In today’s world, the world has become increasingly connected through various digital platforms. It is due to the rise of technology and the internet. Moreover, there have been various developments to make payments via the internet as well. These are highly secured services offered by world-class finance technology or fintech companies. India has several such online payment startups, and most of them support all the diverse methods available to make such digital payments.
What is Digital Payment?
Digital payment can be defined as any transaction that takes place via digital or online modes, with no physical exchange of money, in the form of draft, cheque, or cash, involved. Both parties, in essence, the payer and the payee, use electronic mediums to exchange money. Besides, it is far from the truth that digital payments take place only via the internet.
Payments made using any UPI equipped platform, via a cellular device, for the purchase of any physical goods can also be considered digital payments. For instance, every time you buy groceries from your nearby shop and pay using any of the available UPI options, you are making a digital payment.
Why is Digital Payment important?
Businesses and consumers are interested in secure and convenient payment methods, as cash has become obsolete in the wake of the COVID-19 pandemic. Digital payments are a method that is safer, easier to collect, and less expensive in the long run as compared to traditional methods of payments. Moreover, digital payments can be processed faster than cash in real-time. And, it can also accommodate any person and any business in the world.
Digital payments are made via the online secure bank network by transferring money from your customer account to your commercial bank account, depending on the platform you use. As soon as you collect the payment, the money flows directly into your business account without delay and at a fraction of the cost. This added cost is known as service charges and is usually below 5%. This makes the entire process of digital payments quite hassle-free and secure.
What are the different methods of Digital Payment?
There are various types of digital payment methods including the use of debit and credit cards, Internet banking, mobile wallets, digital payment apps, unified payment interface (UPI) services, unstructured supplementary service data (USSD), bank prepaid cards, mobile wallets, among others. All of these have their advantages and disadvantages. However, it is true that almost all of this eclipse the traditional cash-based economy in ways more than one.
Here are a few of the predominant digital payment infrastructures available in India that can expedite your cash transfers and reduce your burden:
1. UPI or Unified Payments Interface:
UPI is one of the most popular digital payment processes in use today. Many easy-to-use mobile applications such as Paytm, Google pay, PhonePe allow users to transact within seconds directly from their bank account using the KYC verification done during the initial account setup. In 2020 October alone, there were over 2 billion UPI transactions made.
2. Mobile Wallets
Much digital payment software has a payment wallet associated with them. This wallet is a digital wallet that stores your money in an easy-to-use platform instead of your bank account to ensure the user seamless financial transaction directly from the application wallet itself. Mobile applications such as Paytm and PhonePe are popular options if you are interested in having your mobile wallet.
3. Banking Cards
Banking cards such as Credit cards and Debit cards are perhaps the oldest form of digital payment available to Indians. Although it took over 10 years to introduce such card systems in India, it changed the system of payments considerably. This step was a prerequisite towards allowing a cashless economy in the long run. In today’s world, many electronic cards are gift cards and gift vouchers as well. Such retail, prepaid cards are also a method of digital payment.
4. USSD or Unstructured Supplementary Service Data
USSD is a digital payment option that does not require internet connectivity. It is the most accessible and can be done directly through a valid and verified cellular connection by dialling a standard code. Many mobile service providers such as Reliance Jio and Airtel option lucrative offers while using this USSD service that comes as a package with the connection.
5. Mobile Banking
Mobile Banking refers to using internet banking facilities such as RTGS, IMPS, or NEFT transactions that can be used to send your funds across the globe directly through your online banking platform. Most major banks are developing interactive net banking platforms on the internet to make such mobile banking payments more mainstream than today. Although NEFT takes around 7 days to complete, IMPS and RTGS transactions usually complete within the day.
After demonetisation and the consequent troubles the public faced with cash transactions, digital payments became a priority for the Indian Government as well. The Digital India Initiative is one of the premier movements launched by the Government in recent times. Nowadays, almost all people, including local retailers and shopkeepers, accept digital payments. The shift from cash-dominated to cashless transactions is an incentive for digital transactions and digital payments. It offers easier access to liquid capital for small businesses and retail investors as well.
Moreover, in the recent future, newer technologies will evolve and emerge to meet the growing demand for faster payment services. In the future, plastic cards will inevitably be overshadowed by state-of-the-art payment services that offer more convenient and seamless methods of transferring and storing money. Perhaps even crypto-transactions would be mainstream methods to pay digitally for global services or wire transfers.
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Q. What do you mean by digital payment?
Ans. Any transaction that doesn’t involve the physical movement of ‘cash’ can be considered digital payment. Transactions that happen online on the web or through multiple mobiles, and computer software such as Razorpay, Paytm, Google pay, among others, are digital payments.
Q. What are the different methods of digital payment available in India?
Ans. There are a wide variety of digital payment options available in India. These include mobile wallets such as Paytm or PhonePay, UPI applications such as Google pay, BHIM UPI, net banking using IMPS, RTGS, or NEFT technologies, credit and debit cards, among others. All of these have their own advantages and disadvantages, as discussed in the paragraphs above.
Q. Can I transfer large amounts using digital payment?
Ans. Yes, you can transfer sums above 1 lakh rupees using digital payment options as well. There are some charges and convenience fees that may also be included in this regard. NEFT/RTGS/IMPS and other net banking options usually have a higher limit than mobile wallets, credit applications, and USSD payment options. Your credit limit usually depends on your application usage and account balance as well.
Q. Is digital payment a safe method?
Ans. Digital payment methods are incredibly safe and secure. There are various layers of cybersecurity encryptions attached to every transaction. It is highly secure and perhaps more so than various traditional payment methods which are prone to human errors such as loss, theft, or misappropriation of the funds.
Q. What can I buy using digital payment methods?
Ans. You can purchase almost anything using digital payment options nowadays. From groceries to the latest fashion and luxury items, everything can be bought and sold using digital payment methods. Moreover, many prefer to use such options over regular cash transactions to reduce hassle and human errors.
Q. Can I buy groceries with digital payment methods?
Ans. Yes, you can purchase groceries with various digital payment options as long as your vendor supports these applications. Most grocers allow their customers to pay using UPI services and Mobile Wallets, depending on the location.