Chargeback Fraud Setting Back E-commerce Businesses: Is There a Way Out?

chargeback fraud ecommerce razorpay thirdwatch

Online e-commerce fraud needs no introduction. With the advent of modern technology, seamless payment modes and flexible regulations, processing online purchases is getting easier by the day.

However, this also has a dark side. It has become increasingly easier for cunning fraudsters to find loopholes in order to dupe online merchants. 

One such loophole is chargeback fraud, also popularly referred to as friendly fraud.

Unfortunately for us, there’s nothing friendly about friendly fraud.

What is chargeback fraud?

Chargeback fraud occurs when a consumer makes an online shopping purchase with their own credit card and then requests a chargeback from the issuing bank after receiving the purchased goods or services. 

Once approved, the chargeback cancels the financial transaction, and the consumer receives a refund of the money they spent. And the tricky part? When a chargeback occurs, the merchant is accountable, regardless of whatever measures they took to verify the transaction.

What can risk analysts do about chargeback fraud?

The primary goal for a risk analyst is to identify the source of a risky online payment and mitigate ways to overcome it. 

In order to do so, the analyst attempts to discover whether the order was placed by the authorized cardholder or a fraudster who’s using the legal cardholder’s information. 

Seems pretty straightforward, right? That’s the case for most scenarios, but not chargeback fraud.

For this small subsection, the authorized cardholder and the likely fraudster is the same person. This is known as friendly fraud and is nearly impossible to detect in a cash-driven market like India. 

Let’s now address some of the pain points that Indian business owners face while fighting chargeback fraud and the possible solutions that can be devised for the same. 

What are the types of chargebacks?

Though chargeback fraud is an umbrella of different activities, in order to mitigate it, it’s important to take a step back and evaluate the different disputes that a merchant can face from a chargeback. 

Actual fraud:

This is perhaps the most obvious reason for chargeback and the most common, too. A fraudulent customer used a legitimate cardholder’s information, made a purchase from a merchant and the merchant shipped the order to the fraudster. Upon reviewing their transaction statement, the authorized cardholder identifies a charge as illegitimate due to fraud and files a chargeback, requesting a refund.

Merchant error:

In this case, when the customer places an order on the website, the merchant either never ships out the order or ships out an item that was broken or different than described. This causes the frustrated customer to file for a chargeback compensation.

Friendly fraud:

A chargeback or friendly fraud is the reversal of payment made through debit/credit card by the user, which is debited directly from the bank account of the e-commerce seller. Chargeback enables the consumer to get his/her money back and protects them from fraudulent sellers online.

Under what cases can a consumer file for a chargeback?

There are numerous instances in which chargeback can be availed by the consumers from e-commerce seller. These instances include:  

  • The Quality of the product or services received were not as advertised by the seller at the time of purchase.
  • The consumer claims that he/she has fallen victim to identity theft or has not sanctioned the purchase.
  • There has been some mistake in the Billing amount, or there are issues regarding duplicate billing of a purchase made.
  • The product or service purchased were not received by the consumer.

How is chargeback misused?

Chargebacks are created to protect consumers from deceitful sellers online, however, this option for refund has been grossly misused by fraudsters in recent years. Criminals have found loopholes in the chargeback process and intentionally misuse the option to swindle e-commerce businesses of millions in revenue!

A person commits chargeback fraud by authorising a credit/debit card transaction, receiving the product or service, and later filing a false chargeback request to get the item for free. Common chargeback frauds suffered by e-commerce sellers include:  

  • The purchased product or service received is claimed to be undelivered
  • The original transaction authorised is claimed to be unauthorised
  • The genuine product or service received is claimed to be faulty or deficient

What is the extended impact of chargeback on businesses?

E-commerce sellers are hit hard by chargeback frauds in the past years with the increase in digital payments and approval of credit card purchases. Online sellers not only lose a big chunk of their revenue to chargeback frauds, but their reputation and goodwill is also damaged immensely. 

The fraudulent consumers not only defraud the seller with false chargebacks but also end up leaving erroneous reviews and ratings, further injuring the business. In many cases, the bank in which the seller has its account ends up blocking the seller’s account thinking they are not genuine.

What’s the way out?

There are numerous ways through which e-commerce sellers can fight chargeback frauds; the simplest being a clear return and refund policy on the website or app. The business must keep clear records of each transaction performed, and copies of every bill or invoice sent. 

A more advanced and reliable solution is to leverage technology. In the era of skyrocketing advancements and artificial intelligence, the smartest way to deal with chargeback frauds is to use fraud prevention tools that can keep a record of everything without affecting your time.

How can Razorpay Thirdwatch help you?

E-commerce fraud prevention tools like Razorpay Thirdwatch enable online platforms to detect multiple kinds of frauds and abuses, including chargeback fraud in real-time. 

With AI that utilises the power of natural language processing and predictive analysis, Thirdwatch is able to detect fraud by scanning each transaction on hundreds of variables.

Razorpay Thirdwatch is a powerhouse that quarantines fake or fraudulent transactions by marking them ‘red’ and approves genuine transactions by flagging them as ‘green’ transactions. It also evaluates and maps every device through which a transaction is made, its own ‘fingerprint’ to check future transactions made through it.

E-commerce merchants need to be aware of the different frauds that cause losses and employ intelligent measures to detect and prevent them. With Thirdwatch, business owners can now focus on their growth and leave the hard labour to us!

Install Razorpay Thirdwatch today and simplify e-commerce like never before!

What You Need to Know About Banking as a Service (BaaS)

banking as a service BaaS

Banking as a Service (BaaS) is yet another fintech innovation that is enabling bank and fintech collaborations. The tickler is, many of these innovations are confused for another.

We’re here today to clarify what Banking as a Service is and what it isn’t.

The banking sector has gone through somewhat of a metamorphosis in the last few years. With fintech players entering the market, this transformation has become unstoppable. Financial services are changing in a way that they’re creating new products, channels, partnerships, and opportunities. Banking as a Service plays a significant role here, at the core of it all.

What is Banking as a Service?

BaaS is an end-to-end approach that facilitates fintech companies and other third party organisations to connect with a bank’s system employing APIs.  This helps organisations build innovative financial services upon the provider bank’s regulated infrastructure while enabling open banking services. Banking as a service BaaS

How is Banking as a Service different from traditional banking?

To understand this, let’s break down the functions of a bank – holding money, remittance, and payment processing. For banks to support these functionalities, they need to put in a ton of investment and constitute the necessary infrastructure. 

The processes, along with the complex infrastructure, end up creating gridlocks. And these gridlocks are what have created an immense thought and application for fintech companies and non-bank organisations towards building financial services — partnering with banks instead of building these financial services from the ground up.

How does Banking as a Service work?

Banking as a Service allows third party organisations to draw off of the existing banking services through APIs that communicate between banks and third parties. These APIs allow the use of these banking services by fintech companies, programmers and developers, and other non-financial companies.

This allows them to build their own features as a layer on top of the existing banking services.  In simple words,

  1. Fintech company/individual pays to use BaaS
  2. Bank/financial institution which is a BaaS platform opens its APIs 
  3. Fintech company/individual builds innovative financial services using these APIs

Banking as a service BaaS

[ Also read: The New Age Ways of Business Banking ]

What are the factors influencing BaaS?

While fintech is growing and revolutionising the way financial services work today, there are a few key aspects that have led to the emergence of BaaS.

