After the digital boom in India, digital payments have become trendy in financial transactions. According to Credit Suisse, the Indian digital market is expected to reach $1 trillion by 2023. Cash transactions are 70% of total transactions. But data using by 300 million Indians have jumped to 5-10 GB per month from 1 GB in last year. Top trending modes of digital payment methods in India are banking card, USSD(Unstructured Supplementary Service Data), APES(Aadhaar Enabled Payment System), UPI(Unified Payments Interface), Mobile Wallet, PoS(Point of Sale), Internet Banking, Mobile Banking, Micro ATM, Bank Prepaid Card, etc.
Digital Payment: Payment which is done through electronic media at the time of purchasing goods or services is called digital payment.
Methods of Digital Payments:
Top trending digital payment methods are highlighted below:
1)Banking Card: Debit/credit cards can be used through the payments system like Visa, Rupay, Mastercard, etc . This is the most convenient method in India.
2)USSD(Unstructured Supplementary Service Data): It is an innovative method by dialing *99# from the phone. It is backed by National Payments Corporation of India, 51 leading banks, all GSM providers. It can be accessed in 12 regional languages including English. There is no need for mobile data for this service.
3)AEPS(Aadhaar Enabled Payment System): By verifying Aadhar number, AEPS can be used in cash withdrawal, balance inquiry, cash deposit, Aadhar to Aadhar transfer at Point of Sale.
4)UPI(Unified Payments Interface): It is a virtual platform based app which is integrating various banks. A customer can send/receive money anytime without a bank account/IFSC code. A customer only needs a Virtual Payment Address(VPA). BHIM is the Government of India initiated a UPI based transaction app.
5)Mobile Wallet: It is a way to carry cash in digital format. Customer must link Credit/Debit card or bank account details for transferring money to the account. Banks have their own wallet but some popular private wallets are Paytm, Freecharge, Mobikwik, Vodafone m-pesa, Phone pe, Tez, itz cash, Jio money, Oxygen, Mcent, etc.
6)PoS(Point of Sale): Payment can be done where sales are made. There are different types of PoS system like Physical PoS, Mobile PoS, and Virtual Pos. Physical PoS terminals are kept at stores where debit/credit card or Aadhar card is necessary. Mobile PoS work through mobile phone/tablet. Virtual PoS are web-based applications.
7)Internet Banking: It is also known as Online banking or e-banking or virtual banking. It is a process of carrying banking transaction on bank’s website via NEFT, RTGS or IMPS.
8)Mobile Banking: It is a wide range of services which uses a mobile wallet, digital payment app, UPI service or other services for carrying financial transaction. Many banks have their own app.
9)Micro ATM: By swapping cards customer can do a transaction like balance checking, fund transfer, deposit, withdrawal, etc. at any store.
10)Bank Prepaid Card: In this payment system, money is loaded to the card by the respective bank to purchase something. Charges are applied by banks. The limit is decided by the bank too.
Advantages of Digital Payments:
1)Faster and easier
5)Availability of Reward points and cash backs
6)Reduction in payment costs
7)Digital record of transactions
9)Proper taxing system
Disadvantages of Digital Payments:
1)Risk of being hacked
2)The necessity of internet access
3)Limits on amount
7)More cost to businesses