Digital Payments

Digital Payments V/S Electronic Payments

Money is essentially a symbolic representation of value. Today all money is not in tangible form. Today, digital payments are like a physical wallet out there in the world. One can add money to the account or pay through or transfer money option from one account to another bank account. Electronic payment is a gateway which transfers the transaction process to a merchant’s account for payment.
The digital world is constantly evolving for better results. These two methods make the process easier, swifter and convenient. At first, electronic payments came into the market with no audience size but now are the new entry to the financial transaction segment.

Digital Payments:

Though there still is some digital payment inefficiency of cash, payment has remarkably improved. The properties of this can be classified as under:

1) It must be based on cryptographic systems
2) It may be exchangeable for other methods of payments
3) It must be storable and retrievable
4) It must be authorized by the bank

A digital invoice is a semi-automatic process. The invoice can be viewed and processed digitally. The popular format for this is PDF and Word format. Some of the examples of this are Mobikwik, Paytm, Bhim, Vodafone m-pesa, Fast-recharge, etc. This is generally used for phone recharge, bill payment, shopping, rides, etc.

Also Read: Top Trends in the Digital Payments World

Electronic Payments:

Electronic payment is done through digital financial instruments like encrypted credit card numbers, electronic cheques or digital cash, etc. It is used in e-banking, e-commerce and retailing, etc. In electronic payment, e-invoice is a systematically built file and can be stored in any possible format. The most popular format of e-invoice is UBL, XML, and EDI. Some examples of this are Paypal, Securepay, NEFT, RTGS, and IMPS, etc. This is generally used for bill payment, fund transfer, business transaction, etc.

The significant difference between digital and electronic payment:

Digital payment

Electronic payment

1) It is payment through digital cash1) It is the transaction through internet
2) User banking details are not necessary2) User banking details are necessary
3)User needs to install app3)User doesn’t need to install app
4) Personal details are given for once4) Personal details are needed everytime
5) It is an intangible form of traditional wallet5) It is an intangible form of PoS machines
6) User can add money to this account through e-payment6) User can redeem money from digital account to bank account
7) Transaction cost is lower7) Transaction cost is higher
8) There isa transaction limit which is imposed by RBI (20k)8) There is no transaction limit
9) Offers and discounts are given by specific merchants9) Nothing is entertained here
10) Lower level of protection against fraud10) Very high level of protection against fraud
11) Example- E-wallet11) Example – Payment gateway

Conclusion: Generally, there are no such significant differences between digital payment and electronic payment. MasterCard, McKinsey, BTSA diagnostics etc. defined electronic payment and digital payment in that way. Digital payments need a gateway for them but then both the transactions are like two sides of a coin.

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