  • Banks are trying to catch up to the speed of fintech companies. Or, banks are partnering with fintech companies to innovate financial services
  • Startups and SMEs are starting to leverage easier and effective business banking
  • The digital transformation and mobile-first approach that has soared over the recent years has played a phenomenal role in influencing BaaS
  • Business architecture of banking is evolving to a much more modern system that is inclusive of newer tech and methodologies
  • Banking regulations have seen an evolution that has further promoted a healthy growth of industrialisation

How do businesses benefit from BaaS?

  • BaaS helps creates new sources of revenue for businesses by enabling cross-selling capabilities because of API driven facilities
  • With BaaS, businesses can compartmentalize business logic and data, and reduce time to build and ship apps
  • Businesses innovate much more by means of capitalizing on APIs of their own, along with third parties
  • Building products and services using API ecosystems can drastically increase Customer base

Banking as a Service vs open banking

The BaaS model is often confused with open banking since both models involve the use of APIs to communicate among banks and fintech companies. But in reality, both models serve completely different objectives. 

Banking as a Service: Businesses integrate complete banking services into their products

Open Banking: Businesses use only data for their products

Industry impact of Banking as a Service

BaaS has created quite a trend in the fintech industry. Many countries around the world have seen a rise in the latest fintech buzzword – neobanks. 

[ Suggested reading: What is a Neobank? Everything You Should Know ]

Neobanks help businesses manage their entire financial operations by providing more transparency and options, along with real-time capabilities. RazorpayX has enabled businesses like Cure.fit, MPL, Dunzo, and more, to make payouts at scale while keeping the costs low.

RazorpayX Current Accounts takes business banking further by including all standard banking services like debit cards, accounting statements, cheque books, and more.   

Many neobanks and challenger banks looking for an alternate source of revenue have also opened their doors for other non-financial companies to use their APIs. 

More than just creating a source of revenue, BaaS has also enabled legacy banks to grow a relationship with emergent as well as fintech giants. This further helps legacy banks to catch up to what some of the fintech companies are doing. 

Xperience the future of banking

Why Indian Startups Need to Change the Way They Bank

startup banking

Today, India is home to the third-largest startup ecosystem (9,300 tech startups) and an abode to the third-highest number of unicorns (companies with a valuation over $1 billion). So there’s no doubt that India is an epitome of innovation, thanks to startups building solutions aimed at solving locally relevant issues. But in this era of unicorns, soonicorns and IPOs, while it’s easier to get caught up in the stories of startup successes, startup failures are becoming more common.

Albeit other reasons for this failure — ‘no market’ need or the lack of alignment among founders and investors, the biggest and most tragic reason for some promising businesses to fail within the first year or two is primarily because of not knowing how they can best manage their financial challenges.

I have sailed the same ship and witnessed other entrepreneurs who did their due diligence, created reasonable financial projections and yet struggled to pay for unforeseen expenses. In the early stages of a business, even a relatively small expense that is not accounted for in the company’s budget can make it difficult to pay bills or make payroll.

It’s important for businesses to not only think beyond just sourcing working capital for operational and day-to-day expenses but also adopt a new-age banking solution that will help the business with entire money management within the organisation, in addition to borrowing working capital.

And, if you ask, why I can’t do all of these with my existing bank, ask yourself how many business hours has your team spent on manual labour, dealing with buggy software and complex infra systems? The most important factor for Indian businesses is to have issues resolved at the first point of contact, and to receive the same level of experience and service, over and over again.

A ‘one-size-fits-all’ traditional banking solution doesn’t suit the business banking needs of new-age businesses. Therefore, the lack of an intelligent tech infrastructure has led to the birth of neo-banks. These exist to simplify banking for businesses, accelerate and supercharge every aspect of a business’s financial operations — from accepting payments and managing cash flow to reconciling transactions and flexible payouts. In its nascent stage, neo-banks are taking over the fintech industry. Let’s understand this difference better.

  1. Access to daily financial reports and diligent insights is a norm for startups and SMEs. Unfortunately, this can take some time with traditional banks. Neo-banking is made for today’s DIY generation where everything is accessible at the customers’ fingertips. Businesses can generate reports based on specifications on their neo-banking dashboard, without banks’ intervention
  2. While traditional banks have restricted working hours, which means, businesses are required to work within the set banking hours, neobanks help businesses integrate in just a few days and enable a 24*7 money movement facility.
  3. It’s critical for businesses to have real-time visibility of their money movements. Waiting on a traditional bank facility to provide this information comes at the risk of losing valuable time and manpower. Using data in the right way and at the right time to inform your strategy is what neo-banking platforms are designed to look at.

This year will mark yet another significant progress in innovations in financial services. How neobanks manage obstacles like regulation and compliance, security, API integration, and how they will come together with traditional banks to build intelligent solutions will be an interesting watch for all of us in 2020.

This story was first published in The Economic Times.

 

RazorpayX – How We Built a Startup in a Startup

RazorpayX

If you’re someone who’s interested in the Indian fintech industry, then you surely know of Razorpay. 

Razorpay’s extensive product suite caters to accepting, processing, and disbursing payments. Founded in 2014, the journey of Razorpay over the years has been incredible, powering disruptors of all scale. With product after product, we have been able to provide the best payment solutions for all sorts of business cases, no matter how complicated or straightforward.  

With over 800,000 merchants using Razorpay’s payment solutions, the biggest names in the market ride with us. Being the 7th employee at Razorpay, I’ve seen the company unfurl into a fintech superpower in India. And, I can’t be more proud to be a part of the overall growth and mission of the company.

Today, I’d like to shed some light on the most exciting product I’ve been working on – RazorpayX, our neobanking platform.

The story is interesting because it is not just about a great product that we are building, but also about how we came about it. 

In 2018, we announced our entry into business banking with RazorpayX in our flagship event, FTX.

You may wonder – why?

The gap in the system

How business banking is carried out is not the most efficient way to manage finances. With traditional business banking, businesses spend way too many hours on manual labor every month, while dealing with buggy software and complex infra systems. 

Several Razorpay merchants conveyed to us how their business banking experience is flawed, which got us thinking – we’ve already enhanced the payments experience. Who better to take business banking forward?

So, we validated the opportunity we had at hand and delved into some primary research.  We talked to 400+ merchants to understand their experience with business banking and drew insights from our conversations.

Next, we surveyed 1,500 CxOs and gathered

  • 64% of companies believe their payment service providers are best equipped to solve their payment challenges as opposed to banks
  • 10x as many companies polled believe payment service providers innovate better than banks
  • 36% of businesses believe manual dependency and reconciliation are the biggest challenges in their current money management

Our solution to bridging the gap – RazorpayX

Since we deal with many different payment flows, we wanted to create a whole new platform that would be dedicated only to building a product that would do away the challenges of business banking. We began to create a platform on which we can further build products that would ease the process challenges for businesses, like integrations with payroll software, and more.

During the early access, merchants were able to use the platform with virtual accounts. We created an entire API and dashboard payouts platform over a virtual account setup. In a few months, thousands of merchants started using it to make payouts at scale to vendors, customers, and even employees. 

From then to now, the platform has gone through major upgrades.

A few use-cases for RazorpayX

  1. Lending companies like Kissht and EarlySalary have been unable to disburse loans to their customers instantly owing to their dependencies on manual processes and cumbersome banking tech. With RazorpayX, these companies were able to disburse loans within seconds
  2. E-commerce companies that provide multiple payment options to their customers have traditionally not been able to process refunds for all methods with equal speed owing to an inconsistent customer experience. Cure.fit, Voylla.com, and other players in the market use RazorpayX to make instant refunds to their customers, irrespective of the payment mode (including CoD)
  3. A key component of making successful games is the process of ensuring winners get rewards, and fast. Dependencies on net-banking and manual methods were not optimal for progressive gaming companies. RazorpayX has helped companies like Mobile Premier League, RummyCulture, Pokersaints, and many more to transfer winnings immediately, and with ease

As we scaled, we realised current accounts would be integral to the product because of the growing demand to support higher volumes of transactions and superior customer experience. We wanted businesses to have the freedom to define their processes, unlike traditional current accounts.

