Digital Payments — Set 4

Correct Answer: A. Replacing card details with a unique alternative code

Tokenization replaces actual card details (like the 16-digit number) with a unique string of characters called a 'token'. This token is used to process transactions without revealing the original sensitive data. It enhances the security of card-on-file transactions with merchants.

Correct Answer: D. BBPS

The Bharat Bill Payment System (BBPS) provides an OMNI channel for consumers to pay their bills anytime, anywhere. It connects billers with various payment apps and physical outlets. BBPS is a central system that ensures interoperability among all participants.

Correct Answer: D. National Financial Switch

National Financial Switch (NFS) is the largest network of shared ATMs in the country, managed by NPCI. It allows customers to use any bank's ATM with their card regardless of which bank issued it. This connectivity has greatly improved banking access across rural and urban India.

Correct Answer: A. Can be used at multiple clearly identified merchants

Semi-closed loop PPIs (like Paytm or Amazon Pay) can be used for purchasing goods and services at a group of merchant locations. They do not permit cash withdrawal or redemption by the holder. These are generally issued by non-bank entities after obtaining RBI authorization.

Correct Answer: A. The final transfer of funds between the banks of the payer and payee

Settlement is the final step where money actually moves from the sender's bank to the receiver's bank. While a transaction may look 'instant' to the user, the inter-bank settlement often happens in batches. NPCI and RBI act as the central clearing houses for these settlements.

Correct Answer: A. UPI Autopay

UPI Autopay allows customers to set up recurring payments for monthly bills like OTT subscriptions or insurance premiums. The amount is automatically debited from the bank account on a set date after a one-time authorization. This feature enhances convenience for both customers and service providers.

Correct Answer: B. A person-specific and purpose-specific digital voucher

e-RUPI is a cashless and contactless digital payment solution in the form of a QR code or SMS string-based e-voucher. It is delivered directly to the mobile phone of the beneficiary for specific purposes like vaccine subsidies. It ensures that the funds are used only for the intended service.

Correct Answer: B. Biometrics

Biometrics like fingerprints or iris scans are classified as 'Something you are'. Multi-factor authentication usually combines this with 'Something you know' (PIN) or 'Something you have' (Mobile/Card). This combination provides the highest level of security for digital banking.

Correct Answer: D. A waiting period before high-value transactions can be made

A cooling period is a security measure that limits transaction amounts for a specific time after a user registers or changes their mobile device. This prevents hackers from immediately draining an account if they gain unauthorized access. It acts as a safety buffer for the bank and the customer.

Correct Answer: B. A bank-issued Reloadable Prepaid Card

Open loop PPIs are issued only by banks and can be used for purchases and cash withdrawals at ATMs. Reloadable prepaid cards with a network logo (like Visa or RuPay) fall into this category. They are the most versatile type of prepaid instrument.