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.
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 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:
|1) It is payment through digital cash||1) It is the transaction through internet|
|2) User banking details are not necessary||2) User banking details are necessary|
|3)User needs to install app||3)User doesn’t need to install app|
|4) Personal details are given for once||4) Personal details are needed everytime|
|5) It is an intangible form of traditional wallet||5) It is an intangible form of PoS machines|
|6) User can add money to this account through e-payment||6) User can redeem money from digital account to bank account|
|7) Transaction cost is lower||7) 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 merchants||9) Nothing is entertained here|
|10) Lower level of protection against fraud||10) Very high level of protection against fraud|
|11) Example- E-wallet||11) 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.