During our event FTX 2.019, we announced RazorpayX’s expansion into current accounts, payroll, and corporate credit cards.

We built RazorpayX with Current Accounts in partnership with RBL bank and included all standard banking services like cheque book, debit card, and accounting statements. We merged these banking services along with powerful tech capabilities like API banking, approvals workflow, and insightful reports.

Next, we wanted to have a payroll system within RazorpayX’s platform. And, payroll is fragmented without a clear-cut solution, which got thinking – should we build? Should we buy? Or should we partner?

The more we thought, partnering made more sense, and we found the best company to partner with. Opfin, a payroll and HR management software company, turned out to be just right to automate the entire payroll process of a business, seamlessly.

Opfin does more than just payroll and fund transfers. It also manages tax filing and compliance via a unified platform, without having to hire any external vendors. 

Ok, current account, check.

Payroll, check.

What next?

We wanted to go just one step further. 

Corporate credit cards.

We’re partnering with banks and networks to build corporate credit cards from the ground up that offer immense flexibility with limited-time credit period and auto-repayment for businesses. These cards powered by our credit intelligence engine can be used to make payments towards Google Ads, Facebook Ads, AWS, Business Travel, and so much more.

So far and more

Even in early access, we’ve hit 3 billion annualised TPV serving thousands of merchants. We’re also processing over 2 lakh payouts every day, out of which 1 lakh is consumer loans.

We are perpetually endeavouring to make the RazorpayX platform more and more stable every day. We want to further grow the platform by building and integrating products that can extend to simplify business banking while providing the best possible experience to prove all businesses a viable alternative to traditional business banking.

We are constantly working towards reimagining and redefining business banking in India, and we’re looking forward to all of you joining us in our journey.

Data Engineering at Scale – Building a Real-time Data Highway

At Razorpay, we have data coming into our systems at an extremely high scale and from a variety of sources. To ensure and enable that the company can operate by placing data at its core, enabling data democratization has become essential. This means, that we need to have systems in place that can capture, enrich and disseminate the data in the right fashion to the right stakeholders. 

This is the first part of our journey into data engineering systems at scale, and here, we focus on terms of our scalable real-time data highway. 

In the subsequent articles, we will be sharing our ideas and implementation details around our near real-time pipelines, optimizations around our storage layer, data warehousing and our overall design around what we call a “data lake”.  

Understanding data classification

The idea of building a data platform is to collate all data relevant to Razorpay in every way possible in a consolidated place in its native format, that can be later processed to serve different consumption patterns. 

And, in this regard, the data platform needs to handle a variety of things (included but not limited to) like data governance, data provenance, data availability, security, integrity, among additional platform capabilities. 

In order to do any of the above, we need to understand the nature of the data. At a bird’s eye level, data within Razorpay, will broadly fall into 2 categories: 

  1. Entities: Capturing changes to our payments, refunds, settlements, etc will happen at an entity level where we maintain the latest state (or even store all the states) of each entity in our storage in multiple manifestations that can serve all kinds of consumers later
  2. Events: Applications (internal, external, third party) sending messages to the data platform, as part of any business processing. And by this, we broadly mean any and every system that ever interacts with the Razorpay ecosystem, which can potentially end up sending data to the data platform. As much as the respective databases can only answer the final state, the events help us understand, how each system/service reached its final state

Evolution and need for a scalable real-time data highway

To understand why we need to build a real-time data highway, and with the explosive growth we have seen, we have constantly been in the quest to answer some of the following questions:

  • What has been the result of some experiments we do?
  • What is the success rate of different gateways, payment methods, merchants etc?
  • How do we make our internal business metrics available to all the respective business and product owners?
  • How can our support, operations, SRE and other teams monitor and setup alerts, around the key metrics across different products and services?
  • Ability to slice and dice all our products, across 100s of different dimensions and KPIs

What was before?

Before we jump into solving some of our above asks, let us briefly look at what we used to have to answer some of these. We built a traditional ETL pipeline, that queries our application database (MYSQL) on a batch interval and updates an internal elasticsearch cluster. 

Not only does this power our customer facing analytics dashboard, but also was fronted by an authenticated kibana dashboard for doing all the above activities. For a certain set of business folks, the data was piped into tableau over s3/athena. For managing the ETL pipeline, we had written a framework on top of apache beam to pull the respective tables, with the joins and transformations, in a composable  ETL pipeline. What this meant was simply a matter of updating a few configurations for a new pipeline. 

At a very high level, the architecture of such a system, looks like the following: 

data engineering razorpay

  1. Input data is read through MySQL in a window period and make a PCollection of payments with payment ID and details as <K-V> pair
  2. In the next transform, we fetch key merchants and use payments formatter to get output data PCollection
  3. In the final step, we write the PCollection to elasticsearch.
  4. Kibana is used as a BI tool to monitor the payment success rates, dashboards

And to serve our customer facing analytics dashboard, we wrote an internal python framework and an API layer that translates an SQL query to an elasticsearch query. As of today, elasticsearch versions 7 and above support built in SQL query. We have, however, been running this framework, successfully in production for over 2 years(much before such a feature was available on elasticsearch) and is serving all our merchant analytics, straight, using the above.

Even with the recent versions of elasticsearch, some our aggregations cannot be directly translated into elasticsearch SQL query format. So, in essence, the merchant/customer dashboard, queries our internal analytics API, using a rest endpoint with the SQL like query, which is converted internally into an elasticsearch query, with the respective aggregations run and presented back to the front end layer for building the visualizations. 

This only solved the need for physical database related changes. In addition to the above, our applications, also emitted events specific to different use cases. 

To initially get this working, after trying several expensive tools, we settled at using newrelic insights to power all our events use cases. We have been using newrelic for all our APM use cases and we ended up powering our events and other metrics using insights. 

As much as it worked for over 2 years, it started becoming quite expensive. In addition, detailed funneling and long term queries became extremely difficult. More than all, it couldn’t be easily correlated to our database changes, primary due to the fact that the events were real time, while the data capture was in batch mode. Also, joining visualizations across newrelic and kibana was turning out to be painful. In essence, the architecture for this system looked like the below.

data engineering razorpay

The following were some of the additional issues we saw with newrelic:

  • Data is locked with newrelic, not easily exportable, data retention for 3 months only (retention is calculated based on usage)
  • Some of our funneling queries, produce incorrect results for old data
  • Subqueries are not possible
  • The number of results capped at 1000 rows max
  • Negative funnels are not possible
  • Reference to a property from a top-level query in a bottom-level query for the funnel is not possible
  • Order of events is not regarded in funnels. While creating funnels, if your funnel says A -> B -> C, even those sessions will be counted for the funnel when the actual order of events was C -> A -> B
  • Since newrelic is an external system, any data enrichment(e.g.: key mappings, customer mappings etc) cannot be applied on the fly. Data enrichment cannot be done, post facto. This poses a heavy challenge when multiple services want to enrich a request that spans across different services
  • In addition, we cannot maintain any specific lookup tables(if needed) to enable custom enrichments(e.g.: geo ip lookup, mobile device mapping, user agent mapping etc)

What was the problem with the above?

