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Digital payments refers to those transactions that are carried out through online mediums, where no physical exchange of money is required. Digital payment can be made from the comfort of your home and the receiver can get the amount directly to their bank account. Today there are various methods of digital payments available in India which can be accessed easily. We will discuss each of these digital payment methods in this article.
There have been various different digital payment methods in India. Some have got prominence just recently, whereas some have been there since more than a decade now.
Unified payment interface or UPI is a payment system that combines various bank accounts into one application, and money can be transferred easily. Through UPI, transfer of money can take place with just a few clicks. One of the features of UPI is that you can pay directly from your bank account to another person’s bank account without the need to type in card details. This method of payment has become one of the most common ways of digital payment among people. What took credit cards decades to achieve in India, UPI took only 2 years.
Mobile wallet is a place where a person can store money in digital form. People may choose to add money from their linked bank account to the mobile wallet and use the money to make payments etc. Many banks have launched their wallets, and many private players have established mobile wallet service for customers. Some of them are Paytm, PhonePe, MobiKwik etc.
Internet banking can be used through the website of a bank. All you need is a stable internet connection to make payments or transfer money. Today many Indian banks offer the services of internet banking. Every payment gateway in India provides virtual banking option to its customers. NEFT, RTGS or IMPS are few of the standard methods through which transaction can be done via internet banking.
Another option of digital payment is mobile banking. It is the manner of conducting transactions and banking activities through mobile devices. Various banks provide the access to mobile banking apps, which can be accessed from mobile phones. Mobile banking services can be categorised into access to- account information, transactions, investments etc. Mobile banking is known for its convenience, speed and seamless experience. Consumers can access mobile banking from anywhere and at any time.
Transactions through banking cards has been one of those methods of digital payments which has been prevalent since a long time. Indians use banking cards such as debit cards, credit cards or prepaid cards as an alternative option to cash payment. People prefer to use these cards as it is secure, convenient and can be easily carried wherever you go. Today there are various apps that have been launched to manage card transaction, such as Cred etc.
Unstructured Supplementary Service Data or USSD is method through which transactions can be made even without an internet connection. Banking customers may avail this option by dialling *99#, which is a common number across all telecom service providers and transact via an interactive menu shown on their mobile screen. Some of the key services offered under this method of digital payment includes interbank account to account fund transfer, balance enquiry, mini statement and various other banking services. Today many leading banks offer the *99# service. It is a unique interoperable service to consumers that brings the diverse ecosystem partners like banks and telecom service providers together.
AEPS is a payment system which is based on the unique identification number of the aadhaar card. It allows aadhaar cardholders to make financial transactions seamlessly through aadhaar based authentication. This method of digital payment has been introduced to ensure financial inclusion and to empower all sections of the society by making financial and banking services available to every section of the society. Through this method, one can easily transfer funds, make payments, deposit cash, withdraw money, know account balance etc. In order to use this feature, your bank account should be linked with your aadhaar.
Micro ATMs are device that delivers banking services to customers. Business correspondents who may be a local store owner can facilitate a Micro ATM to perform instant transactions. Through this device, one can transfer money from your aadhaar linked bank account by finger authentication.
Some of the major services that can be accessed from this Micro ATM includes withdrawal, deposit, money transfer, and balance inquiry. The fundamental requirements to access these feature is to link your bank account with Aadhaar.
Another method for digital payment is through Point of Sale terminals. It is the location or segment where the sale takes place. You may have noticed it in the malls and stores. The common type of PoS machine is used for debit or credit cards. Customers can just swipe their cards at such machine and enter the PIN.
Now modern PoS digital payment methods have also been introduced which includes a contactless reader of the PoS machine wherein without the need of a PIN one can easily debit an amount upto 2000 rupees by auto authenticating it.
This sort of cards are issued by banks which is different from a debit card. In case of debit cards, you can use it numerous times, but the same cannot be said for prepaid cards. In order to get a prepaid card, you need to have a KYC complied account. Some common use cases of these cards includes corporate gifts, rewards etc.
These digital payment technology has made it easy and convenient to conduct transactions. Now increased number of people are embracing these technological advancement considering its ease and customer experience. However, there are still innovations and improvements that can be made in the future.
The following points may be considered going forward:
It is important to understand where we stand at this point in time and how can we ensure that digital payments are made more efficient going forward. The above mentioned points can be considered to prepare a road map that will help to attain the objective of safe and secure digitalization of payments. If these can be ensured then we may witness more digital payment methods in the near future.
Read our Article:E-Rupi: Contactless and Cashless Digital Payment