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“Faceless, Paperless, Cashless” is the professed role of Digital India envisaged by the Ministry of Electronics and Information Technology (MEITy), Government of India, across the country, especially in rural and remote parts of India. It is expected to boost Digital payment system in India.
MEITy further encourages and promotes common e-Governance infrastructure, offering an end-to-end transactional experience for citizens, businesses as well as internal government functions, including access to various services and making payments and receipts through electronic modes. A targeted and time-bound approach has been recommended by the Apex Committee on Digital India to implement digital payments for citizens across all the e-services of Government Ministries and Departments.
Payments can be made through digital modes where both payer and payee make use of the technology to send and receive money. The requirement of hard cash is being eliminated in this system of digital payment. It is also known by the name of electronic payment as all the transactions are completed online, making it an instant and convenient way to make payments.
This method makes use of mobile apps to make and receive payments. The funds can be transferred between two accounts by the use of UPI Apps. Firstly, one has to register for mobile banking with his/her bank to make use of the UPI apps. The limitation is that only an android user can take advantage of this facility as the service can only be run on Android phones. Lack of a good internet connection further adds difficulty to the situation.
The term AEPS stands for “Aadhar Enabled Payment Service”. The payment is made under this system by making use of the Aadhar Number. This results in the bank to bank transactions under which the payment is deducted from the payer’s account and is credited to the payee’s account.
It is a mobile banking based digital payment mode, but you do not need to have an Android-based smartphone or internet connection to use USSD (Unstructured Supplementary Service Data) banking. This service can be used for various financial and non-financial operations such as checking balance, sending money, changing MPIN and getting MMID.
These include credit cards and debit cards. Now prepaid cards and Rupay Debit cards are also joining the trend. Although cards are the most convenient methods of digital payment, it charges 0.75% to 0 % on transactions.
The e-wallets are the easier and faster way to make payments. But, as in the case of UPI payments, there is a need for Android-based smartphones and stable internet connection for making or receiving payment through e-wallets. On the whole, the rise of the FinTech companies has led to the increased use of digital payment methods in India. Some of the commonly used e-wallets are Paytm, Freecharge, StateBank Buddy etc.
There are various advantages being offered by the digital payment methods, which are listed as follow:
The wide use of the digital payment instruments is necessary for fulfilling this purpose. But every coin has two sides, so does digital payments. Despite many advantages, there are a few limitations surrounding this. Some of them are as follows:
The digital revolution is at its active stage, thereby providing an easy way to go for digital payments. Fintech companies are making the most use of it, showing a positive trend in the growth of NBFCs, Credit Co-operative societies, etc. With more than 100 crore active mobile connections and more than 22 crore smartphone users, India is playing a major role in the field of digital payment system. This number is rapidly increasing with a faster internet speed. The digitalization of remote areas is further adding grace to the whole process.
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