While the above system has been serving all the above needs, it presented us with the following challenges:

  • As it is a traditional batch system, we will have delays in terms of being able to slice and dice in real time
  • Scaling elasticsearch for heavy business queries was challenging. As a result, we had to setup multiple elasticsearch clusters(for internal and customer facing use cases). In addition, tuning elasticsearch for our needs became a constant challenge
  • Data governance: We had to build a whole lot of access control mechanisms on top of kibana to ensure role based access control. Elastic search only supported search guard, which came with its own performance issues
  • Joins: Some of our dashboards required us to join across a variety of databases and tables. Elasticsearch, inherently does not support joins. So, the above means, we had to make constant modifications to our ETL pipelines, to ensure we are able to keep our indexes, upto date, based on these every growing needs
  • Schema Evolution: In addition to the above, our internal application schema is constantly evolving and for every such evolution, we had to rely on elastic search index versioning and aliasing strategies to ensure data correctness. In addition, this required us to backport data across different indexes
  • Cross join events with db changes: As mentioned above, we couldn’t easily do causation-correlation analysis at any given point easily. We had to export reports from each of the above systems(newrelic, tableau, elasticsearch) and needed manual intervention to understand any issues at hand
  • Availability: We also wanted all of this data, in some fashion, to be available to our data scientists and that also was turning to be cumbersome. This again, needed multiple different kinds of exports. In addition, the data governance rules become worse to deal with, for all these situations

In addition to the above, we had multiple BI solutions being used internally for different stakeholders:

  • Engineering wanted to query through SQL like interface
  • Product Analysts preferred custom dashboards
  • Business analysts wanted richer visualizations
  • Marketing wanted other integrations around Hubspot, Google Analytics etc

In essence, there was a strong need to converge all our BI use cases into a single unified platform. The above issues, were inhibiting us, in terms of exploring and analysing the data within the entire ecosystem. Earlier this year, our product team arrived at a single BI tool, to which all data will be tied to.  

Evolving to a real-time data pipeline

Sometime early this year, post the decision on unifying the BI tool, the data engineering team was given the task of building a real time pipeline, served through the unified BI tool for handling the above issues. 

The data engineering team was already building a scalable data lake for resolving some of the above issues. However, with the need to handle some of our peak load transactions and improve our operational excellence, the product team prioritized having a real time capability that needed to be exposed to all our internal stakeholders, within the lake. 

The long-term idea is to expose these capabilities to our customers, on a real time basis, thereby eliminating our older version of the analytics dashboard. The data engineering team started having a close look at the scale of the problem to be handled. Here is a high level summary of our findings:

  • We do several million transactions per day(~100M)
  • With just a small fraction of our application stack integrated into the data engineering platform, we are generating close to 0.5 billion events a day
  • The compressed size of our data within the lake, at this point was close to 100+TBs.

All of the above, just within a few months of building the data lake!

Lets understand the above in a little more detail, before we present the solutioning here:

  • We have a variety of micro services that run as part of our core payment gateway system to handle a single successful payment
  • Post a successful payment, there are a variety of other services that handle different post payment processing activities like refunds, settlements etc
  • In addition to the above, we have other products that directly and indirectly use the core payment gateway services like subscriptions, invoices etc
  • Our front end and mobile SDKs emits a variety of events into our system. We cannot use third party systems like google analytics etc, as per PCI norms and other CORS issues. So, all these events have to be piped into the lake
  • Over and above these, our internal micro services also emit events during different stages of their processing lifecycle

To solve all the above issues, we divide our discussion into real time entities and real time events. 

Real time entities

Writing to a database is easy, but getting the data out again is surprisingly hard. If you just want to query the database and get some results, that’s fine. But what if you want a copy of your database content in some other system like data lake for real-time analytics?

If your data never changed, it would be easy. You could just take a snapshot of the database (a full dump, e.g. a backup), copy it over, and load it into the data lake. This poses 2 different kinds of problems:

  1. Most of the data goes through a state machine and hence, the state of the data changes rapidly
  2. Getting the up-to-date view of this data is challenging in real time.

Even if you take a snapshot once a day, you still have one-day-old data in the downstream system, and on a large database, those snapshots and bulk loads can become very expensive, which is not great.

So, what does the above mean?

  • We will need to incrementally load data into a real time streaming pipeline that directly manifests into the lake
  • We cannot expose our internal primary database to our BI tool as it stores a lot of sensitive information
  • We want our real time stream to be as performant as possible
  • We do not want to keep the data in our real time stream for eternity, as its primary use case is around instantaneous monitoring, visualization and alerting

Keeping the above in mind, the data team had made the following assumptions:

  • We do not need all of this data for eternity, unlike our traditional OLTP store. So, we decided to store the data as a rolling window update over seven days(1 week)
  • We will still want to maintain some basic governing facts loaded here for eternity(e.g. Merchants, customers, card bins etc)
  • We will want this system to be extremely performant and being able to query as fast as possible
  • Some of the rolling aggregations are fairly complex and needs to be computed with as much data as possible to achieve the desired latency
  • We will want the change data to be captured here, as soon as possible
  • In essence, all operations on this store will only be upsert operations, as we do not want to keep a copy of any older/stale data

At a very high level, our architecture for solving this problem looks like the following:

data engineering razorpay

 The flow of data will look something like this:

  • MySQL Read Replica instance used to pull the data
  • We use maxwell to handle the CDC(change data capture) and also ensure, we filter out sensitive information before reading the bin log
  • A Maxwell daemon detects change data capture (CDC)  to this DB and pushes them to a Kafka Topic
  • A spark consumer will now keep reading from the kafka stream and keep batching updates every few seconds(note: the minimum batch duration available in spark is 100 ms)
  • Finally, Change data is pushed to the real time data store, where the queries can be executed from the BI tool.

Choice of real-time data store

We did a variety of evaluations on some of the existing data stores for the real-time use case. In essence, we wanted SQL capabilities to be used by the unified BI tool. Most folks within the organization are comfortable with SQL and hence, we wanted something that fits the bill. 

After evaluating a bunch of OLAP engines, we arrived at timescaledb as a choice of this engine. Timescaledb is an underlying postgres engine with a timeseries extension. This gives us the ability to not compromise on the SQL like capabilities and also gives some of the advantages over rolling aggregate computation etc.  In addition, we will want the operational cost to be extremely lesser with self-healing and auto-scaling abilities possible. 

We didn’t want to spend large amounts of money investing in a paid solution like memsql etc to solve these problems. Considering all the above, TimescaleDB seems like a reasonable place to start, simple enough to set up and maintain and seems to meet all the respective criteria.

Real time events

As mentioned above, as of today, only a small fraction of all our workloads(front end systems, mobile SDKs and a few core transactional apps) are pushing events into the data lake. Despite this, the data lake is receiving close to 0.5B events per day. 

As you would’ve guessed, with all the existing services pushing events, this number is only going to grow significantly. For a long while, we had an internal event ingestion pipeline(codename: lumberjack), written in go,  which primary relays incoming events from multiple producers into desirable targets. 

In essence, all that is needed for any app, to tie its events into the lake, just needed to register itself through a configuration. The reason for choosing go over java or others, is to achieve an extremely high level of concurrency, with minimal operating metrics(cpu, memory etc). In addition, this was designed as a heavy I/O bound application, as most work was simply processing, doing minimal validation/enrichment and transmitting events. 

We already discussed some of the challenges we had with events being pushed to newrelic. So, we wanted to move all of the events, into a central store, from where we could query using our unified BI tool. 

We started making minor architectural changes to our event ingestion pipeline to arrive at the following:

data engineering razorpay

Lumberjack workers: We were originally pushing to aws SQS. We wanted streaming capabilities and SQS was only supporting long poll. So, we decided to move this to Kafka streaming. Kafka streaming gave us the ability to replay and manage offsets effectively. 

