The Digital India programme is India's flagship initiative to transform India into a digitally enabled society and knowledge economy. One of Digital India's stated goals is to be "faceless, paperless, and cashless." Digital payment services are forms of contactless, cashless and paperless payment methods. Through services like smartphone apps and AI/machine learning, technology has enabled the world to adopt these simpler financial transactions. Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), investments, bank statements, bill payments, and other digital payment methods are all available on a single platform in mobile banking apps. Customers are encouraged to adopt digital services by banks because it makes operations easier for them.
Did you know?
The first online payment platform in India was Billdesk which launched its operations in 2000.
Online payment methods in India
Various digital payments are available to promote cashless transactions and convert India into a cashless society. Some of the digital payment methods are:
- Banking cards
- Point of sale (PoS)
- Internet banking
- USSD (Unstructured Supplementary Service Data)
- UPI (Unified Payment Interface )
- Mobile banking
- AEPS (Aadhaar Enabled Payment System)
- Mobile wallets
- Banks prepaid cards
- BHIM (Bharat Interface for Money) app
1. Banking cards
Cards are one of the most extensively used digital payment methods, offering a variety of features and benefits such as payment security, convenience, and so on. Debit/credit or prepaid banking cards have the advantage of being used for various sorts of digital payments. Customers can keep card information in digital payment apps or mobile wallets to make a cashless payment. Among others, Visa, Rupay, and MasterCard are some of the most reputable and well-known card payment systems. Banking cards can be used for online shopping, digital payment apps, point-of-sale machines, and internet transactions, among other things. These banking cards contain the card number, cardholder’s name, smart chips, expiration date, card holder’s signature and the security code, i.e., the CVV.
How to get a bank card?
You need to apply for the card in your respective bank by filling up a form requesting this service. The card will be activated within a week, and you will be given a 4-digit pin that may be used for all transactions if you apply with your particular bank and provide Know Your Customer (KYC) details.
2. Point of sale(POS)
An important component of a point of purchase is the location where a client makes a payment for goods or services and where sales taxes may be due. It could be a physical store with PoS terminals and systems processing card payments or a virtual sales point like a computer or mobile electronic device. The merchant may utilize various technologies such as weighing scales, barcode scanners, and cash registers to calculate the amount due by a consumer (or the more advanced "POS cash registers", which are sometimes also called "POS systems. Payment terminals, touch displays, and other hardware and software solutions are available to make a payment.
3. Internet banking
Also known as net banking or online banking, it is a digital payment system that allows a bank or financial institution's customers to conduct financial and non-financial transactions through the internet. Customers can use this service to access practically every banking service that was previously only available at a local branch, such as fund transfers, deposits, and online bill payments.
Anyone who has an active bank account and has registered for internet banking services can use it. A consumer who registers for online banking services does not need to visit the bank every time they need a banking service, making it a convenient process of banking. User/Customer IDs and passwords are used to protect net banking portals. There are different services included in internet banking such as account balance check, view bank account statements, NEFT & RTGS Funds Transfer, IMPS Fund Transfer, issuance of cheque book and many other services as well. Funds can be transferred through internet banking by three methods namely NEFT, RTGS and IMPS.
Another digital payment technique is by dialling *99#, which can be used to make mobile payments without downloading an app. These forms of payments can be done even if you don't have access to mobile data or the internet. The USSD and the National Payments Corporation of India (NPCI) support this service. The primary goal of this form of digital payment service is to foster the participation of underprivileged groups of society in the digital payment systems and to integrate them into mainstream banking. This service can be used to make fund transfers, see bank statements, and inquire about balances. This type of payment method also has the advantage of being available in Hindi.
What Is *99# and How to Use It?
• Customers can access this service by dialling *99#, after which they can utilize their mobile to interact with an interactive audio menu.
• The customer's mobile number must match the one linked to the bank account to use the service.
• The next step is to register for USSD, MMID (Mobile Number Identifier), and MPIN (Mobile Payment Identification Number) so that this service can be availed.
AEPS can be utilised for various banking operations, including balance inquiries, cash withdrawals, cash deposits, payment transactions, and Aadhaar to Aadhaar fund transfers, among others. Based on Aadhaar verification, all transactions are processed through a banking correspondent. There is no need to go to a branch, produce debit or credit cards, or even sign a paper in person. Only if your Aadhaar number is registered with the bank where you have an account can you use this service. The NPCI has taken another step to promote digital payments in the country through AEPS.
UPI is an interoperable digital payment system that allows any consumer with a bank account to send and receive money via a UPI-enabled app. The service allows users to link multiple bank accounts to a UPI app on their smartphone, allowing them to seamlessly conduct financial transfers and collect requests 24 hours a day, 365 days a year. UPI's key benefit allows users to send money without a bank account or an IFSC number.
All you'll need is a Virtual Payment Address to get started (VPA). There are numerous UPI apps available on the market, and they are compatible with both Android and iOS devices. A valid bank account and a registered cellphone number linked to the same bank account are required to access the service. There are no fees associated with using UPI. Some of the examples of UPI enabled apps include PhonePe, Paytm, Bhim App, Google Pay, Google Tez, MobiKwik etc.
7. Mobile banking
Making financial transactions on a mobile device is mobile banking (cell phone, tablet, etc.). This activity can range from a bank sending fraud or usage activities to a client's cell phone to paying bills or moving money internationally. The ability to bank from anywhere and at any time is one of the benefits of mobile banking. Compared to banking in person or on a computer, security concerns and a limited range of capabilities are its disadvantages.
A virtual wallet that holds payment card information on a mobile device is a mobile wallet. Mobile wallets are a handy way for a user to make in-store payments, and they can be used at any retailer that the mobile wallet service provider has listed.
