In-store payments are payments you make in person, at a shop counter, with a card, a phone or a UPI QR code. For instance, you might be paying for a coffee at a café in Pune, for groceries at a kirana store or for a haircut at a salon.
Take, for example, a card payment. You buy a coffee for ₹180 at the café. The staff enter your order on the billing screen. This screen runs point of sale (POS) software, which also knows the menu and the prices. You tap your debit card on the POS terminal, the card machine on the counter. Two seconds later, the machine beeps: approved.
In those two seconds, the payment request passes through several systems. The terminal sends it over a payment switching network, a private network that carries card payments. The request reaches the café's own bank. In payments, the shop's bank is called the acquiring bank, or acquirer. It receives card payments on behalf of the shop. The acquiring bank sends the request to a card network, such as Visa, Mastercard or RuPay. On the way, a fraud detection system gives the payment a score for how likely it is to be fraud. The card network then sends the request to the bank that gave you the card. This bank is called the issuing bank, or issuer. Your bank checks your balance and approves or declines the payment. The answer travels back the same way, to the terminal.
The money itself does not move in those two seconds. Your bank only reserves ₹180 in your account. The money moves later, usually on the next working day, from your bank to the café's bank. Banks call these two steps authorisation and settlement.
Now consider a shop with no card machine at all. Many Indian shops use only a printed UPI QR code. You scan it with your UPI app, type the amount and enter your UPI PIN. UPI, the Unified Payments Interface, moves the money from your bank account to the shop's bank account within seconds. No card and no card network are involved. A small speaker on the counter, called a soundbox, then announces the payment aloud. So the shopkeeper knows the money has arrived without checking a phone.
Say you tap your phone instead of your card. The phone then sends a token, not your card number. A token is a different number that represents your card. So the café never receives your real card number.