Consumer : We completely removed the task of pushing events to newrelic. This way, we got rid of the Kafka consumer, which was running on the lumberjack side. We moved to this operation to a spark streaming job, which will read messages from kafka in order of appearance and stream this to an S3 bucket. 

Sink – S3: Spark streaming job will sink data for every micro-batch interval, which is configurable. Currently, we have set it to 1 min. Every micro-batch is accumulated in memory, so we can configure the sink interval based on data size. Again, the minimum micro batch interval supported by spark is 100ms

Query execution: We are using presto for query execution. The advantage we get here is sub second responses for a few million records. 

S3 – Partition: In order to further speed up the query execution of the events across multiple days, we create daily partitions(msck repair) to ensure the users can query using the created_date as the primary partition key. This has been configured into our BI tool. 

Infrastructure setup

Our entire infrastructure for all of Razorpay has been deployed and operated via kubernetes. In essence, except for the spark setup, we run and manage all the other aspects via kubernetes. 

So, in essence, maxwell has been running as a deployment, kafka is running as a kubernetes daemonset, exposed to the spark pipelines and timescaledb also has been setup using a kubernetes daemonset backed with a remote AWS EBS volume. Connectivity from the BI tool is enabled to the timescaleDB over NLB and the AWS Security group associated with timescaledb, ensures security over the setup.

 The above aside, the spark cluster has been exposed to our BI tool, controlled again via AWS security group and only allows presto queries to be executed. We use prometheus for all our internal metrics. 

Currently, since spark doesn’t support out of the box metrics to be injected into prometheus, we have funneled the metrics to lumberjack from spark, which is directly scraped by prometheus and exposed on our dashboards. 

Databricks has an upstream patch on spark, but that’s not yet merged into spark core, for pushing prometheus metrics into a push gateway. (TBD: we might need a separate section around metrics here and also add diagrams for infra).

The major challenges

Real-time data challenges:

  1. Since Pipeline has to handle DDL and DML both logs, so the order of committing the statement to the data lake is very crucial which was a major challenge for pushing data in the same order as it was generated. We have implemented custom logic to create the order by considering the bin log file name and offset of that file. We have an internal schema registry deployed again on kubernetes, to manage the same. This allows us to track schema evolution over a period of time and also ensures we can keep multiple copies of the data, on the lake
  2. Kafka has slowed down periodically due to limited partitions. This leads to a lag in the data lake, which was fixed by partitioning on unique IDs 
  3. The Dashboard queries performance is bad so we implemented a custom user defined function which aggregates the data in a rolling time window and caches the old aggregate data
  4. Because high transactions happen in the DB system for humongous tables such as payments, orders, etc. and how transaction happen in small tables like marchent we can not distribute load uniformly across partitions. This leads to Data write performance skew
  5. Mysql GTID also cannot be used around sequencing in certain cases, and we have built custom sort and de-duplication mechanics to handle out of order events
  6. Replication delays: In order to avoid AWS inter AZ data transfer cost, and to avoid pressure on the primary databases, we have designed maxwell to read from the replica. As a result, at peak times, if there is a replication lag, our real time pipelines expect the same delay on processing and transmission
  7. Scaling challenges around timescaledb: At the moment, timescaledb inherently dosen’t support clustering options. We plan to move this layer either using kubedb into a clustered mode, or perhaps use other mechanisms to ensure we have better clustering / MPP kind of execution
  8. In addition, we can cut down the spark processing time, by moving this pipeline into flink, which can directly stream kafka to timescaledb endpoint

Real-time entities challenges:

  1. Since the events are pushed in small micro batches, this leads to a lot of cost overhead on S3. In addition, during query execution, we were bitten by hadoop’s small file problem. We are still balancing the right micro batch interval
  2. In addition, we wanted to have a unified way of keeping this data. So, we plan to move the immediate events into the real time data store and eventually sync up into the partitioned tables, on a daily basis
  3. With the above change, we can quite simply move the spark processing to flink processing, where the flink jobs can directly stream to the timescale db endpoint and spark process the daily batches with partitioning.

Learnings and pitfalls

  1. To replicate MYSQL DB transaction in the correct order on a Non-MySQL datastore, for ordering the DB transactions and replay the events a combination of GTID, XID, event types (commit start and end ) need to be used
  2. Spark streaming has a lot of overhead and doesn’t play well when used with small batch sizes (millisecond level, that’s why we moved to seconds level batch)
  3. Running SQL queries from spark carries a lot of overhead. We need to instrument the right metrics, analyze queries in a timely fashion and enable the right kind of caching for optimizing the queries
  4. A large portion of our data lake is built on aws s3. This comes at a significant cost, if not tuned well. For instance, the s3 data transfer cost, bit us quite badly a few months back. As a result, we had to go through significant infra optimization, enable vpc endpoints among others. Cost optimization, continues to be an ongoing exercise
  5. Optimizing S3 by itself, has posed enough challenges for us. As we mentioned earlier, in the subsequent posts, we shall enlist our learnings, observations and the work we have done to optimize these

The road ahead

As much as we have been able to build some of these things at an extremely efficient scale and operationalize it, our journey doesn’t stop here. 

It has in fact, just begun. 

In the subsequent posts, we shall talk around the journey of our data platform, data lake, non real time use cases, optimization techniques adopted among a variety of subjects. 

Our journey thus far, on the data side, hasn’t really been that smooth. We have failed, learnt and recovered. On the other side, some of the most challenging problems we have faced, has been a lot of fun to solve too. We wish to learn and share our learnings through these.

If you are interested in working with us or solve some exciting problems, please reach out to hiring@razorpay.com or visit our careers page.  

Authors: Birendra Kumar (Head of Data Engineering, Razorpay) and Venkat Vaidhyanathan (Architect , Razorpay)

Installing Razorpay Thirdwatch for WooCommerce in 5 Simple Steps

WooCommerce is one of the biggest platforms in the world for setting up an online store and rightfully so, owing to its seamless functionalities and ease of use. Thirdwatch from Razorpay is a plugin designed to detect fraudulent orders and reduce RTO for e-commerce businesses. If you haven’t been aware of Razorpay’s entry into the e-commerce industry, allow us to explain to you what we’ve been up to and how to install Razorpay Thirdwatch in 4 simple steps.

What is Razorpay Thirdwatch?

Razorpay Thirdwatch is a first-of-its-kind solution for fraud prevention for e-commerce businesses. Thirdwatch is an AI-powered platform that enables online sellers to prevent Return-To-Origin (RTO) orders and reduce losses up to 30 percent. Thirdwatch’s AI engine evaluates every order in real-time and provides actionable results to weed out orders likely to result in RTO. 

One of the small, yet significant components of Thirdwatch is Buyer Action, a feature that automates confirmation from customers. This can significantly reduce manual intervention while keeping fraud at bay. Read more about Buyer Action and how it impacts business here.

How does Thirdwatch’s AI-engine work?

Once integrated, the solution captures 200+ parameters from your online store analytics. It leverages an ensemble of AI algorithms and graph algorithms to flag an order with a high risk of RTO and enables the seller to either cancel or take corrective actions.

What happens to the processed orders?

The processed orders transition into the following two states –

  • Red: If the order is marked red, then the seller can either decline the order or take corrective actions like updating the address or getting a confirmation from the customer on order quantity, etc
  • Green: If the order is flagged green, then the sellers can go ahead with the usual flow and ship the order

What is the basis of screening orders?