8. Bank prepaid card
A prepaid card can make purchases. You purchase a card with funds pre-loaded on it. The card can then be used to make purchases up to that amount. A prepaid card is sometimes known as a stored-value card or a prepaid debit card. Prepaid cards are available at a variety of stores and online. The Visa or MasterCard logo can be found on many prepaid cards. These prepaid cards have the appearance of a credit card.
9. Micro ATMs
They are card swipe terminals that allow banks to access their core banking system from a distance. A fingerprint scanner is included with this machine. In other words, micro-ATMs are portable point-of-sale machines used to distribute cash in areas where bank branches are not accessible. Micro ATMs, which are comparable to point-of-sale (PoS) terminals, are a type of mobile banking device that may be used at home.
10. Bharat Interface for Money (BHIM)
The National Payment Corporation of India created BHIM (NPCI). It is a mobile-based program that enables rapid, safe, and dependable cashless payments. BHIM is based on the Unified Payment Interface (UPI), allowing direct bank-to-bank e-payments. It works with other Unified Payment Interface (UPI) applications and bank accounts. The Unified Payment Interface (UPI) is an instant payment system built on top of the IMPS infrastructure that allows you to send money between any two bank accounts in real-time.
Benefits of Digital Payment Methods
While most of us have adjusted to the shift in payment methods, there are many people who still prefer the conventional form of cash payment and are yet to accept the concept of digital transactions fully. The people living in rural areas and those who do not have any access to internet connections and smartphones are unable to use digital payment methods.
- Transactions made using a digital payment system are quicker, easier, and more convenient than traditional bank transactions made in person at a branch.
- Digital transactions are less expensive than traditional methods of payment.
- Digital payments are more rewarding because they provide individuals with access to a choice of promotions and freebies.
- Digital transactions give a clear trail of the entire transaction, making it easier to track payments.
- Paytm and other digital payment systems assist in the payment of power, broadband, gas, phone, and DTH recharges.
Here are some of the most compelling reasons to go cashless and get the benefits of digital payments:
1. Enhanced Safety
Carrying cash with you at all times can be unsafe. As a result, individuals are frequently the victims of minor thefts or robberies. One of the most significant benefits of digital payments is that they are far more secure than traditional cash transactions because they require adequate verification and authentication. Banks and other digital payment systems provide additional security for digital transactions in the form of OTPs and cross-verification, which can prevent fraudulent transactions.
2. It's More Convenient
Standing in long ATM lines only to withdraw a small quantity of cash is time-consuming and not convenient. However, people are confronted with this circumstance every time they go shopping. On the other hand, digital payment systems provide greater convenience for everyone because they allow them to perform financial transactions without worrying about running out of cash.
3. Transactions that are quick and easy
Since digital payments have been around for a while, the process has gotten simpler than before. Digital payments are now accepted at showrooms, malls, and even small shops. Buyers can now make purchases using their mobile banking apps or other digital wallets, making the entire transaction process simpler. The buyers can just scan the QR code and make the payment very easily through their digital wallets.
4. Special Offers and Discounts
Banks and other financial organisations often offer their consumers various offers and discounts to boost digital payments. One can take advantage of these deals and receive regular cashbacks, rewards, and discount vouchers for digital transactions. Furthermore, certain banks and digital wallets offer unique benefits and deals to their consumers.
5. Physical Distancing
One of the most significant advantages of digital payments is that they encourage secure and contactless transactions. With the Covid-19 situation still looming over our heads, it's critical to avoid personal contact. During this situation, elderly individuals are recognised to be in higher danger. As a result, one of the best methods for them to stay safe during the Covid-19 pandemic is to use digital payment systems.
6. Traveling Convenience
Gone are the days when we had to carry big sums of cash when travelling out of town. Retailers around the country have realised the value of becoming cashless and have begun to accept digital payments. As a result, people can easily travel to and from other Indian cities without worrying about finding an ATM or running out of cash.
7. Keep tabs on your spending
Maintaining a weekly/monthly budget is the first step toward financial independence. This is especially essential for the individuals who rely on their pensions and other retirement funds. With easy-to-access bank statements and logs of all transactions, digital payments allow them to keep track of their overall spending.
8. Various Alternatives
Individuals can now choose from a variety of digital payment alternatives, including debit and credit cards, as well as digital wallets such as Google Pay and PhonePe. This allows them to do financial transactions without worrying about running out of cash.
9. Budgeting Consistency
Going cashless is one of the best methods for people to understand their spending habits better, as they can track and analyse their transaction patterns using various apps. This will assist them in better understanding their spending and better planning their budget. To achieve financial independence, you must develop a budgeting discipline.
10. You will save both time and money
One of the most significant advantages of going cashless is saving individuals a significant amount of time and money. Individuals can make faster payments thanks to the many payment alternatives offered. People can also save money by using digital platforms that impose transaction fees. This will not only help them save money, but it will also be good for their total budget. Although it may be difficult for the elderly to comprehend digital transactions fully, they can seek assistance from family members about it.
Various digital payment methods are available to promote cashless transactions and convert India into a cashless society. Going digital is advantageous for people who do daily transactions to purchase one or more products or services. Digital payments enable purchasers to pay directly from their banks, merchants to sell to clients in other countries, and customers to pay in foreign nations. There are many advantages and disadvantages of using digital payment methods. Hope this article answers all your queries regarding digital payment.
The Khatabook app is one such app where you can do secure digital payments. It is an excellent app for small and medium-sized businesses where payments can be made, sending payment reminders, generating business reports etc.