NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Digital Payments

Internal Assignment Applicable for December 2020 Examination

1. Digital payments comprises payment transactions carried out using a variety of
electronic modes such as cards, mobile or internet based set ups, to send and receive
money. Adoption of digital payments has increased significantly with the move
towards a cashless economy. Alternate payment channels fulfill customer demands for

convenience and speed and could soon become mainstream. With the widespread use
of smartphones, mobile banking and payments applications have gone mainstream, and
wearables provide convenient access to such applications. Contactless payments enable
consumers to make everyday purchases quickly and safely especially for low-value
transactions. Mobility, Internet of things (IOT), connected homes, entertainment, and
media are expected to augment the non-cash transaction volumes significantly. By
2021, it is expected that more than 15 billion machine-to-machine (M2M) and
consumer electronic devices are likely to be connected. As merchants start providing
Augmented Reality (AR) assisted shopping experiences, they will likely look for an
AR-integrated payment gateway that delivers a superior customer experience. The
Digital Payments ecosystem in India are undergoing a transformation with the entry of
global tech giants that are acting as aggregators for retail transactions. Within just four
months of launch, Google’s payments app is now already processing a large number of
digital transactions. You are requested to prepare a report on the opportunities arising
due to countrywide adoption of digital payments in India. Discuss the developments
that will contribute to the growth of digital payments in the country. Suggest additional
measures in order to boost electronic payments in India, which have not been in
practice. (10 Marks)

2. Paytm (One 97 Communications Ltd) has spent nearly ₹ 14,500 crore to convince
Indians to substitute digital payments for cash. For a few months after demonetization
in November 2016, it seemed like the company was on the cusp of victory. However as
of now, Paytm is in danger of having its meal eaten by new market entrants in the
payment apps. According to a 2018 Credit Suisse report, digital payments are expected
to grow to $1 trillion by 2023 compared with $200 billion in 2018. However digital
wallets, where Paytm has established a monopoly, may soon become obsolete. Growth
in digital payments is now being led by the Unified Payments Interface (UPI) platform.

Dozens of large companies and small startups from Reliance Industries to Facebook to
Razorpay are launching UPI-based products.
Two newer payment apps, in particular, are threatening to topple Paytm. For many
months now, Walmart-owned PhonePe and Google Pay, the search giant’s eponymous
payment app, have recorded more transactions on UPI than Paytm. This development
has been reported earlier in different publications as well. With the expansion of UPI,
usage of wallets is expected to wind down completely over the next few years.
According to the latest data from the Reserve Bank of India (RBI), wallet transaction
value dropped to ₹ 15,109 crore in October 2019, from ₹ 18,786 crore a year ago.
Paytm has hired you as an Independent Strategy consultant. Prepare a report on what
measures and strategy could you employ in order to sustain in the competition.
(10 Marks)

3. Bitcoin and other alt-coins must overcome competition from existing, government-
sponsored currencies and reduce the costs for consumers to switch to new payment

systems. The biggest obstacle to the widespread adoption of bitcoin is the incumbent-
monies problem. By providing a lower bound on the network size of the incumbent

money, legal tender status and public acceptability make it more difficult to overcome
the network-effects problem. NASDAQ has announced it will launch a blockchain
style digital ledger technology to manage equities with its NASDAQ Private Market
Platform. If the blockchain technology significantly reduces the costs of processing
transactions, it will be adopted. Bitcoin and the alt coins are unlikely to function as
more than a niche money except in the unlikely event of hyper-inflation
a. Discuss how adoption of bitcoin will affect the existing modes of digital payments?
(5 Marks)
b. Discuss advantages and disadvantages of bitcoin over digital payments system.