There are a variety of parameters used to judge whether an order is risky or not. Following are the key parameters that play a critical role in screening the orders:

  • Shipping Address Profile
  • Device Fingerprint
  • IP Address Profile
  • Buyer’s History
  • Buyer’s Navigation Behaviour
  • Network Effects

Are there any customization options available?

Razorpay Thirdwatch comes with a horde of options for easy customization. You can also customise the Thirdwatch plugin at the time of integration by accessing the open-source project, available here

What are the steps to install Razorpay Thirdwatch for WooCommerce?

To make it easier than ever for merchants to install Thirdwatch, we’ve made a step-by-step guide to make your installation process quick, easy and hassle-free. Let’s get started!

Type 1: Direct Installation

Step 1: Download WooCommerce plugin from WordPress store using this link.

Step 2: On your WordPress dashboard, click on “Plugins” on the left tab, and search for “Thirdwatch” on the search bar on the right side.

Step 3: Step 3: Install the Thirdwatch plugin and click on “Activate”. Once you’ve activated, register your business account on Thirdwatch Dashboard from here. If you’ve already created an account on Thirdwatch, log in to your account using your email address and password from here .

Step 4: On the Thirdwatch dashboard, click on “Settings” to get your API Key. To generate an API key, enter your online store’s URL. 

razorpay thirdwatch woocommerce free installation

razorpay thirdwatch woocommerce free plugin install

Step 5: Head over to WordPress dashboard–>Thirdwatch and enter your API key–> Check “Enable Thirdwatch Validation”–> Click on “save changes” (details of API key given below as well)

Type 2: Custom Installation

Step 1: Download the Razorpay Thirdwatch plugin from the WordPress Store, unzip the package and place the folder in the wp-content/plugins

Step 2: Now, click on the Plug-ins option in the left-hand bar on the WordPress dashboard. Under the Thirdwatch tab, click on activate.

Step 3: After successful installation of the plugin, click on the Settings button and check on Enable Thirdwatch Validation.

Step 4: To enter your API Key, you can sign up on the Thirdwatch dashboard for free. Upon signing up, you can find the API key in the Settings tab. Here’s a guide to fill the following details:

  • 🏁 Approve Status (Change order status when an order has been approved by Thirdwatch)
  • 🚩 Review Status (Change order status when an order is flagged by Thirdwatch)
  • ⛔️ Reject Status (Change order status when an order is rejected by Thirdwatch)
  • 💬 Fraud Message (Choose a custom message to be sent to the customer if their order has failed validation)

Step 5:  Head back to the WordPress dashboard–>Thirdwatch. Click on save changes, and you’re good to go!

Yes, it’s that easy to install Razorpay Thirdwatch! With all-new features like Buyer Action on Thirdwatch, it’s easier than ever to keep a check on fraud and the losses that come with it. 

Install Thirdwatch for WooCommerce today and supercharge your business like never before Start saving money by optimizing your e-commerce operations with Thirdwatch. If you have any questions, make sure to get in touch with us here, and we’ll be happy to help you with them. 

Understanding the New Age Ways of Business Banking

business banking

Banking is the most fundamental form of managing finances. Whether your use is personal or official, you rely on banking and its services. And, if you have a business of your own, you definitely know the importance of business banking. Today, we’ll take a look at business banking and understand the new age forms of using these services. 

What is business banking?

Business banking is the process of a third party managing your company’s finances by providing loans, credit, savings, and current accounts that are especially designed for businesses instead of individuals.

Business banking helps keep your funds safe while providing you with a clear view of your business’s financial health. You also get additional perks that you won’t receive with a personal account.

Methods of business banking

Business banking can be carried out in a few ways.

A physical branch – This is the traditional way of business banking where are your transactions will be processed at a branch.

Online banking – This method of banking has become increasingly popular because of the ease it provides to the customers.

In online banking, neobanking and open banking have opened up a whole new avenue of services that primarily focus on experience while providing your business with the best possible solutions for money management. Let’s take a closer look.

What is neobanking?

It is a type of digital bank that does not have any physical branches. Unlike a traditional bank that has a branch at a specific physical location, a neobank is entirely digital and online.

Think of a neobank as a cluster of financial service providers who cater to today’s tech-savvy consumers. Without a license of its own, a neobank leans on bank partners to provide bank licensed services to its customers. 

How does neobank help with business banking?

Often, businesses have to deal with tedious, never-ending processes that involve disbursals and payments. These processes result in hours and hours of manual efforts due to buggy software, complex infra systems, and many other reasons. This complexity may further grow into fiddly money movement views. 

Business banking via neobanks helps solve all these problems.

  • Account creation is a breeze since neobanks are completely online; they don’t have a storefront. All it takes are a few minutes and a couple of simple steps on a smartphone
  • With friendly UI, you can provide the best user experience to your customers
  • Business banking with neobanks helps take your business to any part of the world
  • Neo-apps help manage your finances by providing you with an overview of your expenses and a savings goal that matches your needs
  • You can save 10x time because of reduced manual effort and instant payouts
  • Make, track, control, and analyse all forms of money movement, all from a unified platform
  • You can also track and manage money movement to vendors, customers, employees, and more, with the in-depth Financial CRM 
  • Use APIs that are easy to deploy and integrate banking into payments and accounting infrastructure
  • Make informed, impactful business decisions with off-the-shelf analysis on payouts mode 

Neobanks also provide current accounts since they support higher volumes of transactions. 

Read more: Everything You Should Know About Neobanking

What is open banking?

Open banking involves sharing financial information digitally and securely, with customers’ approval. The use of APIs enables third-party developers to build services and applications around a financial institution. This drives speed while keeping costs low when compared to traditional systems. 

A combination of rich bank data and disruptive fintech results in financial products that provide both businesses and customers with the best of both worlds.

How can you improve your business banking with open banks?

The utilisation of APIs by banks has become very progressive all around the world, and for good reasons. With API banking, innovators have more flexibility to provide the best features and services to streamline financial services, thereby creating a surge of competition and innovation in fintech products.

Use cases for API banking

The most common use-case for API banking is payouts.

Lending: In the last year, the consumer lending industry saw a meteoric rise. And, with increased competition, the speed at which loads are processed became a top priority.

Today, RazorpayX has helped many lending companies reduce the average time to process a loan from 3 hours to 30 seconds.  

Gaming: Gaming is an industry in which instant gratification reigns supreme – winners want to claim their prize instantly. 40% of the real-money gaming industry in India uses RazorpayX to disburse winnings to their users.

Open banking provides solutions for all your business banking needs.

  • Have more transparency, knowledge, and options when it comes to managing your finances, and find a tailored solution that fits your business case 
  • With real-time capabilities, get enhanced visibility of cash flow, cash position, and more, across currencies
  • Reduce administrative hurdles with regard to managing your finances like applying for a business loan, checking your creditworthiness, and more
  • Be in control of your data as you decide how to use it or who gets to access it
  • Set targets on savings and expenditure, ration your finances logically while being able to account for each and every financial activity
  • Have a single view of all your finances while being able to control, track, and analyse all financial movements, all in one place

RazorpayX – business banking experience like never before

With RazorpayX, businesses can manage their entire financial operations and make timely payouts using our sleek dashboard or robust API.  Businesses like CureFit, MPL, Dunzo, and others use RazorpayX to make payouts at scale via API while keeping costs low.

This also helps them ensure their customers and partners are happy. RazorpayX Current Accounts takes business banking further by including all standard banking services like debit cards, accounting statements, cheque books, and more.

Conclusion

Surely, you’d want to manage your business’s money better, with more control and efficiency. Neobanking and open banking can help streamline and automate your business banking at scale.

