The travel industry was the first to pick up this splendid product. It needed a safe international fund transfer and excellent expense management solution back then.To know more about virtual cards, write to us at business@m2pfintech.com.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Tag: "Payment Cards (2)"

M2P Fintech