What is a Neobank? Everything You Should Know

neobank

Lately, Neobanking has become a buzzword in the fintech community. The term has gained momentum since it’s been taking the spotlight on the news and media. But do we know what it’s all about?

Neobanks are taking over the fintech industry by a storm, on a global level. We see a new player on the market every day whose primary intention is to simplify financial services to a greater extent. Let’s understand what it truly means.

What is Neobank?

A neobank is a kind of digital bank without any branches. Rather than being physically present at a specific location, neobanking is entirely online.

It’s a wide umbrella of financial service providers who beseech today’s tech-savvy customers. Neobanks can be called fintech firms that provide digital and mobile-first financial solutions payments and money transfers, money lending, and more.

Neobanks don’t have a bank license of their own but count on bank partners to provide bank licensed services. 

As the financial landscape is shifting towards customer experience and satisfaction, a gap has developed from what the traditional banks offer to what customers expect. And, Neobanks are making an attempt to fill that gap.

Most traditional banks are bogged down by their legacy-based infra. So, they crumple when it comes to aiding SMEs with financial services like providing a payment gateway, an invoicing software, multiple views of cash management, among others. 

This disparity, along with the explosion of mobile technology, it only makes sense that banking services can coalesce with other financial services.

Why Neobank?

In recent years, we’ve seen a massive drift in the finance industry. With over 2000 fintech players in the country, digital payments are embraced at such a large scale. Customers are moving away from physical banks and physical cash, and more towards online banking and wallets. 

In our recent report, we talked about how India is moving towards an era of rising fintech. We talked about how Indian consumers transact digitally, and the numbers are growing on a rapid scale. More and more people are getting comfortable making online payments through Google Pay, Paytm, PhonePe, and more, now more than ever.

If we think about these numbers, we can see the potential neobanks have in the country. Neobanks provide the fluidity that traditional banks don’t. They can easily sustain themselves and turn out to be profitable.   

How does a neobank work?

Unlike a traditional banking system, neobanks have a completely different business model altogether. But, like traditional banks, neobanks do make money marginally between money inflow and lending. 

And, since there isn’t a physical location and that they’re completely online, the customer fees are slashed by a significant amount. Because Neobanks are customer-centric, they provide personalized services to their customers that are fired up via technology. 

Data-driven decisions drive the decision-making process of a neobank. Since their platforms are also very modernized, it becomes easier for them to collect and analyze data and understand how their customers behave in the neobanking ecosystem. Based on these observations, they create cohorts of customers based on their actions rather than merely sticking to one or two data points. 

What are the advantages of neobanking?

Since neobanks are completely digital, they open up a wide window of advantages to a customer. Here are some key points that may interest you into moving towards a neobank.

Hassle-free account creation

We’re all fully aware of the pain we need to go through to create an account in a traditional bank. The process may not be as elaborate as before, but the hiccups aren’t completely gone. This tedious process is completely eliminated while creating an account with a neobank. 

Neobanks don’t have a storefront like we discussed earlier. So, you don’t have to go anywhere to create an account. You can do it in a couple of simple steps, right at the comfort of wherever you are, and on your phone!

And, you’ll have the account ready in just a couple of minutes!

Seamless international payments

In the case of traditional banks, it isn’t always that we get a debit card that can be used anywhere in the world, or transact internationally. We may have to ask for an upgrade, make a request, and finally have an international debit card.

You don’t have to worry about any of that if you have an account in a neobank. You can use your card to make purchases, or transact while you’re abroad, with current exchange rates.

User-friendly interface

Neobanks are all about providing an excellent customer experience. This also means you don’t have to work through a glitchy netbanking site anymore. You don’t have to worry about a mobile app that isn’t very responsive.

Neobank apps are very crisp, clean, and user-friendly. They’re highly responsive and well-designed to suit the needs of a customer. The ease of use is what makes the app such a hit amongst its customers.

Smart reporting

Transactions made via neobanks are immediate. The transaction details are populated instantly providing you with an up-to-date balance on your account, at all times. All of your transactions and payments appear on your app and, you don’t have to go anywhere else for this information. 

The neo-app also provides you with an overview of your expenses, along with a savings goal which can be customized to best suit your needs. This helps you manage your finances in a much better and informed manner.  

Neobanks are great for businesses, too!

So far, we talked about how much customers can do with neobanks. Now, let’s understand how businesses can make the most of neobanks.

If you’re a business, you often have to deal with long, tedious processes involving payments and disbursals. Often, you end up spending hours and hours on manual efforts every month because of multiple buggy software and complex infra systems.

Money movement views can also be super tricky because of complexity. Oh, and let’s not forget that you’ll receive no insight on payouts to make impactful business decisions.  

With a product like RazorpayX, you get to simplify, accelerate, and supercharge every aspect of your financial operations! From accepting payments and managing cash flow to reconciling transactions and flexible payouts.

  • You end up saving 10x time because of instant payouts with reduced manual effort  
  • You provide a superior customer experience 
  • You’ll have access to a unified platform that helps you make, control, track, and analyse all forms of money movement from its powerful dashboard.
  • You also manage and track money movement to vendors, customers, employees, etc. through in-depth Financial CRM.

The result, you ask? You make informed, impactful business decisions with off-the-shelf analysis on payouts mode! And, there you have it, some light on the buzzword “neobanks!”

Everything You Should Know About Facebook’s Libra

Facebook Libra cryptocurrency - all you need to know about it - Razorpay payment gateway

With so much buzz about Facebook’s Libra all over the internet, we wanted to make things easier for you. We made a ton of research on the newest innovation, so you don’t have to!

Let’s jump right in.

Apparently, a couple of years ago, Mark Zuckerberg expressed his interest in cryptocurrencies in an interview in the subtlest manner. Seems like he was earnest about exploring opportunities in the financial services industry.

Facebook revealed Libra, a cryptocurrency, along with a consortium of 27 partners and associations earlier. Libra was conceptualised around a mission – to enable a simple global currency infrastructure that empowers billions of people. 

Let’s slow down and understand what the deal is all about.

What is Libra, exactly?

Facebook’s Libra is not just a cryptocurrency.  It’s a “reliable digital currency” all about delivering “the Internet of money” through an efficient infrastructure. The cryptocurrency is intended to be sent to any part of the world with a bare minimum of a fee. 

How is Libra any different from all the other cryptocurrencies out there? 

We thought you’d wonder. 

Since we’re all familiar with Bitcoin, let’s understand the whats and hows of Libra through painting a contrast.

Although built on the same fundamental axiom as Bitcoin, Libra aims to have a stable value, while it gets backed by a number of currencies. 

And, unlike Bitcoin, which is open in nature, Libra is not going to be so. A bank does not issue Bitcoin or manage it either. You can pretty much download a crypto wallet and get going. But Libra is more like digital money with traits of fiat money, if that makes sense.

Libra is also not as decentralised as the other cryptocurrencies. You can open and download the open source code for free in the case of Bitcoin. There are speculations about Libra having multiple central nodes instead of one centralised node, which can be controlled by a legion of stakeholders.

We all know how secure Bitcoin is because of its decentralised nature. It’s next to impossible to hack, being one among the most secure computer networks ever. We’ve already talked about Libra having multiple centralised nodes. This may create a few loopholes concerning security.

So, what’s the idea behind Libra anyway?

Libra is all about making financial services accessible for everyone, irrespective of their geographical location or financial background. The Libra case study talks about how people with less money end up spending way too much money on financial services. And, this is something that should not go unaddressed. 

With the belief that a low-cost money movement will create better economic opportunities, Libra is to charge a very insignificant amount as the fee for transactions.

Libra is also conceptualised to put an edge on advanced financial inclusion, ethical factors, and the integrity of the ecosystem. 

How does Libra work?

Let’s talk a little about the flow of events. 

Imagine you buy Libra. What happens next?

The money goes into a bank account and stays there. It won’t budge because the idea is to match the value of a Dollar or Euro. When Libra’s value is that of a currency, it’s immediately backed by a Dollar or a Euro in the bank.

Why so?

Because, the account holding of Libra in a bank will generate interest based on value, which can be used to return the initial investors of the cryptocurrency. 

Again, comparing with Bitcoin, Libra can be created without a limit on the number, unlike Bitcoin, which is said to have an upper limit of 21 million. And, creating Libra is also not as laborious as Bitcoin, since Bitcoin consumes a lot of electricity.

If Libra works the way it’s told to work, we should all be able to send it to any business on a global scale. 

The best part is, you can also convert Libra back to your preferred currency. Calibra, Facebook’s wallet will convert Libra at the current conversion rate and helps transfer money into a bank account.

What can you use Libra for?

Libra is built in a way that any organisation can accept a coin and make a wallet on top of it. So, Libra is not just limited to Facebook. The cryptocurrency is intended to be for all of Facebook’s users (about 2.7 billion), including Messenger. 

Libra can be used for multiple purposes. Since the partnership is branched out all the way to Uber, Spotify, and more, it’s expected that one can buy services on the partnered businesses through Libra. You can also run Facebook ads using Libra.

Facebook also went about setting up Calibra, a subsidiary. This is going to make Libra accessible to all users. The idea is to expand and build more financial services as a layer on Libra. 

You can set up a Libra wallet from any part of the world by providing identity proof. The only setback will be faced by regions that have limitations on the use of social networks. 

Libra is said to work all over the world from the year 2020.

How do things look for Libra in India?

We all know about the crypto-ban in the country and how there is a draft law that proposes a 10-year jail term for holding, selling or dealing in cryptocurrency.This could also mean that Libra may never make an entry at the Indian financial services landscape.

Considering how India is also moving towards a fintech revolution, it can do more good than bad if Libra were to set itself to work in the county. This is particularly great for Facebook since Indians are heavy users of Facebook and WhatsApp. 

There is a lot of hush-hush about the reputation though. Facebook has an underlying negative tension since it hasn’t safeguarded its user information to the best it could. Concerns about security since it’s money we’re dealing with, simply cannot be sidelined. 

Speaking of security, Libra is not as decentralised as a cryptocurrency usually is. This can pose a threat, or help Libra represent itself as “not a cryptocurrency but is like one” and find its way into the Indian market. 

Let’s say Libra does enter the Indian fintech. What could possibly happen? If you think about it, Libra can compete with our favourite UPI. Since UPI, digital payments have gotten way easier than ever, mobile payments had a breakthrough, and the country moved a step ahead in its fintech journey. Libra could give UPI a run for its money.

Libra could also become one of the prominent methods of online transactions since payment solution companies will also come forth to support the same.

We’ve talked about UPI contributions from various cities and states of the country. Now, let’s talk about rural areas. From our previous report, we know where tier-3 cities stand with UPI. But can we all agree upon the fact that tier-3 cities have WhatsApp and Facebook users? Of course.

If people from these areas aren’t really catching on to UPI, could it be possible that since they already have WhatsApp and Facebook, or either one among the two, they’re a step closer to financial inclusion? 

Maybe.

 

Aadhaar Virtual ID (VID) – Get Your VID in 3 Simple Steps

Guess what’s common in getting a mobile phone connection, investing in mutual funds and opening a bank account? Submitting Aadhaar details! Yes, Aadhaar has become the de facto authentication/verification tool for a gamut of services today.

Using a single universal ID is great, but it brings along data security challenges. UIDAI decided to overcome this through the creation of simple, easy to use Virtual IDs (VIDs) in place of original Aadhaar numbers.

Why Aadhaar VID you ask? Simply put – to eliminate data misuse. With Aadhaar details required at several places today, people have become wary of sharing Aadhaar numbers in the fear that personal information might get stolen or misused. Aadhaar VIDs address this exact problem by masking the original Aadhaar number.

You can create a new Aadhaar VID for every instance you need. There is no way of tracing original Aadhaar numbers from Aadhaar VIDs, giving no space for any data or security breach.

However, Aadhaar VIDs still fulfill all personal verification requirements. Every Aadhaar VID can confirm your Aadhaar details like name, address, biometrics etc., thus seamlessly completing any eKYC process.

Getting an Aadhaar VID is super easy, and you can generate one, on your own in just a few minutes. Here’s how:

[CAUTION: The privacy of your Aadhaar information is vital. So please ensure you are on the official Aadhaar website (uidai.gov.in) before typing in your Aadhaar details]

1. Open UIDAI’s VID Generation page

aadhaar-vid2. Enter Aadhaar number, security code and click the ‘Send OTP’ button

adhaar-vid3. Enter OTP from mobile phone, select ‘generate VID’ and hit submit

aadhar-vidJust that! And your Aadhaar VID is sent to your registered mobile phone. Here’s a sample:aadhaar-virtual-id-vid

There’s more to Aadhaar VIDs than just a simple ID generation process. We’ve got all that covered in our FAQ section below –

FAQs

Q. Are Aadhaar VIDs permanent?

A. Aadhaar VIDs are temporary 16-digit numbers that can be generated by Aadhaar number holders. The current minimum validity of an Aadhaar VID is 1 day. So, you can create a new Aadhaar VID every day after 00.00hrs.

Q. Do Aadhaar VIDs expire?

A. Currently, there is no expiry or validity defined for Aadhaar VIDs. An existing Aadhaar VID is valid until a new one is generated.

Q. Is there a limit on the number of Aadhaar VIDs that can be created?

A. There is no limit on the number of Aadhaar VIDs that can be created. You can generate a new Aadhaar VID after the minimum validity period of 1 day.

Q. Can Aadhaar VIDs be created by anyone, on my behalf?

A. Only Aadhaar number holders can create Aadhaar VIDs.

Q. Can the same Aadhaar VID be used at multiple places?

A. Absolutely. A single Aadhaar VID can be used at multiple places, or a new one can be generated for each use case. The choice purely lies with the Aadhaar number holder.

Q. What happens if I forget my Aadhaar VID ?

A. An existing Aadhaar VID can be retrieved by following the same steps used to generate a new one.

Q. Can an Aadhaar VID be mapped back to an Aadhaar number?

A. It’s impossible to trace an Aadhaar number from an Aadhaar VID.

Q. I have not linked my phone number to my Aadhaar number, can I still get an Aadhaar VID?

A. No, currently Aadhaar VIDs can only be generated from the UIDAI portal through an OTP key. Hence, it’s mandatory to link your phone number to your Aadhaar number at the moment.

Q. Who is authorized to store Aadhaar VIDs?

A. No agency or service provider is allowed to store Aadhaar VIDs. Only UIDAI has access to all the Aadhaar VIDs generated.

Q. Where can Aadhaar VIDs be used?

A. Aadhaar VIDs can be used at all instances that require eKYC details.

At Razorpay, we support Aadhaar eSign (which uses Aadhaar VID) for creating e-Mandates as part of Razorpay Subscriptions. Our strength lies in delivering smooth, seamless customer experiences and even this time around, our team worked proactively to bake in the Aadhaar VID generation process as part of the Aadhaar e-Sign workflow.

So, if your customers need to set up e-Mandates using Aadhaar e-Sign, they can effortlessly do so, directly through the checkout page for Razorpay Subscriptions. Curious about e-Mandates? We’ve put together some FAQs, take a look.